At an event alongside the International Labor Organization’s annual conference in Geneva last month—an event hosted by the ILO and the Norwegian, German, and South African governments—the Center for American Progress made the case for countries to strengthen government institutions that help protect workers struggling to maintain their livelihoods. Such institutions are defined as a set of policies that include social protection such as health care, unemployment benefits, and worker training/retraining programs; decent employment opportunities with accompanying labor rights; and social dialogue in the form of opportunities for employers and unions to engage with their governments. These institutions comprise the pillars of the ILO’s Decent Work agenda and are instrumental in helping workers, their families, and societies through the current crisis and those of the future.
Participants to the event included Foreign Minister of Norway Jonas Støre, South African Minister of Labor Membathisi Mdladlana, German State Secretary at the Ministry of Labor and Social Affairs Detlef Scheele, and representatives of employers and workers associations. Key leaders of international organizations such as World Trade Organization Director General Pascal Lamy and the International Labor Organization’s Director General Juan Somavia were in attendance. Think tanks included the Center for American Progress with Senior Fellow Richard Samans and Associate Director for International Economic Policy Sabina Dewan in attendance, as well as Research Director Jon Erik Dølvik from Fafo, or the Institute for Labour and Social Research in Norway.
The participants at the meeting were interested in CAP’s paper highlighting why labor and welfare institutions matter amid this recession and how to help develop resilience in the face of future crises. Building these institutions in countries that do not have them, and strengthening them in countries that do, is one way to structurally rebalance the global economy for stable, more sustainable, and equitable economic growth.
Global economic integration in the post-war era boasts a substantial legacy of growth, but without question not everyone prospered equally. Strengthening government institutions to protect workers, generate employment, and facilitate dialogue between employers, unions, and governments is a way to widen the circle of beneficiaries from greater integration of countries into the global economy. Structurally rebalancing the global economy through these kinds of institutional reforms is therefore equally important to improving the quality of global economic integration in the long run as well as protecting workers and their families amid the current crisis.
One factor in particular that constrains governments from strengthening labor and welfare institutions is the view that these decent work institutions are a barrier to a flexible labor market, which some feel limits economic growth. In response, some participants at the meeting pointed to the downward economic spiral perpetuated by rising unemployment, inequality, and poverty that occurs in the absence of adequate social institutions. Indeed, appropriately designed and governed institutions are essential investments that can improve the resilience of workers but also create the confidence needed to spur investment, hiring, and growth in economies at large.
The participants at the meeting acknowledged that for developing countries, the affordability of establishing and maintaining labor and welfare institutions is a particular challenge. That’s why international partners and stakeholders—including donor governments, international institutions, employers groups, unions, and civil society—should provide both financial and technical assistance to help developing country national governments build capacity to establish protection systems and strengthen their key labor ministry functions including the inspection and administration of labor standards.
The participants of varying nationalities and affiliations noted that in the global crisis they face a common challenge and therefore the solution must also be a common one. Building on the theme of the report and presentation by the Norwegian Institute for Labor and Social Research, the participants recognized that a shared understanding of the challenges confronting workers, and broad agreement on the principles of how to confront these challenges in an aligned and consistent manner is essential to coping with the still debilitating global economic downturn. This shared understanding or “coherence” among governments, international organizations, across different levels of government, and employers and workers groups is essential to strengthening institutions for decent work in developed and developing countries.
As the economic crisis shows initial signs of weakening, managing the recovery process is as important as handling the immediate impact of the storm. Policies for recovery should focus on creating decent work and strengthening institutions to protect workers and their rights in the wake of this crisis and those that might occur in the future. Governments must protect workers, invest in the creation of decent employment opportunities, and leverage social dialogue to keep the global economy on track.
For more on this topic please see:
- Institutions Matter: Exploring the Differences in Labor and Welfare Institutions for Decent Work in Developed and Developing Countries by Sabina Dewan
- CAP Goes to Geneva: Protecting Workers and Curbing Job Losses Around the World by Sabina Dewan
- Transitioning to a New U.S. International Economic Policy: Toward a "Global Deal" to Revive and Broaden the Benefits of Growth by Richard Samans