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GB.270/ESP/3
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Committee on Employment and Social Policy |
ESP |
THIRD ITEM ON THE AGENDA
Relations with the Bretton Woods institutions
I. Introduction
1. The Committee will recall that the paper submitted to it in November 1996 on this subject(1) provided details of collaboration between the ILO and the Bretton Woods institutions over the preceding two years. It drew attention to the widening scope of the ILO's dialogue with these institutions beyond the key issue of structural adjustment to include broader economic issues relating to globalization and economic growth and a variety of labour market and social issues. This was due partly to pressure on the international organizations, created by global changes, to develop more coherent and integrated answers to the challenges their members were facing, partly to institutional changes that had led the Bretton Woods institutions to develop broader programmes in the social and labour fields, and partly to the ILO's own interest in looking more actively and broadly into the social implications of international financial and economic policies in accordance with its constitutional mandate.
2. That paper also outlined the ILO's broad objectives for dialogue with the Bretton Woods institutions, which augmented the traditional ILO concerns of promoting tripartism and international labour standards; the objectives included the ILO's assuming a leadership role in articulating the importance of job-creating economic growth and of job creation that involves productive and rewarding employment under safe and healthy working conditions; they also included establishing the ILO as the principal source of expertise and technical assistance capability in this field, in relation to both short-term needs and long-term employment strategies.
3. The purpose of the present paper is to inform the Committee of specific developments that have occurred over the last 12 months.
II. Visits by the President of the World Bank and follow-up
4. As reported to the Committee last year, the Office received, in May 1996, its first visit from a President of the World Bank, Mr. James Wolfensohn. Most importantly during that visit, Mr. Wolfensohn indicated his firm commitment to accept an invitation to address the plenary of the 1997 International Labour Conference. An invitation was subsequently transmitted and accepted.
5. The meeting of May 1996 had included a private meeting with the Director-General followed by an informal discussion with selected members of the staff, which provided a first-hand opportunity for a mutual learning experience through an exchange of views and information concerning, on the one hand, the ILO's priorities with respect to the promotion of democracy, human rights and quality employment, and on the other, the World Bank President's commitment to promoting social development and to institutional cooperation, including a personal commitment to encouraging stronger cooperation from Bank staff. It was agreed that these issues should be addressed by the two institutions through an enhanced bilateral partnership.
6. One development that followed from Mr. Wolfensohn's visit to the ILO in May 1996, therefore, was the visit by a high-level ILO mission to the World Bank in March 1997. Through meetings with a broad range of Bank officials, and, building on earlier technical discussions at the Geneva round-table meetings of 1994 (see GB.267/ESP/2), staff links were strengthened and key areas for future policy dialogue and cooperation identified and prioritized. The objective was to focus on new areas for policy dialogue and cooperation, although all participants agreed that these new priorities should be incorporated into the framework of dialogue and cooperation on existing issues and concerns. Highest on this list were the promotion of core international labour standards and the elimination of child labour.
7. On the first of these priorities, the promotion of core standards, agreement was reached to initiate a structured staff dialogue to explore the possibilities of the Bank's incorporating a concern for consistency with core standards in its operations. To set this dialogue in motion, the ILO gave a technical briefing on international labour standards at the Bank in May 1997, and the ILO has proposed to the World Bank a high-level seminar on core standards. The ILO has at the same time provided technical advice, continuing the efforts that were reported to the Committee last year, to support the Bretton Woods institutions in their attempts to respond to recent United States government legislation requiring US executive directors of the international financial institutions to urge their respective institutions, inter alia, "to adopt policies to encourage borrowing countries to guarantee internationally recognized worker rights" and "to include the status of such rights as an integral part of the institution's policy dialogue with each borrowing country". In another standards-related activity, the ILO, in consultation with the World Bank and the International Federation of Building and Wood Workers, has acted to facilitate the dialogue between them in response to the latter's initiative to ensure that ILO core standards are observed in World Bank procurement contracts.
