Protecting People, Promoting Jobs_ILO 2009

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Protecting people,promoting jobs

A survey of country employment and social protection policy responses

to the global economic crisis

IN ERNA IONAL LABOUR OFFICEGENEVA, SEP EMBER 2009

An ILO report to the G20 Leaders Summit,Pittsburgh, 24-25 September 2009


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he designations employed in ILO publications, which are in con ormity with United Nations practice, and the presentation o material thereindo not imply the expression o any opinion whatsoever on the part o the International Labour O ice concerning the legal status o any country,area or territory or o its authorities, or concerning the delimitation o its rontiers.

he responsibility or opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication doesnot constitute an endorsement by the International Labour O ice o the opinions expressed in them.

Re erence to names o irms and commercial products and processes does not imply their endorsement by the International Labour O ice, andany ailure to mention a particular irm, commercial product or process is not a sign o disapproval.

ILO publications can be obtained through major booksellers or ILO local o ices in many countries, or direct rom ILO Publications, InternationalLabour O ice, CH-1211 Geneva 22, Switzerland. Catalogues or lists o new publications are available ree o charge rom the above address, orby email: [email protected]. Visit our web site: www.ilo.org/publns.

Photocomposed in Switzerland by ILO D P

ISBN 978-92-2-122732-8 (Printed version)ISBN 978-92-2-122733-5 (Web pd )

First published 2009

Tis Report may also be consulted on the ILO web site (www.ilo.org).


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Contents

Table of contents ........................................................................................................................................... v

Acknowledgements ......................................................................................................................................... vii

Introduction .................................................................................................................................................... 1

Chapter 1: Recent trends in employment and unemployment, with a discussion of the situation ofdeveloping countries ................................................................................................................................ 5

1.1 Falling employment and rising unemployment ................................................................................ 51.2 Women and men are a ected di erently ......................................................................................... 7

1.3 Youth unemployment ...................................................................................................................... 71.4 Unemployment and discouraged workers ........................................................................................ 91.5 World crisis but di erent labour market outcomes .......................................................................... 91.6 imely labour market data ............................................................................................................... 101.7 Te impact o the crisis in developing countries .............................................................................. 10

Chapter 2: Survey of employment and social protection measures taken by governments to counterthe crisis .................................................................................................................................................... 15

2.1 Te ILO survey ................................................................................................................................ 152.2 Te OECD inventory and assessment ............................................................................................. 18

Information Annex 1: Employment and social policy measures in response to the crisis .................. 251. Measures to create and retain employment ............................................................................................ 25

1.1 In rastructure spending .................................................................................................................... 251.2 Direct nancial support to enterprises ............................................................................................. 271.3 Adjusting labour conditions to t current demand .......................................................................... 28

2. Assessing the salience o labour market policies ...................................................................................... 292.1 Te public employment service ....................................................................................................... 292.2 Skills and training ............................................................................................................................ 312.3 Hiring subsidies ............................................................................................................................... 32

3. Supporting the unemployed and social protection .................................................................................. 333.1 Current bene t schemes .................................................................................................................. 34

3.2. Social assistance .............................................................................................................................. 354. Social dialogue and rights at work .......................................................................................................... 37


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Tis report has been prepared by sta o the Inter-national Labour Ofce, with contributions rom Dun-can Campbell, Marva Corley-Coulibaly, Philippe Egger,Iyanatul Islam, Bob Kyloh, Nomaan Majid, MoazamMahmoud, Stephen Pursey, Catherine Saget and Valen-tina Stoevska. Sta rom the regions, country ofces andtechnical departments contributed with the collectiono in ormation, policy reviews and comments.

Te OECD contribution has been prepared by JohnMartin, Ste ano Scarpetta and Danielle Venn.

Valuable comments received on the dra t report aregrate ully acknowledged, in particular rom DominiqueDesruelle (IMF), Ariel Fiszbein (World Bank), JrgenMayer (UNC AD), Danielle Venn and Ste ano Scar-petta (OECD), and Stephen Richards (United King-dom).

Acknowledgements


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On 2 April 2009, at the London Summit on Growth,Stability and Jobs, the G20 Leaders adopted a GlobalPlan or Recovery and Re orm. In paragraph 26 o theirstatement, the G20 Leaders address the employmentand social dimensions o the crisis and ormulate a spe-ci c request to the ILO, as ollows:

We recognise the human dimension to the crisis. We commit to support those a ected by the crisis by creating employment opportunities and through in-come support measures. We will build a air and am-ily- riendly labour market or both women and men.

We there ore welcome the reports o the London JobsCon erence and the Rome Social Summit and the key principles they proposed. We will support employmentby stimulating growth, investing in education and train-ing, and through active labour market policies, ocusingon the most vulnerable. We call upon the ILO, working

with other relevant organisations, to assess the actionstaken and those required or the uture.

Te present report responds to the G20 request. It issubmitted to the G20 Leaders Summit in Pittsburgh,United States, on 24-25 September 2009. It was pre-pared under very tight time constraints. It should beread in conjunction with the companion text submittedto the G20 Leaders.1

Te report is organised as ollows.Chapter 1 presents recent employment and unem-

ployment data, covering a selection o countries span-ning all regions and income levels. It includes a dis-cussion o the situation o developing countries in thecontext o the global nancial and economic crisis.

Chapter 2 presents a survey o measures taken orannounced by countries or employment and social

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ILO. 2009. Protecting people, Promoting Jobs: From crisisresponse to recovery and sustainable growth. ILO communication tothe G20 Leaders Summit in Pittsburgh, 24-25 September 2009.

protection between mid-2008 and 30 June 2009 in re-sponse to the crisis.

Tis in ormation was collected by the ILO in closecollaboration with national authorities. Te survey cov-ers the ollowing our broad areas:

(i) stimulating labour demand;(ii) supporting jobs, jobseekers and unemployed;(iii) expanding social protection and ood security;(iv) applying social dialogue and protecting rights at

work.

Te survey covers 54 countries, including all G20countries. A more detailed inventory with a brie de-scription o the measures taken by each country will bemade available through the ILO web site.

Tis chapter also includes a section produced by the OECD that examines the size and employmentimpact o the scal and labour market policy packagesin OECD countries, and identi es the main orienta-tions o the discretionary labour market policy measurestaken by the di erent countries.

In ormation Annex 1 seeks to illustrate more con-cretely the range o measures taken by individual coun-

tries to stimulate labour demand, protect jobs and theunemployed, extend social protection and promote socialdialogue. It is accompanied by initial comments with re -erence to recent knowledge and literature. Tis is prelim-inary and a work in progress. It will be urther developedon the basis o additional inputs by G20 countries, ILOconstituents and relevant international organizations.

Tis in ormation will be submitted or discussionand review to the Governing Body o the InternationalLabour Ofce, at its orthcoming session o November2009.

Te product o this process will be available to theG20 or any ollow-up decided by leaders on theseissues.

Introduction


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Annex 2 lists the 54 countries in the ILO sample by region and income category.

Annex 3 provides an inventory o measures takenacross a sample o 54 countries, including all G20countries, or the 32 measures identi ed in the ILOsurvey.

Annex 4 estimates the aggregate employment e ect o the stimulus measures taken by countries. Te estimationprovides an order o magnitude o employment saved orgenerated by the extraordinary measures taken.

Annex 5 presents our possible scenarios or recov-ery in global employment depending on the strength o economic recovery and its employment intensity.


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Chapter 1

I most cou tries, sharp emplo me t losses havebee registere as o the thir quarter o 2008. Tesehave co ti ue i to the seco quarter o 2009, accor -i g to the most rece t ata available. Figure 1.1 epictsthis tre or the G20 cou tries as well as the G20 aa a itio al 34 cou tries.2

1.1 Falling employment and risingunemployment

I the group o G20 cou tries,3 total emplo me tha bee o a risi g tre o 1.6 per ce t per ear si ce

earl 2002. I the perio rom March 2008 to March2009 total emplo me t ecli e b -0.8 per ce t oaverage.

U emplo me t has ollowe a i verse tre (Fig-ure 1.2). Te average u emplo me t rate showe aupwar tre i 2008 which co ti ue i the rsthal o 2009. Te average u emplo me t rate or G20cou tries i March 2009 stoo at 8.5 per ce t, or 1.5perce tage poi ts higher tha a ear earlier. Te total

umber o u emplo e , or the sample o cou tries, iMarch 2009, was 23.6 per ce t higher tha i March2008.

Accor i g to the ata available or a more limiteumber o cou tries, the umber o u emplo e iMa 2009 was 29.6 per ce t higher tha a ear earlier.

Tere are i itial sig s that the pace o eterioratioma be mo erati g. Accor i g to ata or April-Ju e2009 available or a limite umber o cou tries, thei crease i u emplo me t has slowe ow compareto the rst quarter o 2009.

able 1.1 ispla s the latest (as at e Jul 2009)u emplo me t rate or 34 cou tries, i clu i g G20

2 See able 1.1 or list o 34 cou tries.3

I the abse ce o mo thl or quarterl ata or Chi a, I ia aSau i Arabia, it is assume that these cou tries have the same tre asthe average or the cou tries with ata i the group.

cou tries. Te u emplo me t rates i 31 o 34 cou -tries (i clu i g 16 o 17 G20 cou tries) with quarterl or mo thl ata or 2009 are higher compare to a earearlier. O l I o esia, the Philippi es a Mauritiusshowe a ecrease i the u emplo me t rate i earl 2009 compare to a ear earlier.

