ILO Director-General calls for greater international financial support for critical social needs in developing countries under fiscal stress


GENEVA (ILO News) – The Director-General of the International Labour Organization (ILO), Gilbert F. Houngbo, has called for swifter assistance to debt-distressed developing countries so they can continue funding social protection and decent work.

In statements delivered at the World Bank/International Monetary Fund meeting, taking place in Marrakech, Morocco, Houngbo stressed that more needs to be done to address developing countries’ limited financial resources by pursuing additional debt restructuring and relief and global financial system reform. He added that in low- and middle-income countries the ILO does not foresee rapid improvements in employment before 2025.

“The fiscal position of low-income countries requires particular attention as the tightening of monetary policies in advanced economies is severely impacting their external balances and increasing their debt vulnerabilities. This, combined with surges in food and energy prices, considerably narrows the scope for governments’ spending in sustainable investments and in social protection,” Houngbo told the World Bank Development Committee.

He cited a July 2023 UN report which found that 3.3 billion people currently live in countries that spend more on servicing debt than on education or health.

“To prevent debt burdens further impeding sustainable development, the role of investments in human and productive capacities must be better factored into debt sustainability assessments and in debt resolution mechanisms. This would not only support countries in their transition but also help (re)create the conditions for macroeconomic stability and economic transformation over time,” he said.

The Director-General told delegates that the UN Global Accelerator on Jobs and Social Protection for Just Transitions  – launched in September 2021 by the UN Secretary-General, António Guterres – offered a three-step solution to these issues: creating national strategies and policies for employment and social protection that facilitate fair transitions; combining domestic and international funding; and enhancing international cooperation.

“Multilateral, bilateral and National Public Development Banks and the IMF can support the Global Accelerator by contributing to the national roadmaps in pathfinder countries that aim to define national priority entry points and sustainable financing strategies (…) they can set more ambitious social impact targets to incentivize more projects that will contribute to the objectives of the Global Accelerator,” Houngbo said.

In his written statements to the International Monetary and Financial Committee of the IMF and Development Committee of the World Bank, the Director-General noted that under-investment in social protection remains one of the main reasons for low levels of coverage.

“There are multiple options to create and extend fiscal space for social protection. The key sources of financing, however, need to be domestic regular sources such as progressive taxes and social contributions, given that the commitments of social protection systems and floors are long-term ones,” he said. “It is critical that countries develop programmes to formalize employment, enterprises and economic transactions, as well as the institutions required to collect taxes and social contributions.”

Houngbo also emphasized that a decisive response to climate change demands coherent approaches and comprehensive policy frameworks, including in the private sector.

“Climate action, if properly managed, can lead to more and better jobs. Both adaptation and mitigation offer opportunities to create new jobs and businesses, while securing existing ones,” he told the Committee. “We can expect the creation of many millions of additional jobs in the coming years and decades, provided that education and skill-building programmes are appropriately expanded, workforce development programmes are put in place, and labour market measures are refined in line with evolving needs.”