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National employment policies:A guide for workers’ organisationsWhat is a nationalemployment policy?

National employment policies:What are they?Why do we need them?Why should trade unions get involved?

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ILO NATIONAL EMPLOYMENT POLICIES - A guide for workers’ organisationsQuick overviewA national employment policy is a vision and a practical, comprehensive plan for achieving acountry’s employment goals. Countries need them because employment challenges are gettingmore and more complex: Demographic trends are putting enormous pressure on labour markets. Structural change in many countries represents a formidable opportunity as well as a hugechallenge, as people move out of the agricultural sector and into the manufacturing orservice sectors in the cities. Economic growth does not automatically translate into more decent jobs and morebenefits for the poor. Informal employment—work that lacks social and legal protections and employmentbenefits—is still prevalent in the developing world. Wage inequality is rising across the world, with workers benefitting less from economicgrowth. An increasing number of those who work are counted among the working poor. Secure, full-time employment with benefits is no longer the norm in the developed world. There are more women in the labour force, but their quality of employment, includingwages, working conditions and prestige, still lags behind men. High youth unemployment is causing increasing numbers of young people to getdiscouraged and leave the labour market.The need for comprehensive national employment policies has been rising to the top of theagenda globally, especially in the wake of the 2008 world financial crisis. In this part of theguide, we tell you what has been happening, especially in developing countries.Trade unions need to be involved in setting policy directions for employment in their countries.No one speaks better for workers than their unions. But this new role goes well beyond tradeunions’ traditional areas of concern and means of action. They will have to widen their agendato deal with employment issues in a larger economic context.Unions will need stronger capacities to take part meaningfully in complex national policydebates, with well-researched arguments and credible representation from all parts of thelabour force. They may need to build coalitions within organized labour in their countriesto achieve a national labour voice, and they may need to build coalitions with like-mindedorganizations outside the labour movement.v

ILO NATIONAL EMPLOYMENT POLICIES - A guide for workers’ organisationsContentsQuick overview 1.1.vWhat is a national employment policy?1.2.  Global trends that make national employment policiesmore important than everDemographic challenges: An ageing labour force in some parts of the world and a“youth bulge” in others Structural change is happening rapidly in some countries. Structural change often means populations on the move. Growth does not automatically translate into more decent jobs and more benefits. Informal employment is still prevalent in the developing world. The scale of vulnerable employment is far larger than that of unemployment. A smaller piece of the pie: Wage inequality is rising across the world. Jobs are not an automatic shelter from poverty. Full-time employment is no longer the norm in the developed world. More and more women are entering the labour force, but the quality of theiremployment still lags behind men. There are not enough jobs, especially for youth. Underemployment and low wages keep the economy from growing. 1333445666881.3.  How national employment policies got to the top of theagenda worldwide1.4.  What are countries in the developing world doing aboutemployment policy?National employment policies around the world Strengthening the employment dimension of national development frameworks 1.5.1314The ILO’s approach to national employment policiesThe normative framework The policy framework References Resources and tools 16171921vii

ILO NATIONAL EMPLOYMENT POLICIES - A guide for workers’ organisations1.1. What is a national employment policy?A national employment policy is a vision and a practical plan for achieving a country’semployment goals. To make such a plan, a government has to clearly see a country’schallenges and opportunities. It has to consult widely to reach common agreementamong all interested parties in the economy, including employers’ and workers’organizations.A national employment policy is not just a job creation programme. It takes intoaccount a whole range of social and economic issues. It affects many areas ofgovernment—not just the areas in charge of labour and employment—and every partof the economy. It brings together various measures, programmes and institutions thatinfluence the demand and supply of labour and the functioning of labour markets. Anational employment policy should promote decent work, in which international labourstandards, social protection and workers’ fundamental rights go hand in hand with jobcreation.A national employment policy is something that each country must forge for itself,according to its own context and state of development. It is not just an inspiringstatement of what we hope for. It is a real plan for how we get there. Many stakeholdershave to be involved in making it, and the result has to be something that they can allwork towards.1.2. G lobal trends that make national employment policies moreimportant than everIf employment challenges were simple, most of them would be solved. But in fact, thechallenges are getting more and more complex in our globalized world. The range ofissues is huge. Read this summary of the trends and challenges. See if you don’t agreethat addressing them requires placing employment at the centre of each country’seconomic and social policies.Demographic challenges: An ageing labour force in some parts of theworld and a “youth bulge” in othersAgeing is a particular concern for developed northern economies and countries suchas China. There, the labour force has a much larger share of older workers and a smallershare of youth. Ever-higher costs for health and social services are borne by a shrinkingworking-age population.1