Amo g the cou tries with ata or the rst a theseco quarter o 2009, the u emplo me t rate hasi crease close to 8 perce tage poi ts i Spai , moretha 5 poi ts i Irela , Latvia a urke , 4 poi tsi the U ite States, 3 poi ts i the Czech Republic,

2.5 poi ts i Ca a a, 2.2 poi ts i Ukrai e, 1.9 poi tsi the U ite Ki g om, 1.5 poi ts i Fra ce a 1.4poi ts i the Russia Fe eratio . I Brazil the latest u -emplo me t rate or Jul 2009 (8.0 per ce t) is actuall lower tha i Jul 2008.

A majorit o the G20 cou tries have recor e majori creases i the umber o u emplo e i the past 12mo ths. From Ju e 2008 to Ju e 2009, total u emplo -me t i crease b 69 per ce t i the U ite States, 44per ce t i Ca a a, 42 per ce t i Australia, 26 per ce ti the Republic o Korea a 22 per ce t i Ukrai e. Ithe ear to Ma 2009 u emplo me t i crease i the

Russia Fe eratio b 83 per ce t; i the ear to April2009 it i crease b 55 per ce t i urke ; a i theU ite Ki g om it i crease b 38 per ce t i the earto March 2009. Te umber o u emplo e i Brazilshows a upwar tre rom Ja uar 2009.

Job opportu ities i urba areas i Chi a also ellsig i ca tl . I the rst quarter o 2009, the i creasei total emplo me t i urba areas relative to the sameperio i 2008 was 1.2 millio people or 1 per ce t, sig-

i ca tl lower tha the 2.6 per ce t i crease recor ei the same perio i 2007-2008.

Emplo me t i ma u acturi g has bee i sharpecli e i some cou tries. A all o more tha 10 per

ce t over the same perio o 2008 has bee observe ,

Rece t tre s i emplo me t a u emplo me t, with a iscussio o the situatio o evelopi gcou tries

Chapter 1


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RECEn REndS In EMPLOyMEn And UnEMPLOyMEn

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amo g others, i Ca a a, the U ite States, Spai , athe U ite Ki g om.

able 1.1 also shows or 17 cou tries the historicalhigh i the u emplo me t rate over the last 40 ears.4 I a majorit o these cou tries (13) the u emplo me trate is lower i earl 2009 tha the historical high. It isequal or ver close i 3 cou tries (Japa , Swe e athe U ite States) a higher i 2009 i o e cou tr ( urke ).

1.2 Women and men are a ected di erently

Te u emplo me t rate has bee i creasi g or wome as well as or me . Te u emplo me t rate

or wome is, o average, higher tha or me . I therst mo ths o 2009 it has rise more slowl tha or

me i most o the 29 cou tries with ata. As a resultthe ge er gap i u emplo me t rates has temporar-il reverse i urke , Mexico, Australia, Hu gar aGerma where the male u emplo me t rate is ow higher tha the emale o e. Tis ma cha ge shoul the weak ess i the labour market persist.

depe i g o the ge er compositio o occupa-tio s, i some cou tries me have bee hit rst b job

4 Te u emplo me t rates are ot strictl comparable as e i-tio s a metho s var over such a lo g perio .

losses. Te i crease i the umber o u emplo e me iBrazil i the ear to Ma 2009 was twice that or wome .I the U ite States, the umber o u emplo e me i Ju e 2009 was almost 80 per ce t higher tha i Ju e2008. Over the same perio , the umber o u emplo e wome i crease b 57 per ce t. Similar patter s areobserve i Australia, Ca a a, Chile, Colombia, Mexi-co, new Zeala , Republic o Korea, Taila , Latvia,Spai , Swe e , the U ite Ki g om a urke .

I other cou tries wome have bee hit rst, orexample i textile export i ustries i Asia. data orthe most rece t mo ths, however, show that the i -crease i emale u emplo me t is rapi l catchi g upthat or me .

1.3 Youth unemployment

youth (15-24 ears) u emplo me t rates i the rsthal o 2009 show a stro g i crease with respect to 2008i those cou tries that publish such ata. For i sta ce,i the Europea U io (EU27) the outh u emplo -me t rate i Ju e 2009 reache 19.7 per ce t, com-pare to 15.4 per ce t i Jul 2008, a i crease o over4 poi ts (Eurostat). Similar sharp i creases are observei several other cou tries, i clu i g Japa , norwa ,

urke a the U ite States.


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Table 1.1 Unemployment rate (most recent month o 2009) and change rom the corresponding month o 2008

CountryLatestperiod Source

Unemploymentrate (%)

Changeon year(pps)

Historicalhigh o URover last 40

years (%) Year

Wageemployment(% o total )

Mauritius Feb-09 LFS 8.0 -0.2 80.0

South Africa May-09 LFS 23.6 0.5 84.4

Argentina Feb-09 LFS 8.6 0.2 75.8

Brazil May-09 LFS 8.8 0.9 14.1 1981 76.1

Canada Jun-09 LFS 8.1 2.5 12.0 1983 83.9

Chile Apr-09 LFS 10.2 2.3 68.7

Colombia Apr-09 LFS 11.9 0.8 48.9

Mexico Feb-09 LFS 5.1 1.1 6.2 1995 67.1

Peru Mar-09 LFS 9.3 0.0 61.5United States Jun-09 LFS 9.7 4.0 9.7 1982 93.4

Uruguay May-09 LFS 8.1 0.9 69.8

Australia Jun-09 LFS 5.7 1.6 10.6 1993 88.7

China Dec-08 Est. 4.2 0.2

Japan May-09 LFS 5.2 1.2 5.4 2002 86.4

Indonesia Feb-09 LFS 8.1 -0.3 27.7

Korea, Republic of Jun-09 LFS 3.9 0.8 7.0 1998 69.6

Philippines Apr-09 LFS 7.5 -0.5 51.9

Thailand Feb-09 LFS 2.1 0.4

Czech Republic May-09 Admin.records

8.0 3.0 8.9 2000 83.4

France Feb-09 LFS 8.9 1.5 89.1

Germany Jun-09 Admin.records

8.1 0.6 11.1 2005 88.4

Hungary Feb-09 LFS 9.7 1.7 87.2

Ireland Feb-09 LFS 10.1 5.5 16.9 1986 82.6

Italy Feb-09 LFS 7.9 0.8 12.0 1987 74.8

Latvia Mar-09 Admin.records

10.7 5.8 88.5

Netherlands Apr-09 Off. Est. 4.6 0.5 86.8

Poland May-09 Admin.

records

10.8 0.8 19.9 2000 77.1

Romania May-09 Admin.records

5.8 2.0 69.2

RussianFederation

Feb-09 LFS 8.5 1.4 12.9 1999 92.7

Spain Feb-09 LFS 17.5 7.9 22.9 1995 83.0

Sweden Apr-09 LFS 8.3 2.3 8.2 1993 89.5

Turkey Apr-09 LFS 14.9 5.0 10.5 2003 60.2

Ukraine Mar-09 LFS 9.5 2.4 82.0

United Kingdom Feb-09 LFS 7.1 1.9 11.8 1984 86.2

Source: ILO Department o Statistics, http://laborsta.ilo.org.The data shown are those available to the ILO on 20 July 2009. They have been received or drawn rom o fcial national

statistical services, publications and web sites. The data are based on national defnitions, are not seasonally adjusted, and havenot been adjusted or altered by the ILO.


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1.4 Unemployment and discouraged workers

Te statistics o emplo me t a u emplo me t oot ull re ect the exte t o the emplo me t prob-

lem. I a itio to the risi g umbers o u emplo e ,ma cou tries are wit essi g sig i ca t i creases ithe umber o iscourage workers. Tis group o the worki g age populatio that is available a willi g to work but oes ot seek emplo me t, i take i to ac-cou t, woul sig i ca tl i crease the total umber o u emplo e a co seque tl the u emplo me t rate.

able 1.2, with ata or mostl 2008, gives a i ica-tio o the size o the iscourage workers populatio ,eve be ore the crisis.

Job losses a u emplo me t, particularl wheprolo ge , e tail high perso al a social costs, i the

orm o loss o skills, loss o co e ce, risi g healthcare costs a risi g crime. Te Commissio o theMeasureme t o Eco omic Per orma ce a SocialProgress chaire b Pro essors Stiglitz a Se provi esa importa t remi er o these costs ill recor e i cur-re t i icators.5

5 See www.stiglitz-se - toussi. r/e /i ex.htm.

1.5 World crisis but di erent labour marketoutcomes

Whe eco omic activit ecli es, the umber o jobs available ecli es a the umber o perso s look-i g or a job i creases. Tis is what the ata epict. A sharp (mo erate) rop i GdP woul logicall lea toa sharp (mo erate) i crease i u emplo me t. Tis isveri e or a umber o cou tries as illustrate i able1.3 i the case o Spai a Brazil respectivel . Howeveri a umber o cou tries a sharp rop i GdP (as iGerma a Mexico or i sta ce) is givi g rise to o l a mo erate i crease i u emplo me t. A i somecou tries with o l a mo erate ecrease i GdP (irelative terms) u emplo me t has rise sharpl . Tesevariatio s ca o l be explai e b i ere ces i cou -tr situatio s a labour market policies.

I act a sharp recessio ca be cushio e b a stro gi crease i part-time emplo me t (as i Germa ), b perso s with rawi g rom the labour orce (as i Japa )or b more perso s available or work but ot activel looki g or work ( iscourage workers as i Mexico) as well as b a i crease i perso s worki g i the i ormalsector (as ma be the case i I o esia with less tha 30per ce t o the labour orce i wage emplo me t).

Source: National statistical web sites and Eurostat database. Expanded unemployment rate calculated by dividing the numbero unemployed and discouraged workers by the number o economically active persons and discouraged workers. Defnition odiscouraged workers may vary across countries.

