Keynote Remarks at the Dialogue with Workers' Organizations

Speech | 27 May 2009

Keynote remarks by Ursula Schaefer-Preuss, ADB Vice President, at the ADB Dialogue with Workers' Organizations, Manila, Philippines

Guests from the various workers organizations and the International Labour Organization (ILO), colleagues from ADB, good morning.

I wish to welcome our guests to ADB and thank you for joining us for this inaugural dialogue between ADB and the International Trade Union Confederation (ITUC) and Global Union Federations.

In February of this year, ILO held a conference in Manila on "Coherent Policies as a Response to the Global Economic Slowdown." ADB participated in the conference and one of the things that struck me was a clear message from workers' organizations present there: they called for greater "engagement" with governments and multilateral institutions. We have heard this call and see today's landmark meeting as the beginning of a new phase of more active dialogue with workers' organizations on issues of shared concern.

The topics we have identified together for our dialogue today are broad and complex: (i) the global financial and economic crisis and its impact on workers; (ii) flexible labor market policies and decent work, and (iii) policies and practices of donor-funded projects on labor.

This meeting takes place as the world battles one of the worst global economic and financial crises since the depression. For poor people and those who are jobless or underemployed, the impacts of this crisis will aggravate their already precarious situation. Data across the region show an upward trend in unemployment. ILO has warned that this recession may add more than 30 million people to the ranks of the unemployed by December. This estimate is conservative and may not fully capture the impact on downstream industries and services, where job losses more directly affect those living in extreme poverty. Among those affected are those working in the export industries, migrant and overseas workers. Many of them are women.

In developing countries, most employment is found in the informal sector. In Indonesia, for example, about 63% of a total labor force of 109 million work in the informal sector. Across the region, those losing their job in the informal sector rarely enjoy the same protections and guarantees as those in the formal sector. Informal sector workers usually lack access to unemployment benefits, and have to rely on their savings or family support should they lose their jobs. The crisis is also expected to lead to a sharp decline in remittances, a major source of household support in many countries, including the Philippines and many parts of South Asia.

Developing countries in the Asia and Pacific region have been severely affected by the economic contagion. Economic growth has declined by one-third from an impressive peak of 9.5% in 2007. ADB estimates that the growth will decline sharply to only 3.4% in 2009. In a region where nearly 906 million people still live on less than a $1.25 a day, slower growth is a cause for concern. The current slowdown is undermining gains made in poverty reduction, and presents a major obstacle to achieving the Millennium Development Goals (MDGs) by 2015.

Leaders and policy makers in this region have put forward packages to protect poor people and to jump-start the recovery process. Governments have launched strong fiscal responses. In the short run, efforts to stabilize the economies and strengthen safety nets to protect the gains in poverty reduction and human development work are needed. Longer term action to rebalance economies must also be addressed.

At this point, allow me to briefly share with you what ADB is doing in response to the crisis. Our long-term strategic framework (Strategy 2020), reaffirms ADB's mission to reduce poverty, achieve the MDGs and improve living conditions and quality of life in Asia and Pacific. The global economic crisis and its unfolding impacts in the region reinforce our strategic thrusts of making economic growth and social development more inclusive and sustainable.

We are working closely with our developing member countries and with international organizations like the ILO to provide relevant and timely financial and advisory assistance. We need to act quickly in areas that address the social impacts of the crisis by expanding support to social sectors, providing employment and income-generating opportunities through community investments in urban and rural infrastructure, and strengthening social safety nets. We will increase support to our members through regular and emergency lending, policy advice and technical assistance. Such support will include promotion and strengthening of social safety nets, rural programs to generate employment, and schemes that directly provide support to poor people like conditional cash transfers. It is good to see that such an approach is to be found in the recommendations made in the Global Unions London Declaration of April 2009.

We are "frontloading" and increasing funds to help countries most in need. Recently, ADB's Board of Governors agreed to provide a sizable General Capital Increase. This will help the ADB and the region to effectively address the crisis and other critical development challenges, such as climate change. We will expand assistance in 2009-2010 by about $15 billion, bringing total ADB assistance to about $35 billion.

Today's meeting provides an opportunity to exchange ideas on how to respond to the crisis and to stimulate job creation. It is useful to recall at the outset that as an international development finance institution we have a specific mandate to serve our developing member countries in Asia and the Pacific. Governments are our primary clients, and we must be responsive to their needs and priorities. Over time, we have strengthened our relations with other stakeholders in the development process, but remain directly accountable to our Board of Directors. These realities mean that when approaching complex and controversial issues, we will not always be in agreement with every major stakeholder group, including organized labor. Nevertheless, we will endeavor to seek convergence in views and consensus on approaches.

There are different views about the way forward to tackle the global economic and financial crisis, and ADB's approach may not find favor with everyone. However, I am confident that we can find agreement on a set of priority issues to be addressed.

One such issue is how to mitigate the impact of the global recession, manage recovery, and then re-establish long-term trajectories for growth, environmental sustainability and human development. This region accounts for more than half of the world's population. Human development is a particularly important issue in light of the youthful demographic profile in many of our members. The "youth bulge" has enormous potential for stimulating economic growth through productive employment, asset creation, and investment.

The growth opportunity must be harvested within the next two or three decades, but this will not be an easy task. Youth unemployment is on the rise, and substandard education and training are pushing poor, young workers into informal sector jobs, often at low pay and in miserable working conditions. It is important to address this issue through an appropriate policy environment that provides support for vocational training and job schemes that impart skills that meet job requirements. ADB will finance education in support of economic recovery, and increase targeted support to children of poor people and other vulnerable groups to help them remain in education and gain relevant skills.

A global effort — with each nation, institution and regional organizations, NGOs, and labor groups, acting in concert - is required to reinvigorate the global economy. Only through dialogues like this can we ensure that the interests of key stakeholders, including union members, are considered seriously.

I believe that ADB, the ITUC and the Global Union Federations share a vision of a region featuring an increasingly skilled workforce, sufficient good jobs for those seeking employment, appreciation and respect for the core labor standards, protections against social risks, universal access to basic services, and a robust public sector enabled with the proper capacity and staffing to carry out its functions.

ADB and international workers' organizations have important assets to contribute to achieving such a vision. We see today's dialogue as an opportunity to improve our collective knowledge, understanding, and substantive dialogue, and to find common ground in addressing the major challenges confronting the region.

Thank you once more for joining us at ADB headquarters this morning to launch a new stage in our relationship.