How to tackle the consequences of the financial crisis? - Speech at ILO regional meeting

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President, Director General, Secretary General, Ladies and gentlemen,

Thank you very much for the introduction.

It is great to meet so many representatives of European employers and employees here in Oslo.

I am especially happy to welcome you to Oslo today. This morning the Norwegian Confederation of Trade Unions and the Confederation of Norwegian Enterprise reached an important agreement on wage formation, again demonstrating the benefits of cooperation between the social partners.

This is very beneficial for the Norwegian economy - and for this conference. The mood here would have been quite different if some of the participants would have been elsewhere organising a strike.

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The crisis in Europe is dramatic. A financial crisis has now turned into a jobs crisis. The level of unemployment in the Europe is now at record levels.

In some countries there is now a lost generation of young people.

Out of work.

Out of training.

And out of the market.

More people are becoming permanently inactive and unemployable.

Even with renewed economic growth, many people will find themselves without work – maybe for their whole life.

Therefore, we need to implement measures now to avoid a major social crisis and political backlash.

This is the main political challenge we face in Europe today.

The International Labour Organization has a crucial role to play in formulating a response, both globally and in Europe.

Norway is a strong supporter of the ILO. And we are proud to contribute by hosting this event.

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So what policies are needed?

Five elements are of the utmost importance:

Firstly, we must combine equitable distribution and economic growth.

There is no contradiction between high growth and fair distribution. On the contrary: equitable distribution promotes efficiency.

In the Nordic countries, we have proven that it is possible to combine economic growth with a comprehensive welfare system, high labour force participation, low unemployment and even income distribution.

We refer to this as the Nordic model, and we have demonstrated its advantages.

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Secondly, we need active labour market policies.

Social safety nets and active labour market policies make the labour market more flexible and the economy less vulnerable to shocks. We call this flexicurity.

We have also sought to avoid rigid employment protection legislation. It is important to avoid creating highly segmented labour markets.

We must prevent high unemployment from becoming persistent.

The key is to focus on active labour market programmes that help people to keep their skills up to date.

We know that vulnerable groups, such as young people and immigrants, are more exposed to labour market fluctuations than others.

In today’s situation, it is therefore particularly important to succeed in keeping the level of long-term youth unemployment down.

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Thirdly, close tripartite cooperation between the government and strong social partners is crucial.

This ensures a stable framework for business and workers.

It reduces the risk of conflict.

And it ensures that reforms can be implemented with broad-based support.

For instance, in Norway we have been able to reform the pension system with the support of the trade unions.

Such structural reforms are key to improve the growth potential of the economy and have positive long-term effects on the public budget balance.

The challenge in Europe is to ensure growth and budgetary consolidation through structural reforms rather than by too harsh austerity measures.

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Fourthly, we must ensure the participation of women in the labour market.

A high female employment rate is crucial for ensuring labour supply and economic growth.

Our policies are designed to promote employment among both men and women. This includes a proactive family policy, education policy, welfare policy, and labour market policy.

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Finally, we need open labour markets. And at the same time we must fight social dumping.

Most of the increase in labour market participation in Norway is due to migrant workers. This has benefitted the Norwegian economy enormously

We need migrant and posted workers to meet increasing labour demand.

This may challenge the Norwegian model of working life by undermining established rights and standards.

We have therefore introduced several measures to prevent exploitation and reduce unfair competition.

We have allowed collective agreements to be made generally applicable to all workers within a sector or a branch.

Labour inspection authorities have received more resources to ensure decent working conditions.

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I have highlighted some of characteristics of the system in Norway and of the Nordic model.

No country can copy another. But we can inspire each other and share useful lessons.

This conference is important to share experiences and to learn from each other.

We must do what we can to improve the joint efforts to promote jobs, growth and social justice.

Thank you very much.

 

Read more about ILOs ninth regional meeting in Oslo.