8. With regard to the second priority, the specific core standards issue of child labour, the Bank has taken some important steps in the past year. In building up its knowledge base on the subject of child labour, the Bank has drawn extensively on ILO sources of information. The Bank's concerns in this area have already begun to be reflected in some of its country reports, and ILO offices and technical teams in the field are being urged to establish close working relationships with Bank staff at the country level. At headquarters, the Bank has prepared an approach paper to expand the Bank's involvement in efforts to eliminate exploitative child labour, which is pending final approval by its Board of Directors, subject to review by its Legal Department.
9. Other key areas for policy dialogue and cooperation highlighted during the high-level mission in March included promoting equality between men and women, structural adjustment and labour market reform, enterprise development, training, cooperation in post-conflict situations, "network knowledge banks" and data exchanges, and country-level collaboration. It was understood that new efforts should be launched in these areas. It was also understood that support should continue for cooperative efforts that were already under way, especially in the areas of vocational training, labour law reform, social security modelling, and the operation of social funds. These efforts have been described in previous reports to the Committee (including GB.267/ESP/2), and updates are included elsewhere in this report.
10. The ILO high-level mission also helped to prepare the arrangements for Mr. Wolfensohn's visit to the 87th Session of the International Labour Conference in June 1997, which included a 30-minute formal address to the Conference plenary;(2) a two-hour informal question-and-answer session, chaired by the Chairperson of the Governing Body, which was attended by some 80 ministers of labour, 20 Workers' and 20 Employers' delegates, and relayed on video at the ILO building for the benefit of other delegates and the ILO staff; a luncheon with the ministers and other delegates; a separate meeting with the Director-General; and finally a press conference.
11. In his address to the Conference, Mr. Wolfensohn confirmed his commitment to close cooperation with the ILO in the promotion of social development and social justice. Focusing on the Bank's role in the fight against poverty and inequity, he emphasized the inextricable links between developed and developing nations, the changing nature of investment flows now dominated by the private sector, the dependence of sound economic policies on sound social policies, the close links and complementarity of the work of the ILO and the World Bank, and the need for an even deeper cooperative relationship between the two institutions.
12. The informal question-and-answer session with ministers of labour and representatives of employers and workers helped provide a clearer understanding of the role and economic mandate of the World Bank, the key issues of concern to ILO constituents, and the importance of the tripartite process. In the lively "off-the-record" discussion, important issues were raised touching on subjects such as ILO standards and human rights, tripartite participation and debt relief. This dialogue should serve to enrich the relationship between the ILO and the World Bank.
III. Other relations and cooperation at the institutional level
13. Since first being invited as an observer at the World Bank-IMF annual meetings in Madrid in 1994, the ILO has consistently sent a delegation to the annual meetings of the Bretton Woods institutions to monitor developments, strengthen contacts, and heighten the ILO's visibility. This has included the annual meetings held in Washington in 1995 and 1996 and in Hong Kong in 1997. Similar representational arrangements at the International Labour Conference have been offered each year to, and frequently accepted by, the World Bank and the IMF.
14. Such participation at the annual meetings was supplemented this year by high-profile ILO participation, as associate sponsor, in two recent major international conferences organized by the World Bank, which has strengthened the ILO's influence with respect to the Bank, other donors and national authorities in important fields of concern. At one of these, the World Bank/Canada "Conference on Knowledge for Development in the Information Age", held in Toronto in June 1997, the ILO was able to focus its activities on knowledge for good governance and on the impact of information technology on jobs and work. At the other, the "International Workshop on Social Funds: A Global Learning Event", held in Washington in May 1997, the ILO's focus was on international support to social funds, with particular emphasis on the gender dimension and the links with the ILO's Action Programme on Economic Reform and Structural Change: Promoting Women's Employment and Participation in Social Funds. Both events have paved the way for future collaboration in their respective areas. In the case of the latter, the World Bank has already actively participated in the ILO's own follow-up initiative, the Technical Brainstorming Workshop on Social Funds: Employment and Gender Dimensions, held in October 1997.