Table 1.2 Discouraged workers

Country Period Discouraged workers(000)

Unemployment rate,%

ExpandedUnemployment rate,%

South Africa Q2-09 1517 23.6 29.7

Brazil Mar-09 927 9.0 12.6

Mexico Q1-09 5656 5.1 15.6

United States Jun-09 2176 9.7 10.9

Czech Republic 2008 11 4.4 4.6

France 2008 128 7.4 7.8

Germany 2008 255 7.5 8.0

Hungary 2008 138 7.8 10.8

Italy 2008 1810 6.7 13.0Netherlands 2008 115 2.8 4.0

Poland 2008 488 7.1 9.7

Portugal 2008 24 7.6 8.0

Romania 2008 299 5.8 8.5

Spain 2008 348 11.3 12.7

Turkey 2008 681 9.4 11.9

United Kingdom 2008 74 5.6 5.9


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a result o the global crisis. Te growth rates or cou tr groups are give below i able 1.5.

All cou tr groups i able 1.5 show egative percapita GdP growth i 2008-2009 save two, amel me-ium-i come evelopi g a least evelope cou tries.

Tis is also re ecte i the two categories o evelop-i g high ma u acturi g exporters a high commo -it exporters. Te largest egative growth i per capitaGdP is recor e or tra sitio CIS cou tries. Most e-velopi g cou tries are registeri g stro g eceleratio igrowth rates rather tha egative growth rates.

able 1.6 below shows the cou tr cou t o egativegrowth episo es i GdP per capita or two co secutiveperio s, 2007-2008 a 2008-2009. Te latter perio

is a estimate.able 1.6 shows a egative cha ge i GdP per capita

i 2008-2009, i earl all a va ce eco omies o the worl a the majorit o tra sitio eco omies. I amajorit o core evelopi g cou tries,7 we that

egative growth cou tries are comparativel ewer.Tere is a sig i ca t mi orit - 29 out o 92 - amo gstthe least evelope a me ium-i come evelopi gcou tries (with arou 17 per ce t o the evelopi gcou tr populatio ) that are orecast to register egativegrowth i 2008-2009.

I 81 out o 123 evelopi g cou tries (with arou

83 per ce t o the populatio o evelopi g cou tries)the IMF orecasts positive growth i 2008-2009. How-ever, there is a ear u iversal eceleratio i growth ithese eco omies. we t - our cou tries with a popula-tio o arou 52 per ce t o the evelopi g worl haveper capita GdP growth rates that are still i excess o 3 per ce t or 2008-2009. Te remai i g (57) positive

o exports); the are i clu e i me ium-i come evelopi g cou tries.Me ium evelopi g a least evelope are re erre to as core evel-opi g cou tries.

7 Me ium-i come a least evelope cou tries are re erre toas core evelopi g cou tries co stituti g over 75 per ce t o cou -

tries i the evelopi g worl a over 93 per ce t o its populatio .For etails o classi catio , see Ghose, Maji a Er st (2008): TeGlobal Emplo me t Challe ge, ILO.

Co versel , the sharp i crease i u emplo me t iCa a a a the U ite States, with a more mo erate co -tractio i eco omic activit (GdP co tractio o -2.3a -2.6 per ce t estimate or 2009 respectivel relativeto -6 per ce t or more i Germa a Japa ), ca beexplai e b more reactive emplo me t relatio ships.

1.6 Timely labour market data

Comprehe sive a timel ata o tre s i the labour

market is esse tial or i orme public ebate a polic purposes. yet serious e cie cies prevail i this area. O 181 cou tries, 65 cou tries (36 per ce t) pro uce mo thl or quarterl labour orce surve s, whereas 116 cou triespro uce a ual surve s a some o l irregularl .

1.7 The impact o the crisis in developingcountries

Most evelopi g cou tries6 will experie ce growthco tractio s i 2008-2009 compare to 2007-2008 as

6 Least evelope eco omies e e as per U ite natio s classi -

catio (http://u stats.u .org/). From the remai i g evelopi g eco o-mies, ot i clu e are high-i come evelopi g cou tries (GdP percapita >$10,000 i 2003) a oil exporters (oil exports >50 per ce t

Table 1.3 Decreases in GDP and increases in unemployment are country specifc

Observed increase in unemployment

2009 estimated decrease in GDP Sharp (>1.6 percentage points) Moderate (4 per cent) Spain, United Kingdom Germany, Italy, Japan, Mexico

Moderate (< 3 per cent) Australia, Canada, United States Brazil, Indonesia

Source: GDP data or 2009 rom IMF, unemployment data rom Table 1.1.

Table 1.4 Frequency o labour orce surveys

Number o countries

Monthly 19

Quarterly 46

Six-monthly 1

Annually 78

Irregular over 2004-08

1 survey 17

2 surveys 6

3 surveys 14

Total countries 181Source: ILO.


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Tese cha ges woul a versel a ect the achieveme to povert -relate MdGs, although it is ot clear how global povert rates will be a ecte .8 I its mi -2009up ate o the worl eco omic situatio , the U ite

8 Che a Ravallio (2009).Te impact o the global fnancial crisis on the worlds poorest . Tese authors show that global povert rates will co ti ue to all rom 42 to 39 per ce t or $2 povert a

rom 21 to 18 per ce t or $1.25 povert .

growth evelopi g eco omies are expecte to have percapita growth o less tha 3 per ce t.

Actual ata o povert rates pre- ate the crisis. Baseo historical relatio ships betwee growth a povert ,it is likel that i those cou tries with ecelerati ggrowth, the rates o ecli e i povert will also ecli e.For egative growth eco omies, povert rates ma welli crease.

Table 1.5 Change in GDP per capita (Country group aggregates)

2007-2008 2008-2009

Industrialized 2.3 -3.3

Transition-CIS 7.7 -4.2

Transition-CEE 6.5 -1.8

Developing-petrol exporters 5.1 0.4

Developing-high income 3.4 -4.7

Developing-medium income 7.4 2.4

Developing-LDC 6.7 2.1

All countries 4.1 -1.7

Developing high manufacturing exporters 7.4 2.4

Developing high commodity exporters 6.3 2.4

Calculations based on data rom IMF (2009). World Economic Outlook April, 2009.

Note: A high manu acturing exporter is defned as a country whose manu acturing exports constitute over 50 per cent o itsmerchandising exports. A high commodity exporter is defned as a country whose commodity exports constitute greater than 30per cent o its merchandising exports. High commodity and high manu acturing exporters are not exclusive o the 123 developingcountries.

Table 1.6 Frequency o countries with negative growth rates in GDP per capita (PPP)

Year-on-year growth

2007-2008 2008-2009

Industrialized 1/23 22/23

Transition-CIS 0/12 6/12

Transition-CEE 2/13 11/13

Developing-oil exporters 1/17 5/17

Developing-high income 1/14 8/14

Developing-medium income 0/44 19/44

Developing-LDC 1/48 10/48

All developing countries 3/123 42/123

Developing-high manufacturing exporters 0/27 11/27

Developing-high commodity exporters 1/20 6/20Calculations based on data rom IMF (2009).


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rate o growth o emplo me t. Both tre s will i creaseu emplo me t, but also i crease the alrea bloatei ormal eco om with higher u eremplo me t alower pro uctivit . decli es i remitta ces will lowerthe co sumptio o receivi g househol s, which ma be close to the povert li e. Where poor househol s are

irectl i tegrate i to the export eco om as labourersor as pro ucers, ecli i g commo it export prices willa ect their livi g sta ar s more irectl .

I Lati America a the Caribbea u emplo me ti crease o average to 8.5 per ce t i the rst quartero 2009 compare to 7.9 per ce t i the rst quarter o 2008, equivale t to over o e millio u emplo e .

Rece t ofcial ata i I o esia a Taila cor-roborate the expa sio o i ormal emplo me t.12 II o esia, the umber o wage emplo ees expa e b 1.4 per ce t betwee Februar 2008 a Februar 2009,

while the umber o casual workers ot i agriculturei crease b arou 7.3 per ce t uri g the perio . ITaila , rst quarter 2009 gures i icate that the

umber o wage emplo ees grew b 104,000 or b 0.6per ce t, solel as a result o expa sio i gover me templo me t. O the other ha , the umber o ow -accou t a co tributi g amil workers combi e i -crease b 566,000 compare to the previous ear, orb 3.2 per ce t. Tis suggests a sig i ca t i crease ipoor qualit i ormal work.

Te ull impact o the crisis o people i evelopi gcou tries, particularl lower-i come o es, is et to be

ull assesse .

12 Hu h, P., Kapsos, S., Beom Kim K., Sziraczki, G. 2009. Im-pacts o Curre t Global Eco omic Crisis o Asias Labour Market,ILO, Ba gkok.

natio s states: the crisis poses a sig i ca t threat to the worl eco omic a social evelopme t, i clu i g the

ul lme t o the Mille ium developme t Goals aother i ter atio all agree evelopme t goals.9

Te U ite natio s estimates that betwee 73 a103 millio more people will remai i or all i to pov-ert compare to a o-crisis tre . Tis is equivale tto a 1.3 per ce t i crease i the povert i ci e ce ithe evelopi g worl . Te Worl Ba k estimates thathal o evelopi g cou tries coul experie ce a rise iextreme povert i 2009.10

I its Least develope Cou tries Report 2009,UnC Ad argues that the impact o the global eco-

omic crisis is likel to be so severe i least evelopecou tries that busi ess as usual is o lo ger possible.Tis will ecessitate a rethi ki g o the evelopme tpara igm.11

Te eco omic crisis has se t shocks to evelopi gcou tries a tra sitio eco omies through sig i ca t

ecli es i exports, capital i ows a remitta ces. Wi e i g curre t accou t e cits a epreciati g ex-cha ge rates are also observe . All o these cha els,separatel a together, a ect the worki g a livi gco itio s o people.

decli i g exports o te mea the loss o mo er sec-tor jobs, i.e. goo jobs relative to i ormal eco om

workers. decli es i capital i ows will a ect the uture

9 U ite natio s. 2009. Worl Eco omic Situatio a Pros-pects 2009, new york.

10 Worl Ba k. Global Mo itori g Report 2009.11 UnC Ad. Te Least develope Cou tries Report 2009,

U ite natio s, Ge eva.