Other regions have rapid population growth and a “youth bulge”. A large, young workforce can bring wealth if the economy is growing with the right ingredients. But it canbe an enormous weight if the economy is not growing or not creating decent jobs forthese youth.Figures 1a and 1b show that there will be more old people and fewer young people in allregions by 2050.Figure 1a. Age distribution of population in “more developed” regions, 2000 - 2050100Age distribution of population (%)908079605040302010020002010Age 0-142020Age 15-64203020402050Age 65 Figure 1b. Age distribution of population in “less developed” regions, 2000 – 2050100Age distribution of population (%)90807960504030201002000Source: UN, 20112Age 0-1420102020Age 15-642030Age 65 20402050

ILO NATIONAL EMPLOYMENT POLICIES - A guide for workers’ organisationsStructural change is happening rapidly in some countries.Structural change is a key condition for the creation of decent and productiveemployment. It occurs when large numbers of workers move out of the agriculturalsector and into manufacturing and service jobs. Structural change can bring aboutremarkable improvements in productivity. Some developing countries (mainly in Asia)have narrowed the productivity gap with industrial countries rapidly. In the past, theprocess of structural change often took decades, but in many developing countriestoday, it is transforming lives within a generation. In 2003, for the first time in history,the global share of employment in the service sector surpassed that of the agriculturalsector. This rapid structural change has slowed somewhat since the global financial crisisthat began in 2008.While there have been gains from structural change in some countries, there are manyissues to address: In countries where structural change takes place rapidly, education and trainingsystems are often unable to keep pace with the changing skills requirements. The move from one sector to another is not always a guarantee of decentemployment. Many service sector jobs are of very poor quality, with low salaries.We cannot assume that the growth of the service sector in poor countries increasesincomes for the poor; they might merely be moving from rural to urban poverty. To ensure that structural change translates into better jobs, a country’s employmentpolicies need to promote investment in higher value-added sectors. Capitalinvestments in infrastructure are needed, but so are social investments in things likeeducation, health and occupational safety.Structural change often means populations on the move.Structural change is closely related to internal migration – people moving from ruralareas to cities. By 2050, more than two thirds of the world’s population will live inurban areas. This migration is the result of work rapidly shifting from the farm to thefactory or to informal employment – work that lacks social and legal protections andemployment benefits -in the service sector. It is a complete reversal of global livingpatterns within a century. In 1950, only 30 per cent of the world’s population lived inurban areas (IOM, 2010).Growth does not automatically translate into more decent jobs andmore benefits.The world economy expanded substantially between 2002 and 2007. Almost all regionsof the world enjoyed fairly robust employment growth. But employment growth is onlypart of the story. The growth during this period did not lead to sustained creation ofdecent jobs. Unemployment, informal employment and working poverty persisted.3

Informal employment is still prevalent in the developing world.Informal employment is typically small, subsistence farming or very small, family-runbusinesses. It is one of the key features of the labour market in many developingcountries. In the agricultural sector of developing countries, informal employment isalways high. But even excluding this sector, informal employment stands at more than40 per cent in two-thirds of countries for which we have data, and appears to be onthe increase (ILO, 2012a).Informal workers tend to have low levels of education. This may mean that these workershave no choice but to work informally. Informal jobs tend to be of low quality, underpaid,insecure, and unprotected by basic labour standards or worker representation.The scale of vulnerable employment is far larger than that ofunemployment.When a worker is purely self-employed, with no formal work arrangement and noemployees except for family members who contribute without receiving wages, werefer to them as own-account workers. Such workers are less likely to be in formalwork arrangements and to enjoy adequate earnings and social security. While peoplein wage employment may not always have all the components of a decent job, theyare still less likely to be poor than own-account workers are.We refer to own-account and contributing family workers in developing countries asbeing in vulnerable employment. The scale of vulnerable employment is far greaterthan that of unemployment. For example, there are 14 times more vulnerable workersin South Asia and East Asia than unemployed workers (ILO, 2010a). In 2007, five outof ten people who worked were either contributing family workers or own-accountworkers. The situation improved considerably between 1997 and 2007, but from highstarting levels. The global financial crisis of 2008 has reversed some of this progress.Figure 2 shows the slow global shift from subsistence household work to wage work.4

