ILO submits recommendations for faster recovery from global crisis

Ramani Kangaraarachchi

The International Labour Organization (ILO) has made three important policy recommendations aimed at preparing the ground for a faster recovery of the suffering financial sector due to the global crisis, and bringing in a positive scenario of employment growth.

These recommendations have been submitted in a paper to be discussed at the Global Dialog Forum on the impact of the financial crisis on finance sector workers.

The report said the global economic crisis is leading to significant job losses in the financial sector and as such it is vital to implement these policies to remedy the job losses in the financial sector.

The three policies are :- adopting a comprehensive strategy to respond to the crisis, helping finance sector workers cope with the crisis and having policies for a more effective finance sector to serve the real economy.

The report said that the crisis requires a global policy approach. Bail-out plans of the financial sector although crucial are insufficient.

The world economy has been affected by a vicious circle of rapidly declining confidence that leads to lower demand, output and employment, which in turn further depresses confidence.

What is needed is a global, coordinated stimulus package that breaks this vicious circle and responds to the current problems of failing capital markets, drying-up of credit and massive job losses.

According to the report the policy package would be based on the following broad principles:

An immediate policy objective to stabilize the financial sector and restore confidence to capital markets. In addition, a macroeconomic stimulus package is needed to boost overall demand, thereby supporting the economy and job creation.

To mitigate the adverse effects of the crisis on disposable incomes and income inequality, social welfare systems need to be strengthened and workers’ rights protected.

The report also said that experience shows that social dialogue, as part of the Decent Work Agenda, can be instrumental in designing an effective package of measures.

The massive impact of the crisis for the financial sector needs to be mitigated by social policies that cushion the adverse effects on employment and disposable income and help those who lose their jobs in the sector to return quickly to employment.

These measures are essential to stabilize the economy and thereby also help improve the outlook for the financial sector, according to the report.

The paper was submitted last week by the International Labour Office for the Global Dialog Forum under its sectoral activities program.