Introductory Comments by Jose M. Salazar in Retreat to Follow-Up on - - PDF document

1

Introductory Comments by Jose M. Salazar in Retreat to Follow-Up on the Conclusions of the Recurrent Item Discussion on Employment Geneva, 20 July, 2010 SEIZING THE MOMENT: OVERVIEW OF THE OUTCOME OF THE RECURRENT ITEM DISCUSSION ON EMPLOYMENT AND OBJECTIVE OF THE RETREAT UNDERSTANDING THE MOMENT As we gather here for this retreat in the summer of 2010, I think it is important to begin with some thoughts on the moment we are living. There are 5 issues I would like to raise in understanding the moment, all of them provide the context in which we operate, in which our constituents operate, and I think they are key to put us in a certain mindset. 1) The first issue is the shift in the center of gravity of economic power from the G8 to the

• G20. This is a major tectonic shift. Brazil, India, China, Russia, the BRICs, have emerged

as major players. A number of multinational companies from these countries are now in FORTUNE 500. 4 of the 10 largest banks in the world are now Chinese, and they dwarf some of the better known banks in the West. China’s demand for commodities and food is having a major impact in the exports of many developing countries. This shift in the center of gravity of economic power has led to a shift in the center of gravity of political

• power. The existence of the G20 is the most obvious implication, but by no means the
• nly reflection of this. China is now a major player in investment, trade, development

and aid in Africa. And will soon emerge as a powerhouse of South-South cooperation. The West is no longer the power it used to be. The center of gravity of the world has moved east. 2) The second issue to understand the moment is technology. I remember reading books

• n the first, second or third industrial revolutions. I have lost count in which industrial

revolution we are now, or how we should call it. But the point is there are new products, new materials, new industries, new ways of doing things are everywhere, and the pace

• f change has accelerated. You don’t have to be a Marxist to realize how forces of

production are changing modes of production and therefore the world of work. The National Academy of Engineering of the United States identifies 14 fields of engineering that are going to revolutionize the world in the next decades. From new carbon sequestration methods to making solar energy economical, to life prolonging medicines,

2

to new biotechnologies for the production of food, to new methods of personalized

• learning. All of these new technologies are going to continue to have major impacts in

the world of work thorough multiple channels, they will continue to change the nature

• f technology and competition for enterprises, methods of organizing production,

methods of acquiring and deploying skills. As always with technological change, they will destroy jobs and create new job opportunities, they will continue to drive skills-biased technical change and exert pressures towards inequality, unless major broad-based investment in education and skills are done by countries. I think the ILO has to be not simply aware of these changes but on top of them, leading their understanding and their impacts in the world of work in developed and developing countries. I do not think we are doing this enough at the moment. 3) The third issue is of course the economic and jobs crisis, the great recession. The Office has produced a lot of research on this, our constituents have discussed it for hours, days and weeks. We know it has had and continues to have major impacts in labour markets. We know that it is by no means over. The sovereign debt threat defined a new phase of uncertainty suggesting the possibility of a double dip recession. We know that there is great diversity in recovery patterns, many countries do not feel they have a crisis any

• more. Others do not seem to be able to emerge from it. Globally, whatever recovery

there is is very fragile and many countries face the prospect of a jobless recovery. In countries that used to be the engines for world demand the private sector is over- indebted and the process of deleveraging will take years. The crisis was also associated with major global imbalances that result in deflationary pressures. Some countries are structurally too dependent on exports. Others, were structurally too dependent on capital inflows or debt-accumulation. We need to link this with the deflationary pressures involved and their impacts on labour markets. In the ILO we continue to develop our policy messages around the crisis, adapting them to the changing conditions. We have put in place a series of knowledge projects/products to better understand the impacts of the crisis and of the policy

• responses. We have substantially adjusted working methods to respond to the crisis,

including in the context of the DG’s special arrangements. However, we have not really changed our work methods sufficiently, and I have the feeling we are slow to respond. Our constituents said it in the RI Committee. They like the approach we have developed to give effect to the GJP, but they do not see the full time teams, they do not see sufficient results in the integrated application of the GJP yet. (I am beginning to lose sleep over this one, there will be a session where we are going to talk more about this).