ILO NATIONAL EMPLOYMENT POLICIES - A guide for workers’ organisationsFigure 2. Share of wage employment and own-account workers and contributing familymembers in total employment, World, 082009201020112012Wage and salaried workersOwn account workers and contributing family workersSource: ILO, 2013aA smaller piece of the pie: Wage inequality is rising across the world.The trends show a rise in wage inequality since the mid-1990s in both developedand developing countries. Between 1995 and 2007, increases in productivity failedto translate fully into higher wages (ILO, 2010c). This means that workers benefit lessfrom economic growth. The majority of countries have seen increases in low-wageemployment over the past 15 years. Low-wage workers are disproportionately femaleand are also more likely to be members of disadvantaged groups.While low-wage employment can be a first stepping stone towards better-paidemployment, especially for young workers, it can also turn into a trap, when there areno opportunities for skills development.The financial crisis of 2008 is another factor in low wages worldwide, because it led tomassive wage cuts in many countries. The crisis has also weakened collective bargaining,and this is likely to provoke a further downward spiral of wages.5

Jobs are not an automatic shelter from poverty.An increasing number of those who work are also poor. Working poverty means thata person is employed, but cannot lift themselves and their dependents out of poverty.This may be because the returns of their labour are too low, or it may be because theycannot get enough work, or both.In the high-growth years between 1997 and 2007, there was a decrease in the world’sshare of working poor, but this did not have a substantial impact on the poor regionsof the world. Since the global financial crisis of 2008, the rate of working poverty hascontinued to decrease in countries going through structural change, but at a slowerpace than before. Since countries with high rates of working poverty have economiesthat are growing faster than the world average, the decline in working poverty isexpected to continue. However, as these countries are also growing faster in terms ofpopulation, the actual number of working poor is expected to increase (ILO, 2012b).Full-time employment is no longer the norm in the developed world.Over the past two decades, more and more people who want to work full time havehad to accept part-time work. This involuntary part-time work, along with temporary ortime-limited employment, wastes a person’s productive capacity. Skills tend to be lostwhen a worker is between jobs or has long periods of unemployment and instability.Precarious employment also means weaker productivity gains in the future and lessroom for prospering and moving up the career ladder. Wages are also lower. Temporaryworkers, for example, are paid about 40 per cent less than permanent workers (ILO,2013a).More and more women are entering the labour force, but the qualityof their employment still lags behind men.Globally, the wage-earning labour force now includes a larger share of women 40 per cent.The last 20 years have seen advances in gender equality in the world of work. Women indeveloping countries have been absorbed into the labour market through various channels.These include working in Export Processing Zones or Special Economic Zones. Women alsowork in export-oriented agriculture, and increasingly as independent migrant workers(ILO, 2012c).However, much of women’s employment is paid less than men’s and carries lessprestige. Moreover, women are more likely to be in vulnerable employment than menare, and this gender gap has widened during the past two decades. Women are evenmore likely to be unpaid contributing family workers in own-account households, withno personal income at all.6

ILO NATIONAL EMPLOYMENT POLICIES - A guide for workers’ organisationsFigure 3a. Share of wage and salaried workers in total employment, by regions and sex, 2012Sub Sharan AfricaWomen14,7WMen28,6M42,0WNorth Africa55,157,3MWMiddle East68,1M64,9WLatin America andthe Caribbean62,4M15,8WSouth Asia23,4M33,2WSouth East Asia andthe Pacific38,6M46,9WEast Asia52,6M79,0Central and South Eastern WEurope (non EU) and CIS M76,489,8WDeveloped Economiesand European Union83,7MWorldW48,2M48,6020406080100Share in total employment (%)Source: ILO, 2012bNote: 2012 are projections (Update October 2013).Figure 3b. Share of contributing family workers in total employment by regions and sex, 2012Sub Sharan AfricaMiddle EastLatin America andthe CaribbeanSouth AsiaSouth East Asia andthe PacificEast AsiaMen19,02MNorth AfricaWomen39,07W33,7W8,1M22,7WM 4,78,6WM 4,015,8W23,4M33,9W10,9M35,5W11,7MCentral and South Eastern W 5,4Europe (non EU) and CISM2,1Developed Economiesand European UnionWorldW2,1M0,7W25,08,6M020406080100Share in total employment (%)Source: ILO, 2012bNote: Preliminary projections (Update October 2013).7