15. In addition, the ILO has participated as a member of the World Bank-sponsored Consultative Group for Assistance to the Poorest (CGAP). In connection with this participation, the ILO also provided support for the Microcredit Summit held in Washington in February 1997 and which had many co-sponsors, including the World Bank. The Summit brought together a wide array of advocates, providers and recipients of micro-credit programmes, and the ILO's presence at the Summit helped to heighten the ILO's visibility and influence in this field. The ILO, furthermore, is a founding member of both the Donors' Working Group on Financial Sector Development and the Committee of Donor Agencies for Small Enterprise Development, coordinated by the World Bank, whose meetings in 1997 were both hosted in Geneva in April by the ILO. The ILO's participation in these events and coordinating entities is built on its work in small enterprise development and the Poverty-Oriented Banking Programme.
16. As in previous years, the ILO was consulted by the World Bank in the preparation of its 1997 World Development Report: The State in a Changing World. The ILO provided its views through meetings with the World Bank team and through written comments during the report's draft stages. While the ILO was able to exert some influence over the final outcome, it was unable to convince the authors to include references to the role of the State in the promotion of democracy and human rights, particularly with reference to ILO core standards. The Bank continues to have difficulty taking account of ILO core standards, perceiving them to be beyond its own economic mandate, although at various fora both organizations have agreed on the importance of the issue of core standards. Part of the effort now going on is to identify the aspects of the core standards on which the ILO and the Bank can have further dialogue.
17. The joint ILO-World Bank study on current issues in vocational education and training (VET) has been completed. This study builds upon the World Bank's VET Policy Paper (1991), to which the ILO had made an earlier contribution, and is intended to provide accounts of VET policy shifts and the obstacles in implementing change, and to document and draw lessons from innovative approaches. The study is actually a combination of 15 country studies, supplemented by a synthesis paper. The publication will serve as a basis for advisory services and the dissemination of best practices for both the World Bank and the ILO. In addition, following the ILO's participation in the World Bank's "Education Week" for World Bank staff in 1995 and 1996, the ILO was invited by the Bank to participate in its expanded "Human Development Week" in 1997, in particular for the panel set up to discuss the joint VET study. Further joint follow-up activities are under discussion.
18. The joint ILO-World Bank study on globalization, economic reforms, labour market legislation and women's employment in the context of export processing zones has been delayed owing to the absence of funding for three of the four planned country case-studies, two of which were to be financed by the Bank and two by the ILO. So far only one of the Bank-financed case-studies has been able to commence, although the search for the necessary funding is continuing. In the ILO's case appropriate funding is being sought through its own donor partners. Both institutions would like to broaden their dialogue and operational cooperation for the promotion of gender equality in new areas, as a priority for enhanced partnership.
19. One specific outcome of the enhanced partnership with the Bank, designed to build institutional understanding and cooperation at the staff level, was the financing by the Bank of the participation in 1996 and 1997 of a senior ILO official in the Bank's new internal executive development programme. Training of staff for executive development is also intended to encompass cooperative programmes through the UN Staff College in Turin and other joint participation in Bank-sponsored programmes.
20. On the operational side, the Bank approved a revised standard contract for use by governments using the services of UN agencies for Bank-financed technical assistance, which will permit continued ILO participation in such technical assistance. The new, approved format met the requirements laid down by the ILO with the support of other UN agencies during earlier negotiations.
21. During the past year, the institutional contacts with the World Bank have been altered by a major reorganization within the Bank. Established contacts at all levels, including the thematic and operational levels, have been affected by a significant redeployment of Bank staff throughout that institution, as the Bank implements its new "Strategic Compact". The President has designated his Vice- President for External Affairs to oversee the Bank's work with the ILO. New links have been established with the reorganized Human Development Department and the new Human Development Network, particularly with the Social Protection Family within that network, which is now the main technical link for the ILO. As the other major new Bank networks -- (a) poverty reduction and economic management, (b) finance, private-sector development and infrastructure, and (c) environmentally and socially sustainable development -- are put in place and made fully operational, the ILO is also establishing appropriate links with them. At the field level there have been comprehensive staff realignments and a greater devolution of responsibility through the Bank's regional departments to their country directors. The effect of this on ILO relations at the field level should be quite significant as the new arrangements are actually put into place.