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15

Survey o employme a d social pro ec iomeasures ake by cou ries o cou er he crisis

Chap er 2

Tis chap er has wo mai sec io s. Sec io 1prese s he mai di gs o he ILO survey o meas-ures ake by cou ries o cou er he crisis across ourbroad areas:

(i) s imula i g labour dema d;(ii) suppor i g jobs, jobseekers a d u employed;(iii) expa di g social pro ec io a d ood securi y;(iv) applyi g social dialogue a d pro ec i g righ s a

work. Across hese our headi gs, 32 speci c measures are

ide i ed, ormi g he basis o he survey carried ou .Te 32 measures surveyed re ec he co clusio s

reached by he Lo do Jobs Co ere ce (24 March2009), he expa ded G8 Rome Social Summi (29-31March 2009), a d he Global Jobs Pac adop ed by heI er a io al Labour Co ere ce i Ju e 2009.

Sec io 2 has bee prepared by he OECD. I com-pleme s he previous a alysis by exami i g he sizeo scal a d labour marke policy packages or OECDcou ries a d assessi g heir impac o employme .Te sec io draws ex e sively rom he a alysis o he

jobs crisis co ai ed i he 2009 edi io o he OECDEmployme Ou look.

Employment impact o the measures taken

Te ILO has es ima ed he scale o he di ere cehe policy respo ses are maki g. Al hough u employ-

me a d o her i dica ors o labour marke dis resshave i creased sig i ca ly over he las 12 mo hs,

hey would have i creased eve more had hese meas-ures o bee ake . Te ILO es ima es, o he basiso IMF calcula io s, ha discre io ary scal expa sio ,

oge her wi h au oma ic s abilisers, will have crea ed orsaved i 2009 be wee 7 a d 11 millio jobs i heG20 cou ries. Te jobs crea ed or saved are equivale

o be wee 29 a d 43 per ce o o al u employmei G20 cou ries i he rs hal o 2009. Wi hou such

spe di g u employme could have bee ha muchhigher i hese cou ries. Fur her de ails o his es ima eare ou d i A ex 4.

2.1 The ILO survey

Te i orma io or he survey was collec ed by heILO rom ofcial sources or 54 cou ries.13 Te samplei cludes all G20 cou ries a d provides a regio al, as

well as a i come ca egory, bala ce.Te survey covers ew measures or employme a d

social pro ec io a ou ced or ake by cou ries be-wee mid-2008 a d 30 July 3009. I here ore doeso i clude measures i place be ore Ju e 2008. I ad-

di io , i orma io is limi ed o measures ake or a -ou ced by a io al or ederal gover me s, excludi g

i i ia ives ake by dece ralised e i ies. A ex 3 provides a i ve ory o measures ake by

each cou ry across he 32 i ems ide i ed i he ILOsurvey.

Overview o measures taken

I he period be wee mid-2008 a d 30 Ju e 2009,cou ries have ake measures o:

S imula e employme ge era io by:(i) i ves i g public resources or i ras ruc ure o

all ypes;(ii) providi g addi io al suppor hrough credi a-

cili ies, ax reduc io s a d ech ical guida ce osmall e erprises i par icular;

(iii) gra i g subsidies a d reduc io s i social securi y co ribu io s o e erprises o lower he cos o re-

ai i g workers i jobs a d acili a i g ew hires;(iv) re ai i g workers i jobs hrough worki g ime

reduc io s, par ial u employme be e s, la-bour cos reduc io s a d rai i g schemes.

13 See lis i A ex 2.


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PROtECtInG PEOPLE, PROMOtInG JOBS

16

O average each cou ry (a a io al or ederal level)has ake jus over e ew measures (over he periodi dica ed) across he 32 measures ide i ed i he ILOsurvey. For each o he our broad areas ide i ed above,each cou ry has ake o average close o our ew measures o s imula e labour dema d, be wee wo a d

hree measures o suppor jobseekers a d u employed,be wee wo a d hree measures o expa d social pro-

ec io a d o e measure o s imula e social dialoguea d righ s a work.

table 2.1 illus ra es he reque cy o measures akeby each cou ry, across he 32 measures ide i ed i

he ILO i ve ory.

Tere are some clear pa er s i he composi io o

he measures ake by cou ries depe di g o heiri come ca egory. Lower-i come cou ries have ake ,o average, a sligh ly lower umber o measures a dhigher-i come cou ries a sligh ly higher umber o measures. All cou ries have give high priori y o

ew or addi io al i ves me s i i ras ruc ure wi h

Provide i come suppor o workers a d amilieshrough:

(i) ex e sio o u employme be e s;(ii) ex e sio o a d adjus me s i heal h be e sa d old-age re ireme be e s;

(iii) expa sio o cash ra s er programmes a d so-cial assis a ce programmes.

Suppor u employed a d jobseekers hrough:(i) s re g he i g o public employme services;(ii) expa sio o rai i g programmes a d acili-

ies.

S imula e social dialogue a d co sul a io s wi hbusi ess a d labour o measures o cou er he crisis

hrough:(i) a io al a d sec oral co sul a io s be wee

busi ess a d labour a d wi h gover me s;(ii) a io al a d sec oral agreeme s be wee busi-

ess, labour a d wi h gover me s;(iii) e erprise co sul a io s a d agreeme s.

Table 2.1 Frequency o measures taken across sample countries

1. Stimulating labour demand ( %) 2. Supporting jobseekers, jobs and unemployed ( %)

Additional fscal spending on in rastructure 87.0 Additional training measures 63.0

with employment criteria 33.3 Increased capacity o public employmentservices

46.3

with green criteria 29.6 New measures or migrant workers 27.8

Public employment 24.1 Working time reductions 27.8

New or expanded targeted employmentprogrammes

51.9 Partial unemployment with training and part-timework

27.8

Access to credit or SMEs 74.1 Wage reductions 14.8

Access to public tenders or SMEs 9.3 Extension o unemployment benefts 31.5

Subsidies and tax reductions or SMEs 77.8 Additional social assistance and protectionmeasures

33.3

3. Expanding social protection and ood security 4. Social dialogue and rights at work

Social security tax reductions 29.6 Consultations on crisis responses 59.3

Additional cash trans ers 53.7 Agreements at national level 35.2

Increased access to health benefts 37.0 Agreements at sectoral levels 11.1

Changes in old-age pensions 44.4 Additional measures to fght labour tra fcking 3.7

Changes to minimum wages 33.3 Additional measures to fght child labour 3.7

New protection measures or migrant workers 14.8 Changes in labour legislation 22.2

Introduction o ood subsidies 16.7 Increased capacity o labour administration/ inspection

13.0

New support or agriculture 22.2

Source: ILO survey.


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SURVEY OF EMPLOYMEnt AnD SOCIAL PROtECtIOn MEASURES

17

i g a d middle-i come cou ries 0.7 per ce o GDP.table 2.3 provides, or a selec io o cou ries, a i -dica io o he ra ge o spe di g o i ras ruc ure.

Timing o measures

Te s ar da es o impleme a io are repor ed orhal o he measures surveyed by he ILO. Te largemajori y o he measures a ou ced are aki g e ec i2009, wi h a small propor io (5 per ce ) a ou ced

or 2010. A clear spike i a ou ceme o measuresis o ed i Ja uary 2009 a d i April 2009. Te Lo -do Summi ook place o 2 April 2009. Some 15 per

ce o he measures are limi ed i ime, mos ly ax cu sor e erprises, social assis a ce measures or he u em-ployed a d social pro ec io righ s gra ed o migra

workers.

Additional spending or vulnerable groups 15

Cou ries across all i come groups have aimed oi crease spe di g or more vul erable social groups.

Across he ILO survey sample he ollowi g measuresca be highligh ed.

29 per ce o cou ries ex e ded he scope o u employme be e s o ew ca egories, i clud-

i g workers wi h shor co ribu ory his ory a d15 Te U i ed na io s repor , Global Impac a d Vul erabili y

Aler Sys em (GIVAS), o which he ILO has co ribu ed, reviews heimpac o he crisis o vul erable people.

he aim o ge era i g employme . However, middlea d lower-i come cou ries have also i ves ed sig i -ca ly i he expa sio o social pro ec io , whereasadva ced cou ries have i ves ed more i labour mar-ke policies. table 2.2 illus ra es he varia io s i hecomposi io o measures ake .

Te umber o measures ake is o i dica io perse o e ec ive ess. More i erve io s are o ecessar-ily be er. A more reduced, bu well i egra ed, packageo measures may be pre erable o a ple hora o small,poorly a ced a d/or desig ed i erve io s. O ly more de ailed a alysis o he impac o he measures

ake would allow such a assessme .

