GB.276/PFA/9/DG - Governing Body

ILO is a specialized agency of the United Nations

276th Session

Geneva, November 1999

Programme, Financial and Administrative Committee	PFA

Programme and Budget proposals for 2000-01:
Approval of the detailed budget and further
development of strategic budgeting
(GB.276/PFA/9)

Director-General's statement

It is my pleasure to present to you my detailed Programme and Budget proposals for the 2000-01 biennium. You requested this information last March in approving the Strategic Budget. The budget resolution unanimously adopted by the International Labour Conference makes specific mention of detailed proposals to be submitted to you at this session. I also undertook to begin the process of specifying performance indicators and targets. The responses to these requests are found in the document before you, which should be read in conjunction with the Strategic Budget submitted last March and my Decent work Report to the Conference.

We are now ready to take the final step prior to commencing the next biennium. In addition, we have reached an important milestone in the overall reform of the programme and budget process.

I have a threefold purpose in this introduction to my proposals:

First, to review for you the key structural and management reforms that we have introduced towards attaining the goal of a more relevant, more efficient and more effective ILO.
Secondly, to set out the main features of the proposals, which now include detailed resource data.
And thirdly, to present a vision of the future stages of the programming process so that together we can continue our common effort to improve our Organization's performance, relevance and accountability.

In my introduction to the Strategic Budget in March, I said the following: "This budget is an integral part of a wider process of change that will take place in the ILO from March to November 1999 at three interlocking levels: formulation of a strong tripartite consensus around the Organization's substantive priorities and the main focus of each priority, a reallocation of budgetary and extra-budgetary resources to implement them through the Organization's programme of work, and the corresponding adaptation of the management structures and programme activities to make them operational …" (paragraph 11).

Since these words were written a lot has been achieved through a new interaction between the decision-making bodies and the Office. The changes announced in March have been basically completed. We can all can be satisfied with a shared ownership of results.

The foundation of all the developments I will present to you is the strong consensus in the Governing Body and at the International Labour Conference on the strategic framework within which we will operate. Based on extensive formal and informal consultations, we have agreed upon four strategic objectives, each of which contributes to the ultimate goal of decent work for all. They are rights at work, employment, social protection and social dialogue. These strategic objectives are the basis of structural reforms and management initiatives. I will propose that they should also be the starting point for the next steps in strategic planning.

Immediately after I took office last March, I began to introduce a series of management reforms. Among them:

organize the Office's technical programmes around the four strategic ojectives, with an Executive Director directly responsible for each sector;
constitute a Senior Management Team at headquarters composed of the six Executive Directors (the four technical programmes together with technical cooperation and finance and administration);
establish the internal structure of each technical sector on the basis of staff involvement and consultation within each sector;
revisit and clarify the operational objectives. For each operational objective, work has begun on identifying performance indicators, establishing cost-effective ways of measuring progress for each indicator, and setting realistic but challenging targets for achievement within the biennium. We will continue refining these questions throughout the biennium;
we have started an in-depth reform of the ILO's system for monitoring, evaluation and reporting, with a view to making it more flexible and responsive to the strategic budgeting framework;
eight high-profile InFocus programmes have been established. Strategies have been developed for launching these programmes, based on an intensive process of debate and consultation inside the Office and with constituents, both in Geneva and in the regions. Work has already begun on a number of initiatives. Almost a quarter of regular budget resources are earmarked for these programmes.

As a result of these management reforms, the Organization as a whole has a greater sense of the strategic direction of the ILO. Taken together, these changes assign clear responsibilities at different management levels and establish the corresponding basis for accountability. The first signs are also apparent of a new climate of openness and participation within the Office which I intend to encourage and reinforce.

The renewal of technical work has included a strong measure of action for gender equality. I began by upgrading the Office of the Special Adviser on Women Workers' Questions, renamed the Bureau for Gender Equality, which now reports directly to me. It has produced an action plan for gender mainstreaming discussed within each sector and recently approved by the Senior Management Team. I also have appointed qualified women to a high proportion of the senior positions that were made available by the creation of the InFocus programmes. Perhaps most important of all, the individual technical sectors have taken concrete steps to introduce gender mainstreaming as a central part of their work while maintaining important gender-specific projects. Existing programmes, such as More and Better Jobs for Women, will continue to be important, but gender issues will not be confined to special programmes, rather they will also be built into ILO work across the board. There will be a provision for a full gender expert in each sector. I will ensure that this promising start continues.