3

The fundamental contextual issue is that the crisis is with us and will be with us for a number of years. And how to make our response more effective, drawing lessons, and evaluating the impact of our work around crisis is very much the central imperative of the moment. 4) The fourth, and closely related issue, is the change in economic paradigms and the fiscal

• challenge. The crisis has destroyed or it ought to have destroyed many tenets of the
• rthodoxy:
• a. the notion of the perfect efficiency of markets;
• b. the belief that macroeconomic stability and de-regulation are the top priorities

for the state to create an enabling environment for growth;

• c. the idea that infrastructure in developing countries can satisfactorily be

developed by the private sector alone;

• d. the tendency to prescribe pro-cyclical macroeconomic policies;
• e. the long standing practice of subordinating or sacrificing social policies and

programs to the imperatives of austerity;

• f. the idea that the best state is the one that gets out of the way;
• g. the notion that the financialization of the economy was for the best of all

possible worlds, and others. With all of this, the crisis has opened a space for policy innovation, and if one gets too excited one could even argue that the crisis has opened a space for new

• paradigms. But I want to echo a concern and a message expressed very persuasively

by Trevor Manuel to the UNDP regional meeting for Africa that I attended, along with Mpenga, last week in Accra. Trevor Manuel said that the crisis ought to spell the end of orthodoxy, but he warned about the dangers, and argued that in fact, we should not take this for granted. One reason is that there seems to be no alternative

• n the table. He warned that if nobody puts a new vision on the table the orthodoxy

is going to come back. More ominously, he said that when governments and policy- makers panic, the panic triggers the default mode, and the default mode is the

• rthodoxy. This is what seems to have happened in the Toronto G20 meeting. He

appealed to the UNDP regional team for Africa to fill in the policy space or to construct the policy room, to make sure policy makers can explain the rationale of

4

their policies, hopefully new, more balanced policies, to avoid the default mode. This is an appeal to all of us in the UN System. The challenge is to create policy room and filling it with a new rationality. I think this is a very clear way of posing the challenge in particular for the macroeconomic policy discussion. And I think we should have this formulation in mind when we come to discuss our new mandate in macro-economics. What is the new rationality, the new connections between key variables, that we can bring to the definition of what is an employment-friendly macroeconomic framework? We have several elements: employment targets, not just inflation targets; construct more flexibility in macroeconomic frameworks including through having several targets instead of only one; a new vision of fiscal policy and its connection with employment policies; much more fiscal space for social security and safety nets; a rethink of the role of trade and productive transformation policies, etc. We will come back to all of this this afternoon. We have to be particularly creative on fiscal issues. We need to develop clear but also pragmatic messages on the danger that premature fiscal austerity will tip the world economy back into recession. But at the same time recognize that the huge rise in fiscal deficits and debt burdens created by the crisis is going to make fiscal stringency the theme of policy for many years in many countries. We need to prepare for that. 5) The fifth element has to do with the UN system and the development agenda. I think we have to understand more clearly what is going on. The thrust for the One UN is still

• there. I would like to hear more from the field in this respect. What is the role of

UNDAFs in the future. How our DWCPs will interact with them. But there is a new energy this year associated with the mid-term review of the Millenium Development

• Goals. UNDP just published an International Assessment of the MDGs, and has proposed

what they call a BREAKTHROUGH STRATEGY based on accelerating the achievement of the MDGs. This new MDG-AF acceleration framework is what is going to dominate the next five years of UN work on development. I think we have to think how our work is going to relate to this. And I think there is a huge opportunity to place the DWA, and the GJP scan methodology as part of the methods to accelerate MDG 1, in particular. So these are five key issues out there in the world, for understanding the moment. There are

• thers of course, but I think these five are a good start as background for our work.

5

But there is a specificity of the moment as well in terms of our own institutional dynamics in the

• ILO. And in this I am going to be very brief.

The moment in the ILO is characterized by the 2008 Declaration, by the 2009 GJP, by our participation in the G20, by the first ever recurrent item discussion of last month, on

• Employment. The Declaration, the Crisis, the GJP, the recurrent item, our participation in the
• G20. I think all of this only speaks to us about change: change in our working methods, change

to be more effective, change to better measure the impact of our work and to better report upon it; change to really deal with the silo mentality and behavior; change to work in a more interrelated and mutually supportive way. I think we need to be very open and very candid when we talk about these things. I would like to define the leitmotiv of this Retreat as business unusual. All the opposite of business-as-

• usual. I think we have to have a mindset of business unusual, and only with this mindset we will

be able to rise to the challenge of seizing the moment and of implementing the conclusions of the recurrent item discussion. And I am speaking here Office-wide, not just employment sector. OVERVIEW OF THE OUTCOME OF THE RECURRENT ITEM DISCUSSION The conclusions have 58 paragraphs in IX sections. There are many items of guidance grouped in these sections. To better digest them I clustered these sections into 6 areas of strategic

• action. These areas are the following:
• I. Adjustments in existing employment programmes
• II. New Thematic Priorities
• III. Employment Policy coherence
• IV. Institutionalize coherence in the organization as a way of implementing the IIMS and the

standards-related action

• V. The Employment Policy work cycle
• VI. Requests to the GB/ILC

You have a one pager that explains. You have a background matrix organized around these six clusters of issues.