There are not enough jobs, especially for youth.After the financial crisis of 2008, the number of unemployed around the worldincreased, particularly in high- and middle-income economies. Youth unemploymentrates have increased in about four out of five advanced economies and in two-thirds ofdeveloping economies (ILO, 2013). A big concern is that more and more young peopleexperience long-term unemployment. Some 35 per cent of unemployed youth inadvanced economies have been out of a job for six months or longer. This is causingincreasing numbers of young people to get discouraged and leave the labour market.Discouraged workers are not counted as unemployed, but they still suffer froma lack of employment opportunities. This can have long-lasting effects on youth. Iterodes professional and social skills and prevents young people from gaining skills andexperience on the job. Unemployment early in life is likely to result in “wage scars” thatcontinue to depress their employment and earnings prospects even decades later.Underemployment and low wages keep the economy from growing.Workers are consumers, but high unemployment, underemployment and low wagesmean they have less disposable income. When they reduce their demand for goodsand services, it erodes business confidence. Consumption and investment are two ofthe main drivers of economic growth. When firms further hesitate to invest and hire, the“negative feedback loop” slows economic recovery.Let’s agree on a policy to solve our problems togetherHigh youth unemploymentis causing increasingdiscouragement amongyoung people8secure, full-timeemployment isbecoming rareEconomicgrowth is tooslow

1.3. H ow national employment policies got to the top of theagenda worldwideThis timeline shows how the issue of employment has gained ground since the middleof the last century.1944194819641966 he International Labour Organization’sTDeclaration of Philadelphia callssupporting programmes to achievefull employment and raise standardsof living “the solemn obligation” of theorganization.T he United Nations adopts the UniversalDeclaration of Human Rights, which saysthat “everyone has the right to work, tofree choice of employment, to just andfavourable conditions of work and toprotection against unemployment”.T he International Labour Conferenceadopts the Employment PolicyConvention 1964 (122). It acknowledgesthat there is a human rights dimensionto work. It serves as a framework formember states who want to makenational employment policies.T he United Nations adopts theInternational Covenant on Economic,Social and Cultural Rights, which says that“the right to work includes the right ofeveryone to the opportunity to gain hisliving by work which he freely choosesor accepts, and [states should] takeappropriate steps to safeguard this right”.9

199519972000200410T he World Summit on SocialDevelopment acknowledges therelationship between employment anddevelopment.E uropean Union member states establisha set of common objectives for creatingmore and better jobs through theEuropean Employment Strategy. Theyagreed on yearly monitoring proceduresand indicators (quantified measurements,targets and benchmarks) to monitor andevaluate progress.T he United Nations General Assemblyunderlines the importance of full,productive and freely-chosenemployment to social and economicprogress.I n Africa, an Extraordinary Summit onemployment creation and povertyreduction convened in Ouagadougouadopts a Declaration on Employmentand Poverty Alleviation in Africa, aPlan of Action for the Promotion ofEmployment and Poverty Alleviation anda Follow-up Mechanism and Evaluation.

ILO NATIONAL EMPLOYMENT POLICIES - A guide for workers’ organisations200520082010 eads of state at the World SummitH“resolve to make the goals of full andproductive employment and decentwork for all, including for women andyoung people, a central objective of[their] relevant national and internationalpolicies, as well as [their] nationaldevelopment strategies, includingpoverty reduction strategies, as part of[their] efforts to achieve the MillenniumDevelopment Goals”.T he United Nations expands theMillennium Development Goals to includea new target for employment, recognizingthat decent and productive work for allis central to addressing poverty. Fournew employment indicators call on allcountries to report progress with databroken down by sex and urban/ruraldifferences.T he G20, meeting in Seoul, agree on25 clear, future-oriented, collectivecommitments called The SeoulDevelopment Consensus. It offers a newapproach to designing economic policyframeworks that lead to both growthand global development goals suchas poverty reduction and employmentgenerationMeanwhile, at a historic conference inOslo, the International Monetary Fund,along with other international leaders,calls for an employment-focused policyresponse to the global economicdownturn.11

