Governments moved to prevent job loss, boost skills in response to global financial and economic crisis

April 20, 2012

ILO and World Bank partner to release new data, report on government actions

WASHINGTON, April 20, 2012 – Today the International Labour Organization (ILO) and the World Bank (WB) released a joint report and new online data tool with the first comprehensive stocktaking of countries’ jobs-related policy responses to the recent global financial and economic crisis.   

A follow-up to a request from leaders at the 2009 G20 Pittsburgh Summit, the report, Inventory of Policy Responses to the Financial and Economic Crisis, demonstrates how governments across the globe and of all income levels used labor market interventions to limit the economic and social impacts of the crisis and spur employment, household income, and economic growth, and reduce poverty. This new online data tool provides a detailed track record of policies enacted during the height of the financial crisis (2008-2010), and implications for the design of policies to address future economic downturns.

“For the first time, policymakers now have access to data on what other countries did during these turbulent times, in order to better understand what works best to create jobs and reduce poverty in the wake of crises,” said Tamar Manuelyan Atinc, World Bank Vice President for Human Development. “These findings affirm the Bank’s new Social Protection and Labor Strategy’s focus on promoting resilience, equity, and opportunity for the world's poorest and most vulnerable people.”

“The ILO has joined forces with the World Bank to create a database unprecedented in its scope and size on crisis response measures taken by both developed and developing countries following the framework of the ILO's Global Jobs Pact,” said Jose Manuel Salazar-Xirinachs, International Labour Organization Executive Director for Employment. “Policy makers and researchers worldwide will be able to use this database to analyze policies and draw further lessons which continue to be highly relevant today as the jobs crisis persists.”

The report reveals that in most of the 55 low-income and middle-income and 22 high-income countries surveyed, unlike previous crises, there was considerable government intervention to mitigate the impacts of the downturn. Not only did a majority of effected countries use expansionary fiscal and monetary policies to stimulate the economy, they also directly intervened to protect or create employment, preserve skills and facilitate the matching between job-seekers and employers, and protect the incomes of the unemployed and vulnerable groups. In many cases, social dialogue helped guide the policy response. This was critical, for instance, when implementing work-sharing arrangements.

But there are questions about how well prepared countries were to respond to the economic crisis, particularly developing countries. Many countries, for instance, did not have significant social security programs that could be scaled up during the crisis. In addition, across the board, the coverage of social insurance programs was low. Policies such as the increase in the level and duration of unemployment benefits, for example, were helpful, but in some cases, might have only benefited formal sector workers. Active labor market programs such as employment services, training, and wage subsidies, were also commonly used, but there are many lessons as to how their design and implementation can be improved. Finally, many countries lacked surveys or administrative data to track the impacts of the crisis on labor markets and workers.

The report recommends that countries focus on: (i) improving the coordination between macro and sectoral policies; (ii) expanding the coverage of social insurance to all workers; (iii) integrating and strengthening safety nets; iv) rethinking the design of active labor market programs including those used to stimulate labor demand; (v) investing in labor market information systems; (vi) promoting social dialogue; and (vii) increasing vigilance to avoid violations of rights at work.

The online database was enabled by financial support provided by the Swiss State Secretariat for Economic Affairs (SECO) for the ILO, and by the Multi-donor Trust Fund on “Labour Markets, Job Creation, and Economic Growth,” with funding from Austria, Germany, Korea, Norway, and Switzerland for the World Bank. It will allow researchers and policy analysts to conduct case studies or cross-country analysis to better understand which policies were the most effective. The data can also facilitate discussions between government ministries, employers, international development agencies and civil society organizations involved in the design and implementation of social protection and labor programs.

The ILO and WB will launch the database and report on Friday, April 20, 2012, from 12-2 p.m. EST during a special event at the WB-IMF Spring Meetings.

About the ILO

In response to the crisis, the ILO constituents, in every country, reprioritized their Decent Work Country Programms (DWCP) to put in place crisis response measures based on lessons from the past, and the policy portfolio of the Global Jobs Pact (GJP). The GJP was adopted in June 2009 as a portfolio of policy measures including macroeconomic, enterprise promotion and SMEs, Active Labour Market Policies, labour intensive investment in infrastructure, skills development, expansion of social protection, social dialogue, and International Labour Standards (ILS).The ILO also stepped up efforts in support of new global strategies for addressing the youth employment crisis and prioritize employment and social protection in global policy rebalancing. The ILO works closely with the other UN agencies and programs in supporting member states facing the challenges brought by the crisis. The ILO has also played an important role in supporting the G20 policy agenda.

About the World Bank

In response to the global food, financial, and fuel crises, the World Bank Group (WBG) increased its labor-related financing from an annual average of $477 million in 1998-2008 to an annual average of $634 million for 2009-2011. From 1998-2011, the WBG supported job creation and worker protection activities in 103 developing countries, with total lending reaching $7.14 billion. With WBG financing, technical assistance, and analytical work, countries are protecting workers and investing in programs that help promote job creation. The WBG’s job-creation initiatives coordinate efforts on macroeconomic policy, the investment climate, industrial development, innovation and entrepreneurship, private-sector development, labor regulations, education and skills, and social protection.

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