A new social contract for a job-rich recovery

By Paola Simonetti, Deputy Director, Economic and Social Policy Department, ITUC

“People are no longer coming to the kiosk to buy tea since the pandemic outbreak started. I am the breadwinner of a family of nine. On many days I don’t earn a single shilling and return home empty handed”. This is the story of Jamila, a tea kiosk holder in Mogadishu, Somalia. Her story is also the story of around 2 billion informal workers worldwide who have been left to cope with the crisis on their own.

The pre-existing labour market deficiencies have made those who were already vulnerable – low-skilled workers, migrant workers, informal workers, women, and young people – even more exposed to the impact of the crisis. In fact, the world entered the pandemic with a pre-existing “sustainability debt”.

The ITUC SDG8 composite indicator below – covering 145 countries corresponding to more than 97% of the world population – is calculated on the basis of four sub-domains related to four dimensions: economic well-being, employment quality, labour vulnerability, and labour rights. The rating ranges between 70-130 and the world average is set to 100.

ITUC SDG 8 composite indicator and sub-domains (click to enlarge)

Source: ITUC-ASviS

Considering the countries’ income groups, the results show huge differences between low-income and high-income countries with an average score of 90.70 for low-income countries compared to an average of 107.39 for high-income countries. Although this certainly depicts a North-South divide, it does not necessarily mean that richer countries are doing well. In fact, high-income countries performing slightly above the world average (100) still have a long way to go towards sustainability.  

This shows that economic growth alone cannot provide countries with the sufficient means to counter poverty and inequalities and ensure well-being for all. The lack of adequate wages and inclusive labour markets are still major questions hindering employment quality. And workers’ exposure to risks, under-protection and exclusion, are global challenges with 70 percent of the world population unable to count on the security of full social protection. While only high-income countries performed better in the labour rights dimension, the economic crisis brought along restrictions on freedoms and labour rights violations worldwide (including an increase in worker exploitation in digital enterprises in developed economies). These include international labour standard violations, non-compliance with labour regulations regarding layoffs, working hours and wage payment, as well as the disregard of organisational health and safety regulations.

The role of SDG 8 in building forward better

Through its targets on workers’ protection, decent work, social protection, inclusive growth, and environmental preservation, multidimensional SDG 8 on “decent work and economic growth” has a fundamental role in driving the recovery and the Agenda 2030 forward.

Interlinkages between SDG 8 and other SDGs (click to enlarge)

Source: ITUC-ASviS1

Good performances in SDG 8 are positively correlated with a variety of targets across the SDGs. As described above, the achievement of one goal (SDG 8) seems to reinforce a country’s ability to achieve other ones. For example, the social dimension of SDG 8 (employment levels, wages and social protection coverage) is key to fighting poverty and hunger (SDGs 1 and 2), while the target of “equal pay for work of equal value” is a key precondition for gender equality (SDG 5). A trade-off arises in the relation between economic growth, currently primarily carbon-based, and the environmental dimension. However, SDG 8 includes a target on decoupling GDP growth from environmental degradation, implying energy decarbonisation and industrial transformation leading to zero CO2 emissions.

Divergent recoveries, particularly exacerbated by the absence of strong international co-operation to beat the pandemic everywhere, and a dramatically weakened employment scenario are currently the world’s biggest challenges. Debt sustainability concerns are likely to push governments towards austerity, making devastating cuts in social sector spending. Austerity will inevitably weaken the speed and quality of the recovery and undermine resilience to future shocks, with dire consequences for SDG 8 and sustainable development.

An SDG8 driven recovery and resilience

It is crucial that policymakers prioritise both urgent and long-term recovery measures, promoting societal well-being and supporting governance mechanisms to push back power imbalances and inequalities:

  •  Stepping up investments in decent and climate-friendly jobs creation with just transition measures: Millions of jobs can be created through investments in sustainable infrastructure, renewable energy and energy efficiency measures. To guarantee that workers and communities are not left behind, just transition measures must be negotiated with social partners, and rooted in social protection, education, training and skills development.
  • Scaling up universal social protection systems: Although feasible options for many countries, where only political will seems to be the real determinant, this is not the case for the poorest ones. The UN Special Rapporteur’s proposal on extreme poverty and human rights for the establishment of a Global Fund for Social Protection is crucial to upholding the implementation of social protection floors in this respect.
  • Upholding equality and fighting vulnerability: Investments in quality public care services and infrastructure, the promotion of equal pay for work of equal value, and the introduction of minimum living wages with stronger collective bargaining remain the preconditions to gender equality, as well as education, skills training and life-long learning as measures for integrating young people in the labour market.
  • Financing recovery and resilience: Universal access to vaccines and treatment, increased levels of Official Development Assistance (ODA) and concessional finance, together with debt relief and a new form of international co-operation, will need to do the heavy lifting for the recovery and resilience needs ahead. Multilateral, regional and national development banks must better support national country needs in strategic sectors and systematically integrate employment into results measurement frameworks, measuring the quality and quantity of job creation.
  • Supporting inclusive governance and social dialogue: Social dialogue and industrial relations are key in crafting equitable policies and granting greater levels of transparency, good governance and trust in institutions, within countries, but also across nations.

The world needs a new vision to refund economic and societal models, and this requires commitments from all economic, social and political forces. The recent G20 Labour and Employment Ministers’ declaration is a promising step to build on and take action. Similarly welcome is the emphasis of the G20 Development Ministers communiqué on the need to strengthen women and youth through decent jobs and by advancing social protection system coverage in developing countries. The priorities above are at the heart of trade unions demands for a new social contract to address major deficits in the world of work and to ensure a human-centred recovery and resilience.

1. Source: ASviS calculation. The magnitude of the interlinkages varies among indicators. The number of arrows refers to the estimation of the slope in the linear regression (log-log transformation). Three arrows [>10%]; two arrows [5-10%]; one arrow [0-5%].