Size and composition o fscal packages

Te IMF repor s ha he average size o discre io ary scal measures i 2009 is 1.9 per ce o GDP i ad-

va ced G20 cou ries, wi h approxima ely 30 per ceexpe ded o i ras ruc ure, a d 2.2 per ce o GDP iemergi g a d developi g G20 cou ries, wi h approxi-ma ely 50 per ce expe ded o i ras ruc ure.14

For low-i come cou ries he ILO es ima es hacou ries are i ves i g o average approxima ely 1 perce o heir GDP o i creased i ras ruc ure spe d-

14 Hor o , Mark; Ma moha Kumar; Paolo Mauro. 2009. TeS a e o Public Fi a ces: A cross-cou ry scal mo i or, IMF S a Posi io no e, July.

Table 2.2 Average number o measures taken by category and country income group

Country sample byincome group

Stimulatinglabour demand

Supporting jobs,jobseekers andunemployed

Expanding socialprotection and

ood security

Social dialogueand rights atwork

Total

Low income (10) 2.9 1.2 2.3 0.8 7.2

Lower middle income (10) 3.8 2.3 3.2 1.4 10.7

Upper middle income(17)

3.9 2.9 2.5 1.6 10.9

High income (17) 4.4 3.7 2.3 1.8 12.2

Average 3.8 2.5 2.6 1.4 10.3

Source: ILO survey.

Table 2.3 2009 spending on in rastructure, as percentage o GDP

Bangladesh 0.1 Egypt 0.8 Peru 2.2

Cambodia 0.2 Jordan 2.2 Romania 1.0

Chile 0.4 Kenya 1.5 Tanzania (United Rep. o ) 1.6

Colombia 0.2 Malaysia 0.6 Uruguay 1.6

Costa Rica 0.8 Pakistan 0.2 Viet Nam 1.7Source: IMF country reports; ILO survey.


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19

Table 2.4 Selected examples o targeting o measures

Low income Lower middle income Upper middle

income

High income

Increased supportto low-incomehouseholds

Kenya (mentallychallenged),Bangladesh (destitutewomen and others),Nepal (children, elderly,deprived castes),Viet Nam

India (widows, disabled),China (returningmigrants), Philippines(CCT*, very poor)

Argentina, Brazil,Colombia, Costa Rica,Peru, Honduras,South A rica,Malaysia, Chile,Romania,Russian Fed.

Czech Republic, France,Germany, Hungary, Italy,United Kingdom, Korea (Rep.o ), United States, Australia,Saudi Arabia, Spain

Increased targetingo employmentprogrammes at thepoor

Cambodia (smallprojects in rural areas),Viet Nam (in rastructurein poorest districts)

Philippines, Pakistan,India,South A rica

Uruguay (long-term and olderunemployed), Peru(low-income youth),Serbia (regions),Turkey (poor regions),China (regions withlow credit availability),Mexico (poor regions)

France, Netherlands (low-skilled, low-paid), Romania(poor regions), RussianFederation (single-industrycities), Spain (unemployed),Chile (high-unemploymentregions), Dominican Rep. (low-income households), UnitedStates (credit or rural anddistressed neighbourhoods),Saudi Arabia (less developedregions), Korea (Rep. o ). (low-income, poor regions), Japanand Australia (disabled),Hungary (depressed areas)

Increasing coverageor level o old-age pension andsupport to theelderly

Tanzania (United Rep.o ), Kenya, Bangladesh,Nepal

China Romania, RussianFederation, DominicanRep., South A rica,Chile

Spain, United States, Korea(Rep. o )

Increasing coverageo unemploymentbenefts/assistance

Viet Nam Ukraine Poland, Romania,Uruguay, Chile, China

France, Germany, Hungary,Italy, Netherlands, Canada,Japan

Increasing level/ duration o un-employmentbenefts

Russian Federation,Brazil

Czech Republic, Canada,United States

Measures to protectmigrant workers

Bangladesh, Nepal,Viet Nam

India (Kerala), Jordan,Egypt, Philippines,Pakistan

Brazil Bahrain, Netherlands,Barbados, Japan

Strengtheningmaternity protection

Bangladesh India, Jordan

Family- riendlypolicies/promotingemployment owomen

India, South A rica,Jordan

Chile, RussianFederation

Korea (Rep. o ), Japan,Netherlands, Hungary

Expanded trainingand employmentmeasures or youth

Kenya (reallocation oresources or youth)

Philippines (expansiono employmentprogrammes), Jordan(in rastructure targetingyouth, training)

Turkey (employmentincentives, training),South A rica (publicworks), Argentina(training), Colombia(training), DominicanRep. (training),Peru (employmentprogrammes), RussianFederation (training)

Japan (PES), Korea (Rep. o )(employment incentives),France (training), Germany(training), United Kingdom(training), United States(employment incentives),Netherlands (training andemployment programmes)

*CCT: conditional cash transfers.


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20

dow ur is expec ed o be larger ha ha providedby discre io ary scal measures.16 Te cou ries whichhave e ac ed he larges scal s imulus packages (e.g.

he Republic o Korea, he U i ed S a es) also e d obe charac erised by rela ively weak au oma ic s abilisers,sugges i g ha he wo orms o scal s imulus are o aco siderable ex e subs i u es.

Estimating the jobs impact o fscal stimulus measures

Te e ec ive ess o scal policy i boos i g eco-omic ac ivi y a d employme is par icularly hard o

gauge i he curre co ex . never heless, he OECDhas made a a emp o es ima e he impac o scals imulus o employme . Tis is do e by compari g

he la es OECD employme projec io s, which akeaccou o he expa sio ary impac o scal s imulusmeasures a d ca be ake as a baseli e, wi h cou -

er ac ual projec io s ha do o . Tese cou er ac ual

16 OECD Economic Outlook , no. 85, OECD Publishi g, Paris,2009. Aus ralia a d he U i ed S a es are he o ly OECD cou ries

where he discre io ary scal s imulus is expec ed o be larger haha provided by au oma ic s abilisers. For more de ails seeInterimEconomic Outlook , OECD Publishi g, Paris, 2009.

which have bee brough orward. I come ra s ers olow-i come households have also bee expa ded i a

umber o cou ries. For mos cou ries, he bulk o he s imulus is due o be spe duri g 2009, al hough

a sig i ca umber o cou ries have spread measuresou over a umber o years. Tis mea s ha s imuluspackages should co i ue o suppor aggrega e dema di hese cou ries well i o 2010.

I addi io o discre io ary measures, mos devel-

oped cou ries have so-called au oma ic s abilisersi heir ax a d be e sys ems, which au oma ically suppor aggrega e dema d whe eco omic co di io s

worse . Tese au oma ic s abilisers i clude u employ-me be e s a d o her social pro ec io measures

which smoo h household i come by o se i g los ear -i gs due o u employme or reduced worki g hours.Figure 2.2 shows ha he rela ive size o au oma ic s a-bilisers varies across he cou ries or which da a areavailable. Au oma ic s abilisers e d o be s ro ges i

or her Europea a d o her cou ries where public so-cial spe di g, par icularly o u employme a d o hersocial pro ec io be e s, is rela ively ge erous a d axreve ue more cyclical. I mos OECD cou ries, hes imulus provided by au oma ic s abilisers i he curre


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21

bo h he rela ively large size o he scal packages ihese cou ries a d heir rela ively large scal employ-

me mul ipliers.18

Scale and composition o discretionary active labour market measures

tur i g rom he overall scal packages o ac ive la-bour marke programmes (ALMPs) speci cally arge eda helpi g he u employed back i o work, Figure 2.3shows ha he policy respo se o he crisis has variedco siderably across cou ries. However, i mos cases,

he addi io al u ds or ALMPs are limi ed.19 Greece, Japa , Pola d, Por ugal, Spai a d Swede are excep-

io s, where rece discre io ary i creases correspo do a ual i creases i ALMP spe di g o be wee 0.15

per ce a d 0.45 per ce o GDP. Jux aposi g 2007expe di ure rom he OECD Labour Marke Policy Da abase wi h spe di g i creases reveals ha Japa ,Mexico, Pola d a d Por ugal are drama ically scali g

18 Te es ima ed employme e ec s o he s imulus packages arebased o i orma io available as o Ju e 2009. Te da a re ec heimpac o scal packages o scal bala ces a d may o re ec all o

he measures i roduced o boos ac ivi y. I par icular, recapi alisa-io opera io s i he a cial sec or a d i creases i public e er-

prise i ves me are o i cluded.19 As show i he rs sec io o his chap er, ma y cou ries

have impleme ed a ra ge o o her labour marke measures, such as

worki g ime reduc io schemes or passive measures such as u em-ployme be e s, i addi io o he ac ive measures discussed ihis sec io .

projec io s were co s ruc ed usi g i orma io o hescal packages show i Figure 2.1 a d employme

mul ipliers, which show he impac o a i crease iscal s imulus o employme . Tree sce arios are pre-

se ed o es he se si ivi y o he es ima es o al er a-ive assump io s abou mul iplier e ec s.17

Eve hough ma y cou ries moved quickly o e aclarge scal s imulus packages, hese packages have ge -erally o had a s ro g e ec i cushio i g he i i ialdecli e i employme caused by he crisis, al hough

Aus ralia is a o able excep io . By co ras , he projec ed impac s o he discre io ary scal s imulus pack-ages cumula e hrough 2010 a d are likely o represea impor a suppor or labour dema d i he la ers ages o he recessio a d he early recovery period. Teaverage employme e ec i 2010 or he 19 OECDcou ries exami ed correspo ds o somewhere i hera ge o 0.8-1.4 per ce . I o al his represe s be-

wee 3.2 a d 5.5 millio jobs. Te jobs impac o hescal s imulus measures is es ima ed o be par icularly

s ro g i Aus ralia (1.4-1.9 per ce ), Japa (1.3-2 perce ) a d he U i ed S a es (1-1.8 per ce ), owi g o

17 For more de ails seeOECD Employment Outlook,OECD Pub-lishi g, Paris, 2009. Fur her a alysis sugges s ha cu s o employersocial securi y co ribu io s may well have a sig i ca addi io alemployme impac due o he rela ive price e ec associa ed wi h a

reduc io i u i labour cos s. I so, he es ima es i Figure 2.3 may u ders a e he jobs impac o scal s imulus packages which i cludesig i ca cu s i employer social securi y co ribu io s.


