ILO/UNCTAD policy debate on trade and employment

27 January 2012

On 20 January the Untied Nations Conference on Trade and Development (UNCTAD) and the International Labour Organization (ILO) hosted a policy debate to accompany the Geneva-launch of the ILO volume: "Trade and Employment: From Myths to Facts." Promises of more and better jobs with increased globalisation are coupled with growing fears of job losses and pressure on wages and working conditions. Yet, not enough accurate data is available to assess the impact of trade on employment.

The book was first published in October 2011 and funded by the European Commission. It aspires to address this disconnect between the common knowledge that trade is important for employment, and yet the lack of evidence to support it.  The volume highlights existing evidence on the linkages between trade and employment, and aims at  contributing to the designing of tools of assessment of trade on employment.

The book was generally praised during the conference and presented as a leap forward in policy debate about trade and employment.

The Executive Director of the ILO, José M. Salazar-Xirinachs, stated that the informal economy can no longer be ignored. The lack of access to credit and skilled labour of the small firms - a typical feature of the informal sector - prevents them from taking advantage of the opportunities of trade liberalisation. The existence of a too big informal economy is likely to affect an economy's supply response to trade reform especially for developing countries.

Another finding of the book was for example that trade does not necessarily reduce gender discrimination and may even reinforce it. Although trade liberalisation might increase jobs for women and allow for greater independence, the poor working conditions in labour intensive export oriented industries and large wage gaps with men may undermine this benefit.  The book also focuses on the various drivers for export diversification and analyses labour market adjustment costs following trade reforms.

Salazar-Xirinachs highlighted that trade liberalisation is more beneficial for wealthier economies, although country-specifics are important to take into account.

Ricardo Meléndez-Ortiz - Chief Executive Officer of the International Centre for Trade and Sustainable Development (ICTSD) - added that it was hard to make a general statement on the effects of trade on a country. Trade liberalisation, investment flows and export-led policies were given as examples by Mr Melendez-Ortiz as country-specific issues that have to be analysed differently depending on the country they are being implemented in.

The absence of reference on  linkages between trade and agriculture in the book was raised during the panel discussion, agriculture being an important source of employment in developing countries.  Alejandro Jara - Deputy Director-General of the WTO - said that liberalisation is "the best thing to happen for agriculture," and that domestic support and subsidies must stop so that developing countries can "pick their own speed."   According to the Faizal Ismail, Ambassador of South Africa to the WTO, one important policy question that the book did not address is "how do we manage trade so it is job creating and welfare enhancing?"

The moderator of the meeting, Tom Miles from the news agency Reuters concluded the meeting stating that countries "need to develop trade to generate employment and need to be developed to take advantage of trade opportunities."

The panel discussion also welcomed: H.E. Fernando De Mateo - Ambassador of Mexico to World Trade Organization (WTO); Ke Sovann - Deputy Permanent Representative, Cambodia; Douglas Lippoldt - Senior Economist at the Organisation for Economic Co-operation and Development (OECD) and Secretary of the International Collaborative Initiative on Trade and Employment (ICITE).

The book can be found on t he ILO webpage.

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