In response to a request from some members of the Governing Body a separate document will be distributed that estimates the resources and describes the activities for gender equality in 2000-01. That document shows that some $12.3 million will be devoted specifically to gender equality, an increase of more than 150 per cent over 1998-99. It also shows that the gender dimension is integrated into all technical sectors.

We have also made an exceptional effort to involve field staff in the restructuring and priority setting. A general consultation of senior regional staff was held in Geneva after the Conference. Each sector has organized consultations with their counterparts in the regions.

Each InFocus programme has inputs and collaboration with the regions as a major element of its plans. I have begun the practice of joint meetings of the Senior Management Team and the Regional Directors at least three times a year and plan to develop further the interaction between them, the MDTs and the area offices, taking advantage of improving communications technology.

The proposals before you include a transfer of resources from headquarters to the regions. We have begun a review of measures to strengthen field services and to make them even more responsive to ILO priorities. The review will:

find ways of better integrating and coordinating work at headquarters and in the regions under the strategic objectives, since the objectives, indicators and targets apply to both;
aim to enhance the efficiency and effectiveness of the systems for planning, managing and delivering programmes which service constituents and advance the Organization's objectives.

Our efforts in favour of the regions will include, as requested by the Conference, an important programme of technical cooperation. The estimates that are available to you show an increase from $179 million in 1998-99 to $215 million in 2000-01. These figures are of course preliminary and have already evolved since the first estimates were furnished to you in March. For example, as regards technical cooperation on the follow-up of the Declaration, for which we made no estimates in the document before you, a commitment of the equivalent of US$1 million from the Government of France has already been made. The Governments of Japan and the United States are funding the first Asian meeting planned under the Declaration, scheduled for this December. Fuller and more up-to-date information on technical cooperation is available to you in a separate information document.

In the future, we will provide fuller information on the breakdown of "other sources" of funds by programme with indications of the contributions by donor. The final objective is to have all financial resource figures concentrated in one document.

Efforts have been made by the support services to improve the quality of their work while identifying savings that can be used for action in favour of constituents. In addition to the savings they have identified, they initiated work on setting service standards so that results-based budgeting techniques apply throughout the Office.

The changes mentioned will require staff who are motivated and highly skilled. I have been impressed by the dedication of the staff since I have taken office. I am convinced that with modern and fair personnel policies which highlight career development and efficient administration we can go even further in developing world-class performance in all aspects of our work. A separate paper has been submitted to you on this matter.

No doubt there are many areas in which the Office has to reform its ways in order to meet our responsibilities. But there is none more important than the way we treat our young professionals. We need major surgery. When I arrived, I found a situation in which many had decided to leave in the recent past. Others decided to do so afterwards. It is normal to pursue other career opportunities or move because of personal or other reasons, but my perception is that many may have done so because of the indifference and lack of guidance of their superiors, less than delicate management methods and an inappropriate working atmosphere. It is an issue that concerns me deeply. Action is long overdue. I have instructed our new head of personnel to act promptly and swiftly on this matter. To facilitate change, I have decided to appoint a young professional to my Cabinet with -- among others -- the specific responsibility of advising me on these issues and keeping me abreast of situations I should be aware of.

I would now like to turn to the main features of the document before you.

The level of the budget that I presented to the Governing Body last March, and which the Governing Body in turn recommended to the International Labour Conference for adoption, was $481.05 million, which represented zero growth as it corresponded exactly to the level of the Programme and Budget for 1998-99. At the time, these budget proposals had been costed at the 1998-99 budget rate of 1.46 Swiss francs to the dollar. However, in accordance with the established practice, the Finance Committee of the Conference revised this exchange rate to that prevailing at the time when it approved the programme and budget. The rate adopted was 1.53 Swiss francs to the dollar which led to a reduction of $13.58 million, or 2.82 per cent, in the nominal level of the budget.

This reduction of $13.58 million in the nominal level of the budget is due entirely to exchange rate fluctuations and, if the underlying Swiss franc and dollar components of the budget are examined, they are identical to those in the 1998-99 budget. I point this out firstly to dispel any impression that there was a real reduction in the 2000-01 programme and budget as compared with that of the present biennium and, secondly, that this distortion in the nominal level of the budget, even though the Swiss franc and dollar components remain constant, should be taken into consideration and kept in perspective when the budget proposals for the following biennium are formulated.