22. A further development affecting the ILO's relations with the World Bank is the Bank's new thrust towards establishing partnerships with civil society, particularly at the country level. This includes all kinds of NGOs, citizens' groups and other groups, and also includes representatives of business, employers and workers. As Mr. Wolfensohn himself pointed out in June, the Bank has recently placed over 50 staff in positions specifically assigned responsibility for relations with civil society. This raises the question of how the ILO's policy advice to governments and its dialogue with the Bank -- which are based on consultations with governments and the social partners in the normal tripartite context -- might relate to the content of the Bank's policy advice to governments based on its dialogue with its own choice of representatives of employers and workers as part of a wider civil society. For example, the World Bank's new project on the Structural Adjustment Participatory Review Initiative (SAPRI), to review the impact of adjustment lending and policy advice -- which is operational in Bangladesh, Ecuador, El Salvador, Ghana, Mali, Uganda and Zimbabwe -- is designed to work with representatives of government and civil society, including employers (business) and workers, in each country.
23. The dialogue with the IMF on policy issues continues to be strengthened by improved contacts and joint initiatives, and the regular contribution of comments by the ILO on World Economic Outlook (WEO). In particular, a special programme of joint staff discussions was organized in Geneva in May 1997. The discussions on the content of the WEO and specific country-level experience have revealed a better understanding not only of common objectives, but also of institutional differences in policy approach and advice, for example in the area of wage policies. Both institutions have agreed that continued efforts should be made in order to harmonize more significantly ILO-IMF thinking in relation to the labour and employment impact of macroeconomic policies.
IV. The role of policy dialogue at the country and regional level
24. The main emphasis of the ILO's policy dialogue with the Bretton Woods institutions, whether at the global or the country level, continues to focus on the labour-market and employment aspects and social impact of structural adjustment measures. Structural adjustment programmes supported by the Bretton Woods institutions have continued to encompass an increase in policy advice, lending and research in the areas of labour market and labour law reform, social security and pension reform, and social safety nets. This continuing shift is placing increasing responsibility on the decentralized field services of the ILO to increase the policy dialogue and institutional interaction at the country level.
25. With both the World Bank and the IMF, the policy dialogue on labour and employment issues has been enhanced through inter-agency collaboration in the ILO-led ACC Task Force on Employment and Sustainable Livelihoods, and the World Bank-led ACC Task Force on an Enabling Environment, as well as the joint ILO-World Bank-IMF Seminar for Trade Union Leaders on Economic Growth and Development in Southern Africa, held in Harare. The results of the ILO-led ACC Task Force on Employment and Sustainable Livelihoods are the subject of a separate report to the Committee.(3) The World Bank and the IMF actively participated in this Task Force. The World Bank was also the lead agency for the Task Force's country study on Indonesia; however, following concerns expressed by the ILO as a result of action taken by the Governing Body concerning Indonesia, the country report on Indonesia was dropped before its completion in the context of the ACC review exercise. The World Bank-led ACC Task Force on the Enabling Environment also conducted a number of country reviews focusing on the macroeconomic and social framework. The ILO was the lead agency for the country study on Hungary, and its analysis on UN-agency cooperation on the macroeconomic and social framework in that country was singled out by the World Bank and other organizations as a good example of addressing critical issues of economic and social policy in the context of the Task Force. All these activities have required a high degree of ILO field-level input combined with headquarters coordination and support.
26. Local Bank and Fund staff participated actively in a series of five national seminars in eastern and southern Africa organized by the ILO on structural adjustment, employment and labour-market institutions. Both the Bank and the IMF made available senior staff from their headquarters to participate in the subregional follow-up seminar held in Kampala in September 1996, which sought to detect an emerging consensus between the social partners, governments and international agencies with respect to the employment and labour-market impact of economic reform and structural adjustment policies. One result of the seminar was closer contact between the social partners, the academic community, the ILO and the international financial agencies. An action programme on structural adjustment, employment and the role of the social partners, included in the ILO's regular budget for 1998-99, will deal in more detail with this issue.