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22

a ce, o ably by o eri g earlier perso alised assis a ceor career cou selli g or jobseekers. Some rai i gprogrammes are arge ed a vul erable jobseekers (e.g.you h, older workers, low-skilled or migra workers),bu mos places are available or all u employed per-so s. Fewer cou ries have expa ded work-experie ceprogrammes a d where hese have bee expa ded hey

e d o be arge ed a disadva aged groups, o ably you h. A ha d ul o addi io al programmes have beees ablished o e courage jobseekers o ake up jobs ores ablish small busi esses, ei her hrough direc i ce -

ive payme s o workers, subsidies o employers, low-i eres loa s, reduced social co ribu io s or i -ki dassis a ce wi h rai i g, child care or ravel cos s.

up a io al u di g or ALMPs, albei rom rela ively low baseli es (excep i Por ugal).

table 2.5 shows he ypes o ALMPs impleme edi OECD cou ries i respo se o he crisis. Almos allcou ries have expa ded places i rai i g programmes

or he u employed or workers o reduced hours a di creased resources devo ed o job-search assis a ce. Ima y cases, his i volves i creasi g public employmeservice s af g levels, bu i some cou ries, priva eemployme age cies have bee give a grea er role ihelpi g o place jobseekers, allowi g job-search assis -a ce capaci y o be expa ded quickly. Ma y cou rieshave also s epped up he i e si y o job-search assis -


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25

In ormation annex 1

Tis in ormation annex seeks to illustrate moreconcretely the range o measures taken by individualcountries to stimulate labour demand, protect jobs andthe unemployed, extend social protection and promotesocial dialogue. It is accompanied by initial comments with re erence to recent knowledge and literature.

Tis is preliminary and a work in progress. It will beurther developed on the basis o additional inputs by

G20 countries, ILO constituents and relevant interna-tional organizations.

Tis in ormation will be submitted or discussion

and review to the Governing Body o the InternationalLabour O ce, at its orthcoming session in November2009.

Te product o this process will be available to theG20 or any ollow-up decided by leaders on theseissues.

1. Measures to create and retain employment

Measures to create and retain employment endeav-our to keep people attached to the labour market and,in so doing, to support aggregate demand. Measures be-

ing undertaken include the ollowing.

1.1 In rastructure spending

Crisis-related rationale:With weak demand in private-sector markets,the government serves as employer o lastresort in an e ort to sustain both jobs andaggregate demand.In rastructure spending has the largest multiplier e -

ects, larger still in developing countries, and is the mostdirect way o increasing employment and o boosting orstabilizing aggregate demand. Te large multiplier e -

ects simply mean that direct e ects o in rastructurespending spill over positively to other sectors o the

economy even i initially directed toward an ailing sec-tor in particular, such as construction.20 An additionalspillover e ect o in rastructure spending, constitutinga multiplier over time, is that it lays the oundation or

uture growth and achievement o long-term develop-ment objectives.

One assessment o the impact o in rastructurespending on employment concludes that US$1 billionspent on large projects generates employment in thearea o 28,000, both directly and indirectly in roughly equal proportions, in advanced economies.21 In rastruc-

ture expenditure in developing countries has a substan-tially greater employment impact: $1 billion spent inLatin America can yield upward o 200,000 direct jobs;spending the same on labour-intensive rural projectscan yield up to 500,000 direct jobs, suggesting thatthe choice o production technology, whether labour-based or equipment-based, can signi cantly infuencethe employment component o the expenditure.22 In itsdirect and indirect employment e ects, especially overthe longer term, in rastructure spending in developingcountries is a superior choice. In its longer-term multi-plier e ect, moreover, the e ect is likely to be greater.

While some large projects may engage large rms with high capital intensity, maximizing the employ-ment component o in rastructure spending is a viableoption or smaller, local in rastructure projects, By com-bining the bene ts o both backward and orward link-ages (such as procuring local materials and hiring local

20 Te multiplier e ects are presumed to be around 1.5; see J. Bivens, J. Irons and E. Pollack, 2009. ools or Assessing the Labor Market Im-pacts o In rastructure Investment. EPI Working Paper, April 7.

21 Levine, L. 2008. Job Loss and Infrastructure Job Creation During the Recession. Congressional Research O ce. See also ILO. 2002. TeLabour-Based echnology Source Book, sixth edition, ILO-ASIS ,Harare.

22

uck, L., Schwartz, J. and Andrea, L. 2009. Crisis in LAC:In rastructure Investment and Potential or Employment Generation. World Bank LCR Crisis Brie s.

Employment and social policy measuresin response to the crisis


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26

cal spending on in rastructure, o ten with even morespeci c targets or disadvantaged groups (Box 1).

In rastructure spending in the crisis period is o ten inthe orm o public works programmes, where the gov-ernment is the employer o last resort. Te two overlapbut are not synonyms, as public works can relate to any government- unded activity to strengthen or maintainthe link to the labour market or those who risk being

labour), they can have a strong immediate impact onthe local economy and underpin uture development. As such, these projects become a tool or local devel-opment.23 One-third o the 54 countries assessed haveincluded a speci c employment component in their s-

23

Murphy, L. Rapid Assessment o Poverty Impacts (RAPI): Elab-oration o a Rapid Survey Method o Assessing the Poverty ReductionImpacts o Pilot Employment-Intensive Projects. Geneva. ILO.

Box 1. Countries with employment criteria in their in rastructure spending

Country Employment criteria Argentina In rastructure spending o $68 billion will be allocated using a combination o large enter-

prises and SMEs; local in rastructure will be built using labour-intensive techniques.Australia The Government announced the largest single in rastructure project in Australias historya

$43 billion broadband network which is expected to create 25,000 jobs per year ( or up toeight years). In addition a $650 million Jobs und or in rastructure development will targetcommunities a ected by the global downturn.

France Frances crisis-related in rastructure measures are expected to create between 80,000 and110,000 jobs.

Hungary As part o the Pathway to Work programme, the maintenance o local in rastructure (schools,public places, child care and health care organizations) will be achieved through local publicworks, which tripled its unding rom 2008.

Indonesia The Economic Stimulus Package (ESP) o $7.3 billion includes an allocation or local resourcebased investments o $1.2 billion in main and local in rastructure. The ILO is currently helping

to improve labour-intensiveness. It is estimated that about one million jobs could be created i50 per cent o the in rastructure were implemented using employment-intensive approaches.Ireland Reprioritization o capital expenditure to support labour-intensive activities where possible.Saudi Arabia The our cities in rastructure project is expected to draw almost SR 300 billion in investment

and create more than one million jobs. These economic zones are located in less developedregions and speci cally selected to ensure that development and employment opportunitiesare spread equitably across the Kingdom.

South A rica The R787 billion project or in rastructure development includes a provision that whereverpossible labour-intensive approaches will be used or road maintenance.

Ukraine Temporary reassignment o workers rom the most a ected industries (i.e. metallurgy, con-struction) to others ( or example, repairs) to avoid lay-o s. Dismissed workers can otherwisebe employed in the preparation o EuroCup 2012. In this case they will be paid guaranteedminimum wages out o the unemployment und

United Kingdom The Government is making it a requirement that success ul contractors have apprentices as

an identi ed proportion o their work orce. It estimates that this could lead to an extra 7,000new apprentices in construction over the next three years.Paraguay The counter-cyclical public works programme has been strengthened through more e cient

resource allocation, the decentralization o programmes and the expansion o activities. Morethan 20,000 jobs are expected to be created during the crisis. 1

South A rica In addition to transportation and irrigation projects, the public works programme will givemore attention to home-based care and community health. The programme targets poorheads o households and is expected to bene t women, who tend to be less represented intraditional public works schemes. It is expected to create 4.5 million job opportunities o 100days, including skill acquisition opportunities.

Mexico The countrys temporary works programme has been expanded to provide employment op-portunities to an estimated 250,000 workers in 2009 or a period o between our and sixmonths at a salary o twice the minimum wage. The cost is $160 million.

Peru Expansion o targeted works programme to provide our months o employment or 16,000

workers at a cost o $13 million.Uruguay Expansion o public works programme or up to eight months targeted at the long-term un-employed; basic wage provided and access to social security bene ts.

1 Reinecke, Gerhard. 2009. Public investment as anti-cyclical policy tool to ace the crisis: Paraguays example. ILO. Chile.Note: The EU Social Fund, the EU Regional Fund and the European Investment Bank are co- unding EU Member States crisis actions.


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severed rom it. Elder care, community service, or otherservice activities have o ten been publicly unded andconstitute public works targeted toward the disadvan-taged. Noteworthy is Indias National Rural Employ-ment Guarantee, a programme that existed prior to thecrisis, but that with it has become an important auto-matic stabilizer, with a majority share o poor womenemployed and employed in green jobs.

Chile provides a good illustration linking scal re-sponsibility, the title o a new law adopted in 2006, with socially responsible employment policy. Te law determines that should unemployment exceed 10 percent, or the average over the previous ve years, then acontingency und is automatically activated to nanceemergency employment measures.

1.2 Direct fnancial support to enterprises

Crisis-related rationale:Otherwise viable businesses, particularly SMEs,have not only aced troughs in demand butare starved o credit.