This is a zero-growth budget. However, there are very substantial demands for resources for new priorities and to strengthen existing action. All parts of the Office have been asked to make a major effort to identify efficiencies, savings, and ways of enlarging the impact of our work within strict budgetary limits. Based on a process that I can assure you has not been easy, we have freed additional resources for the most essential programmes.

While I will not review all the details of the document, I would like to list those items that have been reinforced:

The Declaration on Fundamental Principles and Rights at Work is an entirely new activity that has been provided with the resources necessary to launch a follow-up as envisaged by the Conference. I anticipate that this will be reinforced through a special effort on technical cooperation.
A substantial increase in regular budget funding has been provided for IPEC, with emphasis on ratification and implementation of Convention No. 182.
The other six InFocus programmes have also received priority in resource decisions.
Action on gender equality has been reinforced, both within the Bureau for Gender Equality and through mainstreaming, as I have already stated.
Employers' activities have been strengthened, in particular to permit better backstopping of technical cooperation.
Our work on external relations and partnerships has been made more visible and more substantial.
A new International Policy Group has been set up. In addition to policy advice in a turbulent world environment, it will give analytical backstopping to our collaboration with the international financial institutions and the whole of the multilateral system, working through the Bureau of External Relations and Partnerships.
Reinforced external communications will be a vital part of a strategy for a more influential and visible ILO.
Finally, as already indicated in earlier documents, an additional amount of $1,585,000 has been provided to the regions in the form of expanded regular budget technical cooperation.

The document provides detailed descriptions of these new and strengthened areas of work, particularly the InFocus Programmes, since these are the areas on which less information was available in Volume 1 of the programme and budget.

The resources to carry out this work have essentially been found outside the technical programmes together with the elimination or reduction of some activities. The balance between different strategic objectives remains broadly in line with my proposals in March. Employment is the largest field of work overall. Some of you have commented that there seems to be a decline in resources for the employment sector but, in reality, resources for employment will increase. There are a number of reasons for this. First, most of the work of the International Policy Group will relate to employment. Secondly, technical cooperation on employment is expected to reach some $134 million in 2000-01 compared with $113 million in 1998-99. These amounts are far more than in any other sector. Thirdly, programme support resources for technical cooperation on employment will increase to over $5 million for the biennium. All of this pushes the real budget for employment well above any other sector.

I would like to underline the increased importance I have given to communications and to partnership. Today the influence and impact of the ILO is increasingly achieved by its outreach through the media, through new forms of advocacy and networking, through schools and communities, through fully using new opportunities to reach a global audience. And partnerships are key. We do not have to do it all ourselves -- our values and goals are widely shared, and we can act as a catalyst and leader to help promote them. Partnerships in the UN system and with the Bretton Woods institutions equally help multiply our capabilities, and I intend to invest in them.

A central issue in strategic budgeting is accountability. We have to be able to say what we are going to deliver, and offer indicators by which our performance can be judged. I will not pretend that this process is easy, nor is it at all complete. We must finds ways of assessing our performance which are close to the impact we have on the real world. On this, there is still work to be done, and in particular the targets which we have set for ourselves will need to be reviewed critically and developed further. I have been enormously helped so far through assistance from constituents with expertise in this area. I plan to continue to call on you for assistance as we aim at a process of continuous improvement. I particularly welcome your more specific comments in this matter to help the Office progress further.

To sum up, I believe that you will find that we have made substantial progress in aligning work to the strategic objectives, in streamlining our operations, in making our programme more transparent and our managers and staff more accountable. I therefore commend these proposals to you for adoption.

Let me now turn to the third part of my introduction, which relates to our future programme.

While action over the last few months has been rapid, it has not been without its difficulties and limitations. I am not satisfied with current programming procedures and I believe that with your active involvement and support we can make a number of improvements. In making suggestions on these matters, I draw upon my consultations with Governing Body members and other representatives of constituents, the advice of officials at all levels and outside expertise.

