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The development effectiveness of Development Finance Institutions

Development funding is increasingly being channelled through Development Finance Institutions. These national institutions are particularly solicited when using development aid money to free up further investment, known as leveraging. When used well, these tools have the potential to allow sectors of developing countries’ economies that wouldn’t otherwise attract investment to strengthen and expand. However, this joint TUDCN-CPDE research paper highlights a number of alarming shortfalls in how these institutions operate that can seriously undermine international development goals.

This new report, entitled ‘The development effectiveness of supporting the private sector with ODA funds’ examined nine Development Finance Institutions (DFIs). It is jointly produced by the CSO Partnership for Development Effectiveness (CPDE) and the TUDCN. Five case studies (available below) provided a background for the study which found that DFI practice is lacking in three vital areas:

Ownership

Ownership has been repeatedly highlighted as a fundamental pillar of development. In spite of that, the majority of the DFIs examined had policies that expressed a preference for supporting the interests of the donor country. This is in clear contradiction of the aim of promoting local ownership and that of ensuring that aid by untied from external interests. In the case of COFIDES (Spain) and OPIC (USA) they go as far as requiring that any investment they make benefit their national (donor) companies. It is perhaps no coincidence that these are the only two DFIs examined in the study that are part owned by private national stakeholders. The issue of private ownership needs to be addressed as it creates a bias that can evidently lead to the compromising of development interests. The concept of ownership also extends to setting the aims of projects. However, not one of the DFIs require that either developing country governments or local social partners be consulted in setting out the aims of a project.

Development results

In order to obtain a good and independent idea of what the development impacts are on the ground, there is a need for performance standards and monitoring systems to be accessible. However, reporting standards are insufficient across the board. There is currently too strong a reliance on self-reporting and limited use of monitoring indicators. Key documentation required for ensuring accountability is not made available. Furthermore, as highlighted by the Panama Papers, it is widely recognised that offshore financial centres (OFCs) have a negative impact on developing countries. It is astounding then that 75% of CDC’s (UK) investments went through jurisdictions that are among the 20 most secretive. This poses serious challenges to the transparency of the DFIs’ work.

Mutual accountability

Meanwhile, accountability flows in only one direction. There is a need for stakeholders to have access to essential information and for complaint procedures to be systematically put in place in order for the opinions of the beneficiaries to be heard. The ability of workers to get organised and raise a complaint to the relevant body is also questioned. This reflects a broader approach of DFIs to labour standards as distinct from development goals. This outlook is symptomatic of a general contempt for labour interests among DFIs which is otherwise illustrated by the fact that none of them require the board to include a workers’ representative.

In light of these findings, the current performance of DFIs is unsatisfactory. Examples of best practice can lead the way to a sustainable approach to the use of financial tools for development.

The full report is available here: EN FR ES

The full case studies are available here:

Source: ITUC http://www.ituc-csi.org/DFI-study

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ILO calls for reorientation of Latin American labour market policies

ILO: Labour market policies in Latin America must be reoriented to protect social achievements and address productivity gaps At a time when governments in the region face the dual challenges of creating quality jobs and safeguarding achievements in social inclusion and work quality, an ILO report highlights the need for a new approach based on active labour market policies to address the current economic slowdown. Lima, 21 June 2016 (ILO) – The International Labour Organization (ILO) has urged Latin American countries to carry out a “strategic reorientation” of their labour market policies in order to increase productivity and to address rising unemployment and informality resulting from the economic slowdown. The report in Spanish A report warns that “the achievements made since the 2000s, in terms of social inclusion and work quality have stalled and are even beginning to reverse,” which can lead to a dangerous “structural stagnation” in labour markets […]

ILO: Labour market policies in Latin America must be reoriented to protect social achievements and address productivity gaps

At a time when governments in the region face the dual challenges of creating quality jobs and safeguarding achievements in social inclusion and work quality, an ILO report highlights the need for a new approach based on active labour market policies to address the current economic slowdown.

Lima, 21 June 2016 (ILO) – The International Labour Organization (ILO) has urged Latin American countries to carry out a “strategic reorientation” of their labour market policies in order to increase productivity and to address rising unemployment and informality resulting from the economic slowdown.