6

Cluster VI has a separate matrix. We will go into a lot of detail. But keeping the big picture, what is the spirit or the mood of the RID? SPIRIT OF THE RECURRENT ITEM DISCUSSION I think it can be summarized by saying that there is a strong feeling amongst constituents about the following:

• The DWA and the GJP is a framework for a new social and economic development

paradigm, now widely adopted by countries and the international community

• Tripartism is an agent for change, transformational change to improve the quantity and

quality of jobs

• Our job in the Office is to contribute to facilitate and accelerate this transformational

change

• It is time for business unusual, time for change!

OBJECTIVES OF THE RETREAT In this spirit/mindset, the objectives of the retreat are:

• First, brainstorming and clarifying the new strategies and actions needed, in the

Employment Sector and Office-wide including in the Field, to implement the guidance of the recurrent item discussion on employment and the self-evaluation conducted by the sector/Office, in a context that can be described as business unusual.

• Second, identifying specifically how the work on employment of the Office and the

Organization needs to be adjusted. This includes: new priorities; change in working methods; use of all means of action; full cycle

• f: policy advice at the country level- monitoring and evaluation-reporting within the
• rganization and possible peer review; for more effectiveness in a context of limited resources

and the need to achieve efficiencies.

7

OUR PREPARATIONS OF LAST YEAR: THE KNOWLEDGE BUILDING BLOCKS (KBBs) AND THE THINK PIECES We should not focus and pay attention only to the Conclusions as they emerged from the Conference, we should not forget the enormous effort we did collectively to take stock with the way we work. I am referring to the KBBs and the Think Pieces, and the two retreats we

• rganized last year. Given the pressures of last year, and the need to write up and finalize the

report, we were not able to fully conclude our KBB exercise and the processing of the Think

• Pieces. We need to do this, we need to draw from and build upon that effort as we discuss the

way forward. So this is also very much what we need to have in mind in this retreat, and I will certainly have it in mind in the rest of the Summer as we define the way forward. WARNINGS I also want in this introduction to make three warnings. The first is on knowledge management. This is an extremely important subject. The GB adopted last year a new knowledge management strategy, there are some ongoing processes in the Office in this respect. Although much of what we are going to discuss is closely related to KM, we do not have this subject explicitly as part of the themes in this retreat. Partly because we already have enough material and themes and partly because to address this properly we need some further preparation that we did not have time to make. Second warning is on the nature of the RI conclusions. I think we can all agree that the RI Committee in the Conference did not engage in a comprehensive and systematic assessment of all the employment programmes, and therefore no comprehensive prioritization emerged in the conclusions of the conference. The conclusions give guidance on new thematic areas such as macroeconomics and trade, and they touch selectively on many issues. But on other programmes and issues the conclusions are silent, for example, youth employment, or rural employment, etc. This does not mean that these issues are not a priority any more. So we have to be able to understand what the conclusions are saying, and be able to interpret the priorities

• f the constituents in subjects in which the conclusions are silent, or lets say, economical with

words. The third warning is about what for lack of a better name I want to call the silo syndrome or rather dilemma: on the one hand we have a list of 18 programmes, aligned in different degrees with human and financial resources and responsible line managers. In all these programmes we have mandates and expectations, including reporting requirements and also reporting

8

• expectations. It is not feasible to say we are going to stop working on any of these thematic

areas. But on the other hand, we cannot expect to fund all these programmes to scale to be programmes on their own right, and we also have the idea that if we combine programmes in an integrated delivery we can be more effective in terms of results, and more cost-effective, to achieve certain outcomes. So what is the right balance between integrated delivery and individual programmes? How do we combine them in practice for maximum impact? What changes in our working methods do we need to achieve the right combination and make these programmes converge at the country level for maximum impact? These are key questions throughout the retreat, in fact, we begin with fundamental questions about specific programmes in the first session. This is a fundamental issue: I would like to hear your views on how we can synergize the programmes so that they converge at the country level in a transformational force to change policy and achieve outcomes in DWCPs or in National Employment Policies. If we continue with the atomization, with the silos, it will be very difficult for the ILO to be a force for transformational change in any given country. I want to finish by introducing Tom Wambeke. Tom works at the Turin Center and has kindly agreed to be our facilitator. Tom is an expert on distance education and learning, and in techniques for group dynamics and dialogues. Tom, over to you.