Stimulating demand through public spending

SMEs orm the bulk o employment in most econo-mies and targeting them or assistance makes sense ininstances o sharp alls in demand having little to do with the businesses themselves. Public procurement op-portunities are well within the grasp o many SMEs, al-though they may be disadvantaged by tender proceduresthat avour larger rms (or to which larger rms canmore readily respond). Several countries have tailoredprocurement bids to smaller rms in this period. A ew examples are shown in Box 2.

Box 2

Hungary : Support or SMEs has increased rom50 to 70 per cent o projects, tender evalu-ation time has been reduced and the rate oadvanced payment has increased.

Mexico : The stimulus package, requires atleast 20 per cent o government purchases tobe made rom small and medium-sized com-panies. 1

Peru : $50 million increase in public purchasesrom SMEs.

South Africa : The Government has introducedan objective o ensuring pre erential procure-ment or SMEs.

United Kingdom : Launch o a campaign urgingsmall businesses to register with the Govern-ments online procurement portal. 2

1

Stimulus plan to curb impact o crisis, IPS News Agency.18.03.09. 2 Supply2.gov.uk.

Box 3

Argentina : New credit acilities provide low-inter-est loans o up to $300,000 or SME investment.

Brazil : The credit resources o the national de-

velopment bank (BNDES) were increased by85 per cent in 2009. China : 9 billion RMB were made available or

loans to micro enterprises, collateral require-ments or SMEs were eased and interest rates

or loans were subsidized. The European Commission has introduced a

new micro- nance acility o an initial budgeto 100 million to support small businessesand entrepreneurs.

France : Public guarantee schemes have beenextended to cover up to 90 per cent o the risksrelated to a loan as compared with 50 to 60 percent on average previously.

India : Increased credit acilities or labour-in-tensive export rms and increased guarantees

or small enterprises. Italy : Increased guarantees and 8 million or

increased credit to SMEs; additional creditavailable or rms exporting outside the EU.

Japan : 10 trillion yen allocated to the CreditGuarantee Association to ease credit con-straints on SMEs and an additional 4 trillion

or sa ety net loans. Serbia : CSD 3.1 billion made available in start-

up credits or entrepreneurs and SMEs. United Republic of Tanzania : An additional

TZS 29 billion injected or credit guaranteesor export rms and SMEs.

Improving access to credit

Crisis-related rationale:

A de ning characteristic o this period hasbeen the dramatic contraction in credit supplyavailable to rms and consumers.Firms are not only aced with alling sales, but also with

limited access to nancing and high borrowing costs. Indeveloping countries where banks were not directly ex-posed to the crisis, trade credits have dried up, risk pre-miums have soared, and SMEs are considered riskier thanlarge rms because o the volatility o their survival rates.Keeping SMEs afoat during turbulent times is a strategy

or preserving and creating jobs, and several countrieshave targeted the small- rm sector or particular assist-

ance. Public banks have played a key role in sustainingand increasing the availability o credit in several coun-tries. For instance, in Brazil, between September 2008and April 2009, public banks increased credit outlays by close to 20 per cent against 2.5 per cent in private institu-tions. Box 3 provides some examples.


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but this is an impact that is presumably made up orin employment preserved (and taxes paid). Exemptionsare in general also a temporary measure in the cycli-cal downturn. An advantage o cutting business taxes isthat they reduce business costs without a ecting work-ers wages and thus aggregate demand.

ax policy has also been used to prop up laggingsectors, with major-expenditure durables leading thelist. Box 4 highlights country examples to stimulatedemand and preserve jobs through the lever o tax ad-

justments.

1.3 Adjusting labour conditions to ft currentdemand

wo mechanisms to adjust labour conditions to tdepressed demand are being used by governments andenterprises, o ten in agreement with trade unions. Teseare wage and working-time adjustments. Wage reezeshave been used as a means o cost stabilization in return

or employment maintenance.26 In some countries thathad recourse to wage reezes in 2009, real wage increaseshad been particularly rapid in preceding years. While, atthe macro level, depressed wages can result in a damp-ening o aggregate demand, the alternative o lay-o s

would have the same, perhaps even worse, e ect. Tis isparticularly true in settings where income replacementmechanisms are weak or non-existent. Box 5 reports onsome country experiences.

Minimum wages constitute a wage foor, guardingagainst wage defation and excessive declines in aggre-gate demand. As such, they can be considered an auto-

26 More rms reeze annual pay rises, Virgin Media, web site,20.02.09. Te article is based on gures o the Industrial RelationsServices.

Reducing taxes

Crisis-related rationale:Tax reductions represent an increase in realincome to both consumers and businesses,and lower business costs.

ax reductions take as many orms as there are taxes,and represent a large share o overall stimulus packages:56 per cent o the net e ect o stimulus packages inOECD countries consists o tax-related measures.24 Onereason or this is the rapidity with which this stimulusmeasure can be implemented. Speed o impact and im-pact, however, are not the same. axes a ect aggregatedemand indirectly through propensity to spend or invest,and have been shown to have lower multiplier e ects andto be less e ective in stimulating aggregate demand andcreating jobs than public spending.25 Tis is particularly true with regard to personal income tax reductions: peo-ple save rather than spend in times o adversity.

Nonetheless, some tax reductions, particularly thoseapplied to businesses (but also to consumption, suchas VA ) can have larger employment e ects than sug-gested by aggregate multipliers. Many countries havelowered business costs through reductions in social se-curity contributions or other payroll taxes. Te penalty,o course, is a short all in scal receipts to government,

24 OECD 2009, Economic Outlook Interim Report, March.25 Congressional Budget O ce, 2002 Economic Stimulus: Evalu-

ating Proposed Changes in ax Policy. Washington DC: CBO, Janu-

ary; Elmendor D. and J. Furman 2008. I , When, How: A primer onscal stimulus. Te Hamilton Project, Brookings Institution, Wash-ington DC, January.

Box 4

Argentina : Reduced social security contribu-tions or enterprises in economic di culties,conditional on maintaining employment.

Egypt : As part o its stimulus package, the Gov-ernment proposed tax rebates or loss-makingsmall businesses.

France : Reduced taxes or new investmentuntil January 2010 at cost o 1 billion; alsoexemption o social security contributions orlow-paid workers in SMEs or up to one year.

India : Lower tax rates or exporters and lowerexport duties.

Republic of Korea : Tax rate or smaller busi-nesses reduced by 2 per cent to 11 per centin 2009 and a urther 1 per cent the ollowingyear; the rate or larger businesses reduced 3per cent to 22 per cent and then urther to 20per cent.

United States : Reduction in capital gains taxor small businesses.

Box 5

China : Local governments have rozen wageincreases in 2009.

Ireland : Previously tripartite agreed wage in-creases in the private and public sector will bepostponed.

Republic of Korea : Freezing o wages in nan-cial institutions and a maximum 30 per centcut in salaries o university graduates in orderto share jobs.

Latvia : Wage reductions o 15 per cent orstate institutions and public services or 2009;teachers wages reduced by hal rom Septem-ber 2009 and health-care workers wages re-duced by 20 per cent.

Serbia : Salary reezes and cuts or above-aver-age salaries in the public sector.


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then work-sharing measures are to be recommended,particularly in the context o a nancial crisis with as-sociated lags o labour market recovery.

2. Assessing the salience o labour marketpolicies

Te crisis in the world o work is mediated throughexisting labour market policies and institutions. Tey have a clear role to play, and labour market outcomesare mediated through them anyway. Tree such policiesare considered here: public employment services, skillsand training programmes, and hiring subsidies.

2.1 The public employment service

Crisis-related rationale:Labour market in ormation is all the moreprecious to those who lose their jobs andare looking or another. This is the central

unction o the labour market intermediationo public employment services job matching,

matic stabilizer, and are also associated with reductionsin poverty levels. Tey are, moreover, targeted at those with the greatest propensity to consume. Te e ect onaggregate demand o minimum wages has been notedsince the Great Depression, when the United Statesadopted a minimum wage as an essential part o eco-nomic recovery. Depending on the relative level o theminimum wage, as compared to the median wage orinstance, adverse employment e ects can occur, par-ticularly or some categories o workers, such as youth.Minimum wages can be combined with other directanti-poverty measures into a highly e ective package,as illustrated in Brazil.

Work-sharing, the reduction o working hours tospread reduced workloads more evenly among workers,has attracted interest in the context o the crisis. Temost sophisticated systems are those in which strongcompany-level negotiations are backed by governmentsubsidies and access to training.27

Businesses bene t rom lower labour costs, while workers receive a portion o their lost salary rom unem-ployment or social security schemes. Te combination isgenerally more than unemployment bene ts alone and isthus a means o stabilizing aggregate demand while low-ering enterprise costs. GermanysKurzarbeit programmehas been heralded in particular. It is the largest in the world, covering 1.3 million workers as o March 2009,and has been credited with increasing consumption by 0.3 per cent per month and preventing unemployment

rom rising an additional percentage point.28 Te Euro-pean Social Fund supports EU Member State schemes toretain persons in employment through short-time work and training. Box 6 gives examples o what some coun-tries have done to encourage this.

Work-sharing arrangements subsidized rom the s-cal purse, o course, are not within the reach o many lower-income countries. In 2008, Argentina, or exam-ple, quickly reactivated thePrograma de Recuperacin

Activa, designed during the 2002 crisis. A monthly

wage supplement is provided to employees or up to 12months, with an agreement not to dismiss workers.