The report in Spanish

A report warns that “the achievements made since the 2000s, in terms of social inclusion and work quality have stalled and are even beginning to reverse,” which can lead to a dangerous “structural stagnation” in labour markets that could, in turn, generate an increase in inequality and informality and erosion in the middle class”.

“The alarm bells are ringing, the economic slowdown will impact the region’s labour markets in 2016 and over the next years,” said the ILO’s Regional Director for Latin America and the Caribbean, José Manuel Salazar.

“Now what we are talking about are effective solutions. The so-called active labour market policies represent a policy shift that seeks to improve and update the skills of the labour force, readjust labour supply and demand, and promote productive employment. This integrated approach is what labour markets in the region need,” he added.

The report, “What works: Active labour market policies in Latin American and the Caribbean ”, was developed by the ILO’s Research Department in Geneva.

According to the document, despite some years of solid growth in which social progress and unemployment advanced, those achievements were not consolidated, thus revealing structural deficiencies. The report warns that “even with remarkable progress, the shift to a knowledge driven economy and one based on better quality jobs has not been completed”.

ILO specialist Veronica Escudero, one of the authors of the report, warned that “even if these policies have great potential, we need to highlight that the design, targeting and implementation are essential to guarantee their effectiveness.”

In this sense, it is necessary to “be very clear about the employment barriers that people in a country face, as well as the needs of the local labour market, to ensure the relevance of the policies and to maximize their impact, including the number of beneficiaries,” explained Escudero.

An urgent policy reorientation for Latin America and the Caribbean

To tackle unemployment, informality and low productivity growth, a policy reorientation is needed in Latin America and the Caribbean. ILO economists Clemente Pignatti and Verónica Escudero discuss the potential opportunities that can be leveraged from active labour market policies in the region.

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ILO warns of widespread insecurity in the global labour market

How is the world of work changing? Are permanent contracts the norm or the exception? Discover the new World Employment and Social Outlook 2015 (WESO).

Raymond Torres, Head of the ILO Research department, introduces the new annual flagship report “World Employment and Social Outlook 2015: The Changing Nature of Jobs” to be launched by the International Labour Organization.

GENEVA, 19 May 2015 (ILO News) – Only one quarter of workers worldwide is estimated to have a stable employment relationship, according to a new report by the International Labour Organization (ILO).

The World Employment and Social Outlook 2015 (WESO)   finds that, among countries with available data (covering 84 per cent of the global workforce), three quarters of workers are employed on temporary or short-term contracts, in informal jobs often without any contract, under own-account arrangements or in unpaid family jobs.

Over 60 per cent of all workers lack any kind of employment contract, with most of them engaged in own-account* or contributing family work in the developing world. However, even among wage and salaried workers, less than half (42 per cent) are working on a permanent contract.

Focus of the report

The 2015 edition focuses on the way in which changing forms of work and workplace organization are having an impact on enterprises, workers and the broader world of work.

It presents the latest statistics on wage and salaried employment, both globally and regionally, and captures the share of fixed-term and part-time contracts.

The report also looks at global supply chains and provides statistics on the number of workers involved.

Finally, it includes policy recommendations on how to reduce growing inequalities through social protection and labour regulation.

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Global Employment Trends for Youth 2013: A generation at risk | ILO Report

Thie ILO Global Employment Trends 2013 Report examines the continuing job crisis affecting young people in many parts of the world. It provides updated statistics on global and regional youth unemployment rates and presents ILO policy recommendations to curb the current trends.

Download the report (Full report 161 pages – pdf 5.6 MB)
Executive Summary (11 pages – pdf 0.4 MB)

Key findings

– Youth jobs’ gains wiped out by slow recovery
– The long-term impact of the youth employment crisis could be felt for decades.
– 73.4 million young people – 12.6 % – are expected to be out of work in 2013, an increase of 3.5 million between 2007 and 2013.
– Behind this worsening figure, the report shows persistent unemployment, a proliferation of temporary jobs and growing youth discouragement in advanced economies; and poor quality, informal, subsistence jobs in developing countries.