Let me list for you what I perceive to be important limitations on our current programme budgeting:

First, the programme and budget takes too long to prepare and approve. Under the old programming cycle, today we would already be preparing a preliminary consultation paper to submit to you next March on the 2002-03 programme and budget. It makes no sense to describe what we think should be done in 2002 before we even start work on the 2000-01 programme. It is unrealistic, and it cuts us off from a results-based cycle.
Secondly, one biennium limits the capacity to achieve and appraise longer term, significant, measurable impacts. All of our programmes have had difficulty identifying measures of the outcomes or results of their efforts within the same biennium that they are launching activities and producing the first outputs.
A third problem is that the monitoring of programme implementation and the evaluation of results is insufficiently systematic and independent. In programme implementation it is my intention to improve reporting and evaluation procedures to give you more, and more timely, opportunities to shape the programme as it is put into action.
Finally, we do not think enough about strategy. Too often, we fail to identify the alternative paths to achieving our long-term goals like better cooperation with other UN bodies or partners who share our values and objectives. As a result we do not always choose the most cost-effective means of action.

I have noted that you in the Governing Body have been thinking along the same lines. You have welcomed the shorter, more strategic presentation of the programme and budget, even if this time the transition to a new Director-General has meant that some of the budgetary details were available later than usual. You have called for more flexibility in the use of resources in return for greater accountability for performance. You have shown interest in a renewal of governance arrangements to reflect the reforms that have been introduced. The Office is prepared to work with you in devising better arrangements for reporting to the Governing Body and for its committee structure, if that should be your wish.

On some questions the Governing Body has an especially deep involvement and I therefore count on its direct collaboration in the design of better methods of work. I am thinking in particular of international labour standards, where innovations decided upon by the Governing Body necessarily precede changes in the procedures followed by the Office. As I said in my Decent work Report to the Conference, "If the ILO is to ensure its continued relevance in this field and reassert the usefulness of international standards, it will need to reinvigorate its efforts and experiment with new approaches". I suggested a number of actions. The revision of standards is one activity on which we must move faster but together. We need to develop and use more efficient methods of revision as well as a better way to determine what kind of standards we wish to develop. I believe that we should have a thorough discussion on all aspects of our policy of standards, and the Office will assist the Governing Body and the constituents on this to the best of its ability.

In the document before you, you will find proposals that will allow us to make progress on all these points through the adoption of strategic planning as a basic long-term management tool. The strategic plan would set priorities and identify strategies. It would provide the framework for accountability by the further development of performance indicators and targets. Within the planning period, each biennial programme and budget would specify the progress that should be expected within the two-year time frame.

I have proposed a very ambitious schedule for establishing the strategic plan, one which will require me to present the draft plan to you for approval in November of next year, and then to complete the first biennial budget under the plan for submission to you the following March. In preparing it, I will continue to insist on extensive consultations, both internal and external. Although tight, I am convinced that this is the only way for us to continue to make rapid and sound progress in budgetary and management reform.

I would like to mention just a few features of the proposal for a strategic plan:

First, it will be based on the consensus we have already achieved in establishing the strategic and operational objectives.
Secondly, it will reinforce the vision of the ILO as a knowledge, advocacy and service organization, with coherent proposals to strengthen each role.
Thirdly, the plan will be comprehensive. This means that in addition to the technical sectors, it will incorporate the results of the review of regional operations that have been announced, as well as reviews of service and support programmes.
Fourthly, the plan will incorporate reinforced evaluation of ILO action, including evaluation of all eight InFocus programmes, as well as new arrangements for reporting on implementation with each biennium.
Fifthly, based on work under way, it will address the issue of how we assure and measure the quality of ILO products.

The document before you contains additional information on the proposed planning and reporting arrangements, and in particular proposes a schedule for submission of the necessary documents to the Governing Body.

We now have an opportunity for a tripartite discussion of the Programme and Budget for 2000-01 as well as the procedures for future programming exercises. I look forward to your policy guidance, and the Office is at your disposal for any clarifications that you may require. I would like to thank you for the advice you have given me and my team on numerous occasions, and in particular for the informal feedback that has helped to improve this document during the course of its preparation. I hope that, after a full discussion, you will agree with the proposals.

The new management systems I am introducing emphasize accountability, including the accountability of the Director-General to the Governing Body. This is the first formal occasion on which I have the opportunity to report to you concerning progress on the promises I made to you in March in my Strategic Budget to modernize the vision, structures and management systems of the ILO. I will continue to report to you on management reforms as part of the annual report on programme implementation. I am quite aware that much more progress is required, but I trust that you will agree with me that with your support, much has been achieved.

Thank you for your attention.

Updated by VC. Approved by NdW. Last update: 26 January 2000.