Work-sharing has been shown to be a cost-e ectiveemployment retention measure, with retention in thelabour market being an overarching concern. Tere aredownside concerns as well. Subsidizing jobs that mightotherwise disappear is one o them. Settings in whichdismissal is easier and more cost-e ective at the microlevel rustrate work-sharing measures. But i the socialgains o retention in the labour market are paramount,

27 Euro ound. 2009. ackling the recession: Employment-related

public initiatives in the EU Member States and Norway.28 Broyer, S.; Costa, B. 2009. How do you explain the resilience o the German job market? Natixis Special Report, 30 June, No. 194.

Box 6

Germany : The Kurzarbeit programme, which isexpected to cost 5 billion during 2009-10, hasextended the maximum bene t period rom sixto 24 months or companies that sign on in2009. The Federal Employment Agency coversup to 67 per cent o wage losses or workerswhose hours have been reduced, while alsoreimbursing employers 50 per cent o socialsecurity contributions (and 100 per cent i re-duced working hours are used or training).

Japan : The Employment Adjustment Subsidyis payable directly to employers and has beenincreased rom one-third o employee adjust-ment costs to two-thirds or large enterprises,and rom two-thirds to nine-tenths or SMEs -to a maximum o $80 per day (i training is pro-vided the amount can be increased by another$63 per day or a maximum o three years).The subsidy is nanced rom the employerscontribution to unemployment insurance.

Poland : A work-sharing programme supportedby workers and employers organizations wasadded in July 2009, nanced rom the Guar-anteed Employee Bene ts Fund. It also estab-lishes training support, with up to 90 per cento the costs to be paid rom UnemploymentBene ts/Labour Fund (the rest nanced byemployer training unds).

Turkey : The Government has extended the

length o time that workers can bene t romthe reduced hours und rom three to sixmonths and increased the bene t level by 50per cent.


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always coexisted, even in recessions. Demand on publicemployment services, which cater to both the demandand supply sides o the labour market, has built up onthe supply side the job losers, and new entrants to thelabour market. Young persons looking or their rst job

ace a particularly di cult labour market situation thepros and cons o what can be done to assist them are de-scribed in Box 7 below. One e ect o the current crisishas been closer collaboration between public and pri-vate providers o employment services, as has been thecase in the Netherlands, Belgium and France, through,inter alia, an exchange o trained sta .

associated training needs and targetingo particular labour market subgroups.The premise in a crisis is that demand

or public employment services will outstripsupply, that the capacity o publicemployment services requires strengthening,and that in the midst o job loss, there remain

job vacancies.

Amid widespread job loss and job scarcity, public em-ployment services have a crucial intermediation role toplay, i only because vacancies and labour surplus have

Box 7. Youth employment programmes: Advantages and disadvantages

Type o programme Advantages Disadvantages

Labour market training Works better with broader techni-cal and employability skills thatare in demand and includes workexperience as well as employmentservices.

May produce temporary ratherthan sustainable solutions andi not well targeted, may bene tthose who are already better o .Training alone may not be su -

cient to increase youth employ-ment prospects.

Employment services (careerguidance, job search and labourmarket in ormation)

Can help young people make re-alistic choices and match theiraspirations with employment andtraining opportunities; can improvein ormation on job prospects, aswell as the e ciency, e ectivenessand relevance o initiatives. Theycan also increase targeted/tailor-made design and implementation.

May create unrealistic expecta-tions, i not linked to the labourmarket, and o ten cover only urbanareas and the ormal economy.

Employment-intensive publicworks and community services

Help young people gain labourmarket attachment and, at thesame time, improve physical andsocial in rastructure, especially icombined with development andsectoral strategies. They can in-crease employability, i combinedwith training.

Low capacity or labour market in-tegration; young workers may be-come trapped in a spiral o tem-porary public works programmes;o ten gender-biased; displacemento private sector companies.

Employment subsidies Can create employment, i target-ed to speci c needs (e.g. to com-pensate or initial lower productiv-ity and training) and to groups odisadvantaged young people.

High deadweight losses and sub-stitution e ects (i not targeted);employment may last only as longas the subsidy.

Entrepreneurship promotion Can have high employment po-tential and may meet young peo-ples aspirations (e.g. or fexibility,independence); more e ective icombined with nancial and otherservices, including mentoring.

May create displacement e ectsand may have a high ailure rate,which limits its capacity to createsustainable employment. They areo ten di cult or disadvantagedyouth, owing to their lack o net-works, experience, know-how andcollateral.

Source: Rosas, G., Rossignotti, G., Starting the new millennium right: Decent employment or young people, International Labour Review ,Vol. 144 (2005), No. 2, Geneva.


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disasters, etc. Te procedure is to establish temporary employment agencies, o ten mobile and o ten designed

or casual labourers. Te principle might well be appro-priate to economic crises in some other locations.

Te intermediary and in ormational role that pub-lic employment services play is vital to labour market

unctioning. In the context o economic downturns,the e ectiveness o employment services aces particu-lar challenges.31

2.2 Skills and training

Crisis-related rationale:At the micro level, this is the opportunity

or some enterprises to invest in skills inanticipation o recovery, and to reduce obsoleteskills, sometimes with government support

or employment retention. For economies thatview the current passage as a changein economic structure, investment in the skillsrequired or the uture is an appropriatemacro-level response.Idle demand but retained employment creates the

opportunity or skill development, as many enterprisesand countries have realized.

Box 9 shows how some countries are addressing skill

development needs. Box 10 shows how some coun-tries are using the interruption o the business cycleto address the longer-term concerns o environmentalsustainability. A shortage o skills or green jobs is aconstraint or conversion to a sustainable economy, andmany countries are using the crisis as an opportunity ormore sustainable patterns o growth.

Te recovery rom the crisis will look di erent to theglobal economy that brought us here in other words,substantial economic trans ormation will be an integralpart o the recovery. o the extent that the opportunity

or economic restructuring exists, supply constraints

need to be met with appropriate investment in skills.Some studies have called into question the value o

training on the grounds o cost-e ectiveness, minimale ect on employment outcomes during recessionary pe-riods, and the high amount o deadweight loss.32

Other studies suggest that skills training is more e -ective when well targeted towards disadvantaged and

displaced workers, and tailored best to t local labour

31 de Koning, J. 2001. Aggregate Impact Analysis o labour mar-ket policy: A literature review, International Journal o Manpower,Vol. 22, No. 8, pp. 707-734.

32

Friedlander, D., D. Greenberg and P. Robins. 1997. Evaluatinggovernment training programmes or the economically disadvantaged. Journal o Economic Literature 35(4).

Several studies o youth employment programmeshave shown that while some programmes are success-

ul, others ail to enhance participants chances o gain-ing a job. Several youth employment programmes inLatin America (as in Chile, the Dominican Republicand Uruguay, or instance) underscore the role o in-tegrated interventions providing a package o training,income support and employment services targeted atlow-income and low-skilled youth.

Labour market in ormation is the chie unction o the public employment services, yet other sources alsoprovide labour market in ormation. Indeed, during the Asian nancial crisis, registrations in the Republic o Koreas public employment services increased ten old,although only 5.8 per cent o those registered oundemployment through the public employment services,the remainder nding it through other means.29 In thepresent crisis, lessons rom previous crises have appar-ently been learned. Tese relate or the most part tosta ng and capacity, and examples are illustrated inBox 8.

In countries with little public employment servicecapacity, emergency public employment services30 might be worthwhile. Tis measure has been used todeal with crises o a di erent order military, natural

29 Betcherman, G.; Islam, R. 2001. East Asian Labor Markets andthe Economic Crisis. ILO and World Bank.

30 Guidelines for the Establishment of Emergency Employment Services.

Box 8

Australia : A$42 billion were invested in em-ployment services, covering a wide range oservices, including the reshaping o the publicemployment services and directing job servicestowards various population segments.

Canada : Increased sta and longer public em-

ployment service opening hours. Dominican Republic : The country has opened

seven new public employment service regionalo ces.

Germany : 2 billion injected to increase thesta o ederal employment agencies by 5,000persons.

Mexico : $138 million has been allocated tothe national unemployment service to extendhours and improve services.

Cambodia : Strengthening public employmentservices through nine new regional job centres.

Spain : The public employment services havehired 1,415 sta in employment o ces and1,500 sta members to assist with job search.


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market needs, with the implication that local labourmarket needs diagnoses precede training strategies.

argeting appears important: evaluations show thatinitiatives aimed at adult women are particularly suc-cess ul.33

For working women and men in the in ormal econ-omy beyond the reach o ormal training institutions,there are nonetheless strategies or improving productiv-ity and raising incomes. Apprenticeship training in thein ormal economy is a widespread practice and a strongmeans by which to increase the income-generating po-tential o poor people. Apprenticeships in this contextcan be structured learning experiences that are transmis-sible and replicable, contributing to the creation o a

oundation o occupational standards. Such approachesrequire more attention.34

2.3 Hiring subsidies

Crisis-related rationale:They reduce the cost o labour and thusstimulate labour demand. They are o tentargeted to labour-market disadvantagedgroups. They are paid out o the scal purse.Under certain conditions, they can raise hires,although displacement o workers is a risk.They can be temporary and ought to be. An important stimulus to employment can come

rom subsidizing the recruitment o newly hired anddisadvantaged jobseekers. Tis is o particular impor-tance to displaced workers and young workers, who aceunusual barriers to their entry to the labour market inthe present conjuncture. Subsidies o this nature canbe considered as an important counter-cyclical tool inthe ace o the crisis a ecting labour demand. How-ever, at a time when jobs are scarce, substitution anddeadweight costs exist. Hiring subsidies can be e ectiveduring a strong recovery, to encourage the employmento vulnerable workers and raise their labour market at-tachment.

Box 11 shows examples o what some countries havedone in this regard. In general, hiring subsidies are moree ective when they are well target

Protecting People, Promoting Jobs_ILO 2009

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