From school to work…

– Informal, poorly paid and unemployed: The reality of work for most youth in developing countries
– School-to-work transition surveys of developing countries show that youth are far more likely to land low quality jobs in the informal economy than jobs paying decent wages and offering benefits. Access to education and training remains a major stumbling block.

Good practices

Sweden tackles youth unemployment through jobs guarantees

In the developing world

Reporting from Malawi and Zambia

Policy recommendations

– A global framework is needed to tackle the youth jobs crisis
Video interview with Gianni Rosas, coordinator of the ILO’s Youth Employment Programme

– The ILO urges policy makers to work together with social partners to address this alarming situation.

The ILO’s call for action

The ILO provides a portfolio of tried and tested measures in five areas: macro-economic policies, employability, labour market policies, youth entrepreneurship and rights.

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Youth employment: What works | ILO Evidence

International Youth Day, marked every year on August 12, aims at drawing attention to issues affecting young people worldwide. It is also an opportunity to highlight some of the policies and practices that can help tackle the youth jobs crisis.

Promoting youth employment has become a top priority for many governments at a time when 75 million young people worldwide are jobless.

ILO News looks at practices that can help turn around the dramatic youth employment situation. The ILO has warned of a “scarred” generation of young workers facing a dangerous mix of high unemployment, increased inactivity and precarious work in developed countries, as well as persistently high working poverty in the developing world.

Youth guarantees

Programmes that guarantee young people will get a job, education or training have shown good results in a number of countries.

In Finland, the success rate of the youth guarantee scheme is estimated at more than 80 per cent. A registered youth has to be offered a job, academic education, vocational training, or another measure to improve job prospects within three months of unemployment.

In some countries, similar programmes focus more on enhancing educational attainment to improve future employability. In New Zealand, the objective of the Youth Guarantee initiative is to improve transitions between school, tertiary education and work, by providing improved access to study to 16- and 17-year-olds not currently in education.

Vocational education and training

Technical and vocational education and training (TVET) can play a central role in preparing young people for work, provided the programmes reflect labour market needs. Several countries have undertaken reforms to make the programmes more relevant to today’s world of work.

In China, more than 3,000 “skilled workers’ schools” offer comprehensive vocational training courses. Nearly 95 per cent of graduates – there were close to 400 million in 1998 – find jobs.

Viet Nam is diversifying its vocational training to include full-time and regular training, mobile training, and training in enterprises and in traditional craft villages – small communities whose inhabitants work together to make specific goods.

The dual system – which combines school-based education with in-company training – is typical of Austria, Denmark, Germany and Switzerland, and more recently Norway. Denmark and Switzerland are among the OECD countries with the lowest unemployment rates for youth, while Austria is well below the OECD average.

Anticipating skills needs

Anticipating future skills needs is the first building block of strong training and skills strategies.

The United Kingdom Commission for Employment and Skills (UKCES) provides labour market information and advises local governments on skills policies. It is a public body made up of employers, trade unions, government and civil society representatives.

The Republic of Korea’s sustained growth pattern has been attributed in part to a government-led skills development system designed to ensure industry gets the skilled workforce it needs. Investment in a well-educated and highly skilled workforce has been an integral part of encouraging the adoption of new technologies.

Expanded Public Works Programme

South Africa is plagued with 50 per cent youth unemployment, high levels of poverty and inadequate skills. In 2004, the government introduced the labour-intensive Expanded Public Works Programme (EPWP) to provide income relief through temporary work. The programme helps develop marketable skills and entrepreneurship capacities among marginalized sections of society. In 2010–11, it created some 200,000 full-time jobs, half of which went to youth. The government receives technical support from the ILO in the design and implementation of EPWP.

Wage subsidies

Wage subsidies and other financial incentives – such as temporary social security exemptions – for employers who recruit young people can help improve school-to-work transitions. In France and Italy, financial incentives are granted to employers who recruit and provide on-the-job training to young jobseekers. Wage subsidies work best when they are designed to address specific labour market disadvantages faced by young people and when they are provided for a limited period of time.

