PREVENTING scarring and protecting the most vulnerable by increasing minimum wages and guaranteeing social protection benefits should be among the priority responses to the current economic and social crisis, the International Labour Organization’s (ILO) Director-General, Gilbert F. Houngbo, told delegates at the 2022 Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG).
Other priority policies include investment in social protection and productive employment through the Global Accelerator on Jobs and Social Protection for Just Transitions. The Global Accelerator aims to galvanize the creation of 400 million jobs, including in the green, digital and care economies, and the extension of adequate social protection to the four billion people currently without coverage. This would support a shift to a pro-active approach to managing economic, social and environmental crises, and the just transition required to tackle climate change.
“At this challenging time, it is essential that we seize the initiative… [and] shape the future so that it delivers a better, more equitable and sustainable world that will also contribute to lasting peace,” the Director-General told delegates.
In his written statement to the joint World Bank-IMF Development Committee, Houngbo noted that increasing productive employment was essential to reduce inequality. Greater formalization of employment was also necessary to improve business productivity and sustainability, promote decent work, and give governments more financial resources to address poverty and inequality.
Long-term policies to tackle persistent large gender gaps, including in pay, pensions and quality of work, were also needed.
“Constrained by rising debt burdens and shrinking fiscal space, many countries now face [a] daunting policy landscape,” he told the Committee. “A new collective effort is needed to better manage and ultimately exit these crises and prevent future crises.” This included increasing social investment in skills development and care, addressing labour market inequalities, and raising the levels of social protection benefits and wages to maintain living standards in the face of inflation – for which there was scope without creating a wage-price spiral, he said.
In a second written statement to the International Monetary and Financial Committee (IMFC), the Director-General described a cost-of-living crisis fuelled by higher prices and a decoupling of wage growth from productivity growth, leading to falling real wages. Without immediate action and increased resources this could increase inequality and place greater strain on businesses, he said, adding that, with many countries having limited fiscal space to provide support to low-income households, this could fuel social unrest.
Houngbo highlighted the need for increased support for vulnerable economies, who may face high and increasing debt. Greater respect for labour rights and the promotion of sustainable enterprises and better working conditions in supply chains could catalyse economic development, poverty reduction and greater income equality between countries, he said.
He called for increased collective efforts to address the current interrelated and mutually reinforcing crises, pointing out that such action would also advance social justice and so contribute to lasting peace.