The global financial crisis is quickly affecting the real economy in many parts of the world and provoking a global economic downturn that is unprecedented in the recent post World War II era. The implications for jobs, incomes and livelihoods of women and men, families and communities are unfolding day by day. Our most conservative estimates show that some 22 million people across the world will become unemployed.
These numbers could well double if economic conditions deteriorate further. Many more under-employed, or those working in conditions of informality and precariousness, see their ranks swollen and their income earning opportunities diminished. The economic recession is paralleled by a deepening jobs and social crisis that is seriously threatening social stability and recent gains in poverty reduction.
In this global job crisis, older workers, together with young people, migrants and low skilled workers, are likely to bear the brunt of job losses. Demographic trends tell us that, by 2050, two billion people will be aged 60 years or over and 80 percent of them will be living in developing countries. With populations aging, the working population will shrink while the labor force itself grows older. Worldwide, the labor force, aged 60-64, will increase by 55 million between now and 2020; over 45 million will be in developing countries. Older workers and their respective conditions in labor markets, represent a diverse panorama of realities across the globe. With a wide range of patterns in retirement age and access to health care, pension schemes and social benefits in different countries, the reality of the crisis is hitting, with varying intensity, specific groups amongst older workers and across countries and economic sectors.
Many aged 50 and above who were fully active in the labor markets prior to this crisis, are particularly vulnerable to job losses in the process of restructuring, and may face discriminatory measures in accessing new and scarce employment opportunities. Those already retired, or who were preparing for a dignified retirement with a decent pension income, face the prospect of declining income. Falling stock markets have severely impacted private pension plans, which lost around 20 percent of their value in one year. Finally, millions of older workers in developing countries, who did not have access to, or had insufficient coverage by formal social security systems, continue to work in uncertain conditions of informality and vulnerability. As the global slowdown spreads to developing countries, including those which had experienced high growth, traditional safety nets are inadequate and economic opportunities are shrinking.
Moreover, beyond this crisis there was a pre-existing socio-economic crisis with widespread poverty, under employment, growth in inequality and difficult social conditions for many. The ILO had long cautioned that the global economy was on an unsustainable course, lacking the direction to make markets and globalization work for all.
Our world today must simultaneously confront a major structural shift, as population aging brings about a new demographic context where older groups increasingly represent a larger share of the population, including the labor force. This trend is already well entrenched in industrialized countries and in some of the developing Asian countries. It will affect all regions within the forthcoming two decades, albeit at a different pace.
This new demographic reality is, indeed, a cause for celebrating one of humanity’s greatest successes, the increase in the life expectancy of women and men. But as people live longer and healthier, we are challenged to rethink our vision of our societies, our work and life relationships, and social organization.
This new demographic transition has numerous implications for growth, employment, poverty and productivity. It is resulting in significant shortage of labor and skills, including in the present context of the crisis, and it is bringing to the fore the necessity of ensuring a wider coverage of social security benefits, access to health care, and ensuring the sustainability of social protection schemes.
Indeed, the employment and social protection implications of aging societies are on the agenda of the ILO’s International Labour Conference to be held in Geneva in June 2009. The emerging global panorama reveals diverse situations within and across countries. This session of the International Labour Conference—a world assembly of governments, employers and workers—provides an opportunity to propose feasible and innovative solutions for promoting an integrated and balanced vision of decent work in aging societies that can reconcile the need for recovery and growth with the principles of social justice, and the aspirations of individuals and families with the progress of societies and countries.
ILO findings show that in defining a new balance in the changing demographic context, there is a close link between realizing the goals of more and better jobs in the globalized economy with those of extending the outreach of social protection and ensuring the sustainability of our social security systems. They also underscore the need for a life cycle approach and an intergenerational perspective. We will not respond to the challenges posed by the aging population by focusing on old-age policies alone. Combating childhood poverty, promoting full and productive employment opportunities for young women and men, supporting women’s entrepreneurship, a lifelong approach to skills development and learning and the wider access to basic social benefits for all age groups, are all elements of the same puzzle. Moreover, while solutions will need to be adapted to diverse local realities, they should be cast in a broad perspective as our global labor markets are already adjusting to these new realities through increasing labor mobility.
There are many challenges ahead but there is no inevitability—the future can be shaped with the right policies. As governments design and implement fiscal stimulus packages, and as enterprises restructure in the face of the current crisis, the quest for short term solutions should not undermine longer term strategies for dealing with structural imbalances. There may be a tendency to focus on short term measures, such as emphasis on early retirement packages for older workers that may jeopardize longer term solutions or reverse gains in combating discrimination against older workers’ access to new job opportunities, if they so desire and need. Training and retraining opportunities and support for self-employment, and access to health care should be made available. We have seen in previous crises that insufficient and/or inadequate labor market responses, once established, may persist after the economy has recovered. Older workers should benefit from stimulus packages and recovery programs and play an active role in reshaping our future.
Developing countries face additional binding constraints. Their fiscal and policy space for launching stimulus packages and counter-cyclical measures to combat the economic slowdown is restricted. At this time, international solidarity is critical to sustain and enhance support for development. Targeted programs combining employment and social protection need to be scaled up.1 ILO findings show the high correlation of poverty and old age on the one hand, and old age and informality on the other. All efforts should converge to prevent backsliding on the gains that have been made. Social transfer programs that target the poorest often have a larger impact on stimulating consumer spending and increasing aggregate demand.
In the short term, addressing this global downturn, and in the long run, adjusting to the new realities of our aging societies, compels us to find ways of enabling older people who so desire to contribute to the economic development and well-being of our societies. We must also enable our societies to benefit from their experience and wisdom without undermining their acquired rights to a dignified retirement, to health insurance and care, and to decent pension income and social transfers at the time they most need them. Reconciling these goals often implies hard choices and context-specific solutions that are best reached through social dialogue.
The ILO’s Decent Work Agenda with its four strategic objectives of promoting fundamental principles and rights at work, promoting employment and enterprise creation, extending social protection and reinforcing social dialogue—provide a principled framework that can go a long way in helping to sustain such a balanced and integrated perspective for facing the crisis, redressing the structural imbalances in the global economy, and taking up the new challenges of demographic transition. The new and harsh realities of the world of work show that the approach of the Decent Work Agenda based on these four strategic objectives that are “inseparable, interrelated and mutually supportive”—as affirmed by the ILO Declaration on Social Justice for a Fair Globalization, adopted in June 2008—is needed now more than ever.
1 ILO, Global Economic Trends, March 2009.
Juan Somavia, a Chilean national, has been Director-General of the International Labour Organization since March 1999. He is the first representative of the southern hemisphere to hold this position.