Reforms to help transitions to formal employment

Following the economic crisis that rocked the country in the early 2000s, the Government of Argentina introduced reforms to address high-levels of informality. These included legislation giving small and micro enterprises a 12 month reduction in social security contributions for new recruits. Another law established sanctions for enterprises exploiting apprentices and young workers. Specific measures also were adopted to curb informality in the most affected occupations, such as simplifying the registration of domestic workers. Source: ILO.

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Learning forum on Green Jobs: local strategies and actions

Learning forum on Green Jobs: local strategies and actions.

Provides participants with a range of development tools and best practices with the objective to enhance their skills in the design and implementation of innovative Green Jobs strategies and actions at the local level. Target group: Local, regional and national officials concerned with economic development or planning and environmental policies; experts from international organizations, NGOs, chambers of commerce and other bodies dealing with territorial development, environment, representatives of workers, employers, local business organizations, cooperatives and other member-based organizations. Application deadline: 27 February 2011 A limited number of partial fellowships is available!

Language: English, French, Spanish, Portuguese,
Modality: face-to-face
Location: Turin and StudyVisit
Start Date: 2011/04/04 – End Date: 2011/04/21

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The Call — The Turin 2011 Learning Link

The Call — Learning Link.

The Turin 2011 Learning Link is based on the principle of collaborative contributions. This call is addressed to all organizations that are willing to share their knowledge and experiences in a participatory learning setting from April 11-15 at the International Training Centre of the ILO in Turin, Italy.
Themes

South-South and Triangular Cooperation
• This thematic area may be examined through the lens of understanding concepts, contexts and the international discourse on South-South and triangular cooperation. Practical questions, such as how to establish commitment to partnerships for capacity development? or what are successful strategies to implementing South-South and triangular cooperation for capacity development? may also be addressed.

Private Sector Participation
• In addition to analyzing challenges and opportunities for public and private sector cooperation for capacity development, the steering committee would appreciate session proposals that investigate incentives and tactics for the proactive inclusion of the private sector. How to identify, adapt and adopt successful practices across sectors, or knowledge sharing approaches, are examples of possible topics.

The MDGS: towards 2015

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Global Employment Trends Report 2009

Based on new developments in the labour market and depending on the timeliness and effectiveness of recovery efforts, the ILO report says global unemployment in 2009 could increase over 2007 by a range of 18 million to 30 million workers, and more than 50 million if the situation continues to deteriorate. The ILO report also said that in this last scenario some 200 million workers, mostly in developing economies, could be pushed into extreme poverty. http://tinyurl.com/bbx2so

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Key reading on ex-ante Poverty Impact Assessment

Promoting Pro-Poor growth: A Practical Guide to ex-ante Poverty Impact Assessment
http://www.oecd.org/document/…

This practical guide, developed by the DAC Network on Poverty Reduction (POVNET), is designed to help staff in developing countries and in aid agencies to plan and execute PIAs and to interpret their findings, the ultimate goal being to design and implement more effective poverty reduction policies and programmes. Download: http://www.oecd.org/dataoecd/46/39/38978856.pdf

Ex ante appraisal of the impacts on poverty of the project ”Plateforme du Millénaire de Diamniadio”
http://www.oecd.org/dataoecd/57/32/39206523.pdf
Process documentation of the first Poverty Impact Assessment (PIA) in the Republic of Senegal, by Kerstin Meyer, Andrea Warner, Roland Hackenberg, Nathalie Manga Badji, GTZ, Dakar, June 2007

Sample Mission Report
http://www.oecd.org/dataoecd/57/53/38609100.pdf
Ex Ante Poverty Impact Assessment for Regional Economic Development: Green Belt Siem Reap Province, Cambodia

Sample Mission Report

http://www.oecd.org/dataoecd/31/27/41768805.pdf
Financial Cooperation with Cambodia. Poverty Impact Assessment for Rural Electrification II

Managing for Development Results and Mutual Accountability
The value of evidence based decision-making for advancing cross cutting issues
http://www.oecd.org/dataoecd/57/40/38607559.pdf
Workshop on Development Effectiveness in Practice, Dublin, Ireland, 26-27 April 2007