27. Substantial progress has been made in cooperation with the World Bank at the country level in the field of labour law and labour relations, particularly as they relate to structural adjustment. In particular, a very constructive seminar on labour law reform was held in Abidjan, Côte d'Ivoire at the end of June 1997. Drawing on country-level collaboration in Côte d'Ivoire and elsewhere, and on the 1995 ILO-World Bank Washington staff seminar on labour law reform in West Africa, and also on institutional dialogue over the Bank's World Development Report 1995: Workers in an Integrating World and the ILO's report World Employment 1995, the ILO worked closely with the Bank's Economic Development Institute (EDI) in organizing this tripartite seminar. The ILO and the Bank had cooperated earlier on a tripartite seminar in Washington in 1996 on "Promoting a Policy Dialogue on Labour Issues" which had enhanced institutional capacity for working together, exposed the Bank to tripartite processes, and improved institutional understanding of the policy issues involved. At the 1997 tripartite seminar in Abidjan, participants from Benin, Burkina Faso, Cameroon, Chad, Congo, Côte d'Ivoire, Gabon, Mali, Niger, Rwanda, Senegal and Togo took part in lively interchanges on the topics of labour law and development, labour relations, recruitment and dismissal, child labour, maternity leave, paid leave, privatization and restructuring. The conclusions and recommendations adopted by the seminar can be used as guidelines for the social partners, and can also provide some policy direction for future work on labour law reform. The successful seminar highlighted areas of common perception shared by the World Bank and the ILO, including a commitment to core principles, while confirming the two institutions' distinct mandates and roles.
28. Of the six countries selected for enhanced cooperation between the ILO and the IMF, the staff of both institutions have reported significant progress in Côte d'Ivoire, India and Ukraine. In Indonesia, institutional dialogue has commenced in areas of mutual concern. Peru was included in this list later than the other five countries, and initial contacts have been established there to discuss the potential focus of future cooperation. Fruitful dialogue has commenced in Uganda, but the absence of a permanent ILO presence in that country appears to be delaying any rapid follow-up. In another region, an ILO contribution on privatization and labour issues in the context of economic reform was presented at an IMF-sponsored seminar for Arab countries on the social effects of economic adjustment on Arab countries, and was published by the IMF in 1997 as part of a book on this subject.
29. Ukraine is a good example of the ILO's experience of cooperation with the Bretton Woods institutions involving both policy dialogue and operations. Last year the Committee was informed of the advanced state of such cooperation in the areas of employment and wage policy. Since then the ILO and the IMF have jointly organized a tripartite seminar to address the grave problems of wage policy and wage arrears in that country. This experience illustrated that, while the policy differences between the ILO and the IMF could be reduced, they could not be eliminated entirely. The ILO, the World Bank and the IMF have also joined together in supporting the Government in developing a social budget model for Ukraine, building on the successful ILO project in Slovakia introducing a social budget model specially designed for transition economies so as to increase transparency and help governments to define and assess the policy options.
30. In the field of pensions, the ILO has launched a series of tripartite regional consultations on the development of an ILO approach to the reform and development of pension systems throughout the world, intended to serve as a basis for ILO advisory services and to contribute to the formulation of a comprehensive ILO strategy in the area of pension reform. This activity has been implemented partly as a response to the increasing activity of other donors, in particular the World Bank, in the field of pension reform. For this reason the World Bank is also being informed and consulted. The series of meetings will include a joint meeting in Paris of the ILO and the OECD, which will also be attended by the World Bank, and which will serve as an opportunity to seek a convergence of views on analytical issues.
31. Other areas of cooperation, particularly with the World Bank, have included a tripartite seminar held in Pretoria in July 1997, where the ILO and the World Bank were both invited by the South African Government to present their respective views on the social and labour aspects of privatization, in preparation for a policy paper by the Government on this issue. In the field of training, a new World Bank-financed training project in Yemen, implemented by the ILO through the Turin Centre, was approved in 1997, and country-level dialogue is continuing; this is exemplified by experience in Viet Nam, where the ILO has cooperated in the design of a skill development and labour market survey. The design and implementation of Social Development Funds is another key area where ILO-World Bank cooperation is continuing. New developments include cooperation in Uzbekistan, where preparatory ILO-UNDP work paved the way for joint ILO-World Bank action in 1997, in cooperation with the UNDP, on the design of technical assistance to help set up the Social Transformation Fund and to help develop a schedule for the reforms necessary to create an enabling environment for the Fund, which will receive a US$10 million initial allocation from the Bank for small and medium enterprise and employment guarantee schemes. The ILO expects to be involved further in the implementation of this project.