20112012T he OSLO Conference on Macro and GrowthPolicies in the Wake of the Crisis reached abroad consensus that we have entered a verydifferent world in terms of policy making inthe wake of the international financial crisisof 2008. In the age-old discussion of therelative roles of markets and the state, thependulum has swung toward the state.I n response to the high level of unemploymentin Europe, the European Commission launchesan "employment package" to: support job creation with reduced taxes onlabour and hiring subsidies and exploit thepotential of sectors like the green economy,information technology and health care help workers succeed and move in thelabour market by investing in skills, basedon better forecasting of need, and bypromoting the free movement of workers strengthen monitoring of employmentpolicies in EU countries so that employmentand social concerns do not lag behindeconomic ones.2013T he World Bank dedicates its annual WorldDevelopment Report to the question ofjobs. It says “Jobs are the cornerstone ofeconomic and social development. Indeeddevelopment happens through jobs.”In the same year, Latin America’s Declarationof Medellin (Organización De Los EstadosAmericanos, 2013a) reaffirms that decent work,productive employment and social inclusionshould be objectives that cut across economicand social policies and commits its labourministers to an action plan (Organización DeLos Estados Americanos. 2013b).12

ILO NATIONAL EMPLOYMENT POLICIES - A guide for workers’ organisations1.4. W hat are countries in the developing world doing aboutemployment policy?Mounting concern about employment has led many developing countries to formulatenational employment policies and to strengthen the employment dimension of theirnational development frameworks. A national development framework is a country’soverall plan that sets out its priorities for development over a period of time. Overall,employment has become more present in national development frameworks. In somecountries, it is illustrated by the names they are given, for instance The Growth andEmployment Strategy in Cameroun and the Strategy for Accelerated Growth andEmployment Promotion in Togo.The EmPol Gateway is an ILO database that has information about national developmentframeworks and national employment policies in 63 countries. Of these, 27 have adopteda national employment policy, mostly since the global financial crisis of 2008. Eighteen arein the process of developing one. Five countries are in the process of revising their policyto better respond to the new employment challenges. There is evidence that countriesare increasingly moving away from tackling employment issues solely through the use ofactive labour market policies, such as direct job creation and hiring subsidies. They aremoving towards developing and adopting comprehensive national employment policies,bringing together various measures, programmes and institutions that influence thedemand and supply of labour and the functioning of labour markets.National employment policies around the worldIn Asia, current or former centrally planned economies (such as China, Nepal, India andViet Nam) have adopted a legislative approach. This is less obvious in Asian countriesthat have always been market-oriented. In East and South-East Asia (Singapore,Indonesia, Philippines, Cambodia) policies are geared towards global integration as acore element of growth and employment promotion (ILO, 2010d). It is either addressedas part of their national development plans or in specific employment policy documents.In Africa, there has been a focus on employment-friendly poverty reduction strategies aswell as national employment plans. Following the Ouagadougou Summit on Employmentin late 2004, employment issues became more prominent in poverty reduction strategies.There is a growing recognition of productive employment as critical to both growth andsustainable poverty reduction. The African Union and regional economic commissionshave contributed to the recognition of the centrality of employment.Following the Arab spring of 2011, some Arab countries have started the process ofdeveloping comprehensive national employment policies, such as Tunisia and Morocco.These countries have moved from active labour market policies that were limited toyoung college graduates to more comprehensive policies that address the many otheremployment challenges faced by the region.13

In Eastern and Central Europe, many countries have endorsed national employmentpolicies. These are mainly focused on: active labour market policies (especially for youth). Active labour market policies focuson stimulating employment through things like direct job creation and hiring subsidies. improving employment services strengthening social protection of the unemployed promoting skills training and other ways to develop human capital encouraging active ageing.Developing an employment policy is a requirement for countries to be eligible forentry to the European Union. Their policies must conform to the social Europeanmodel and the European Employment Strategy. The social European model promotessustainable economic growth and high living standards and working

NATIONAL EMPLOMENT POLICIES A guide for workers organisations 3 Structural change is happening rapidly in some countries. Structural change is a key condition for the creation of decent and productive employment. It occurs when large numbers of workers move out of the agricultural sector and into manufacturing and service jobs.