Using Poverty and Social Impact Analysis to design more effective poverty reduction measures
http://www.undp-povertycentre.org/pub/IPCPovertyInFocus14.pdf
This IPC Focus issue examines the usefulness of two recently developed analytical tools: Poverty and Social Impact Analysis (PSIA) and Poverty Impact Assessment (PIA). Both approaches provide a framework to analyse the distributional impact of policies, programmes and projects. PSIA involves in-depth analysis of complex policy reform processes and offers evidence-based policy choices. PIA focuses on decisions concerning development projects and programmes. To explore PSIA’s and PIA’s potential contribution to more effective poverty reduction policies, individual articles in this volume.

Lessons learned in conducting Ex Ante Poverty Impact Assessment
http://www.mfdr.org/rt3/Glance/Day3/Sen.ppt
Lessons learned in conducting Ex Ante Poverty Impact Assessment for a Natural Resource Management Programme in India Third Round Table MfDR – Hanoi 2007.

Ex Ante Poverty Impact Assessment
http://www.mfdr.org/RT3/Glance/Day3/Dio.ppt
Presentation by Wolf M. Dio, GTZ, POVNET Task Team Leader, Third International Round Table MfDR, Hanoi 2007

Poverty (and social) impact analysis compared
http://www.undp-povertycentre.org/pub/IPCPovertyInFocus14.pdf
PSIA is an approach developed in 2001 by the World Bank and other donors, while the PIA came about in 2006 as a result of discussions within the OECD Development Assistance Committee (DAC). The main difference between both tools is that the PIA is designed to focus on project, programmes or specific policy reforms, while the PSIA approach is better for macroeconomic and structural policy reforms. Since PSIA was introduced, approximately 150 assessments have been conducted and the International Poverty Centre (IPC) show that it has been applied with a different degree of success in different occasions. Most of the articles in the journal agree that further progress needs to be made in order to unleash PSIA’s full potential.

As well as the PIA approach, POVNET has recently developed and is actively disseminating guidance for donors on promoting pro-poor growth , including in relation to:
Agriculture:
http://www.oecd.org/document/…
Employment:
http://www.oecd.org/document/…
Infrastructure:
http://www.oecd.org/document/…

Private sector development:
http://www.oecd.org/document/…
Social protection:
http://www.oecd.org/document/…

Poverty and Social Impact Analysis
http://www.worldbank.org/psia
This World Bank website was conceived as a forum for interaction and a tool for disseminating experience.

Sourcebook on Emerging Good Practice in Managing for Development Results (MfDR)
http://www.mfdr.org/Sourcebook.html
The Sourcebook is a valuable resource which provides solution-oriented examples of MfDR in action for practitioners at many levels and in many contexts. By focusing on observable and replicable interventions, the Sourcebook aims to increase the understanding of MfDR and illustrate how many stakeholders are effectively implementing MfDR principles for greater development effectiveness.

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Unions to Davos: Jobs the Missing Link

Employment and incomes key to pulling world economy out of tailspin, as ILO predicts up to 50 million jobs to go and 200 million more into absolute poverty, as new IMF figures herald global recession. The global financial crisis now threatens to become a social time bomb if the world’s governments don’t act together to save and create jobs, according to global trade union leaders attending the World Economic Forum Annual Meeting in Davos.

The ITUC, with its national affiliates and Global Unions partners, is pushing a comprehensive recovery and reform package, with top priority on sustainable employment, in discussions with the global institutions and national governments. Ensuring workers’ rights to union representation and collective bargaining, coupled with investment in labour market programmes, have to be the core of recovery efforts to enable consumer spending to steer economies onto the path to growth. In their statement to the Davos meeting, the unions call for a series of measures to arrest collapsing global demand.

The union statement also calls on business to negotiate with unions to save jobs, upgrade skills, cut carbon emissions and re-tool industry to set the basis for recovery. This needs to be done through national social dialogue and collective bargaining and internationally through agreements between multinationals and Global Union Federations in the different sectors. The ITUC represents 168 million workers in 316 affiliated national organisations from 157 countries. http://www.ituc-csi.org