32. ILO cooperation with the World Bank in the field of labour-intensive works was reported to the Committee last year. This cooperation is continuing: following consultations in 1997 in Washington with the World Bank Infrastructure Operations Division (Sahelian Department), the ILO's support to the AGETIPs (Agences d'Exécution de Travaux d'Intérêt Public pour l'Emploi) -- which are the executing agencies for public works and employment programmes supported by the Bank, in Benin, Burkina Faso, Mali, Mauritania, Niger, Senegal and Togo -- looks set for expansion. In addition, ILO work under the World Bank-supported sub-Saharan African Transport Programme (SSATP) is continuing and has led to the development by the ILO of guidelines on the implementation of employment-intensive investment programmes, published as a technical paper by the World Bank in 1997.
VI. Conclusion
33. The ILO will continue to pursue its broad objectives for dialogue with the Bretton Woods institutions, with emphasis on promoting tripartism and international labour standards, and reinforcing the ILO's leadership role in promoting job-creating economic growth and job creation that involves productive and rewarding employment under safe and healthy working conditions. The impetus for reform within the UN system will play an increasingly important role in defining the scope of the dialogue with the Bretton Woods institutions. As the UN draws on the commitments made by its member States at major international conferences, including the Social Summit held in Copenhagen in 1995, it is focusing on its own comparative advantage of normative consensus and universal membership in relation to the Bretton Woods institutions. The General Assembly has called for a high-level dialogue between its Economic and Social Council and the Bretton Woods institutions on the occasion of the Bank and Fund's Spring 1998 meetings, as follow-up on the commitment for such a dialogue made at the Social Summit. A parallel commitment at the Social Summit made reference to the need for dialogue between the heads of the UN, the Bank, the Fund, the WTO and the ILO. Thus, the ECOSOC dialogue with the Bretton Woods institutions will serve as a major turning point for UN system-wide coordination, and the Office will monitor these developments closely.
34. At the inter-agency level, coordination with the Bretton Woods institutions has been influenced by the results of the ACC task forces mentioned above. While the evaluation of the ILO task force initiative is the subject of a separate paper, it should be noted here that the task force experience is serving as the basis for extensive discussion in the ACC -- and in the UN system in general -- on how best to coordinate the activities of the UN, its funds and programmes, the specialized agencies, and the Bretton Woods institutions. For the ILO, this experience has highlighted the importance of coordination through existing machinery and the acknowledgement of its own specialized expertise through readiness to take on a leadership role for the coordination of UN system-wide activities in such areas of expertise. With the Bretton Woods institutions in particular, this coordination role has been recognized to include an acceptance and better understanding of different perspectives on policy and technical advice based on differences in institutional mandates.
35. Respect for different perspectives, however, must be supplemented by a genuine willingness to coordinate efforts on common objectives. Such is the case with regard to the commitments made at major international conferences. The debate on how to establish common policy prescriptions emanating from these commitments is especially lively with regard to core international labour standards and the role of other institutions, including the Bretton Woods institutions, with regard to respecting those standards. The same concern applies to commitments made in the areas of tripartism, full and productive employment, adequate remuneration, and safe and healthy working conditions, but the definitive debate is taking place with regard to core labour standards. The momentum for reform and for improved coordination, while still retaining respect for different mandates and the merits of a certain degree of decentralization, will bring the policy dialogue between the ILO and the Bretton Woods institutions to new levels of understanding in the months and years to come.
Geneva, 15 October 1997.
Appendix
Address by Mr. James D. Wolfensohn,
President of the World Bank, to the International Labour Conference,
85th Session, 13 June 1997
2. Appended.
3. GB.270/ESP/1/1.