An interview with Gerry Rodgers of the International Institute for Labour Studies

'Poverty anywhere is a threat to prosperity everywhere'

Gerry Rodgers is the Head of the Labour Institutions and Economic Development Programme at the ILO's International Institute for Labour Studies in Geneva. Recently, the Institute organised a symposium entitled 'Poverty: New approaches to analysis and policy'.

At the end of the proceedings, The Courier had an opportunity to speak to Mr Rodgers about aspects of the fight against poverty and about some of the isues raised in the preceding discussions. Noting the recent work of the ILO and IILS in this field, we began by asking him for his personal view as to why 'poverty' seemed to be reemerging as an issue of international concern.

Well, it is interesting to see that poverty is back in the international limelight after a fairly long period when economic issues such as growth and production were the priority. Distributional issues were really off the agenda for the whole of the 1980s, but now they are back again. The United Nations is organising a summit of heads of government on social development in 1995. UNCTAD and the World Bank are both starting to pay much more attention to poverty again, while the Inter-American Development Bank has actually adopted a policy that 50% of its loans have to contribute directly to poverty reduction. So it is a very widespread phenomenon at the international level.

Why is it happening now ? Well I think there is a growing perception that what took place in the 1980s, when inequalities both within and between countries increased, has created unacceptable situations. In that decade, the gap between Africa and Latin America on the one hand and the industrialised world on the other widened considerably.

At the same time, inequalities grew very substantially in the industrialised countries, especially in the UK and the USA, where the real incomes of the bottom 10%-30% declined while those of the rich rose. I guess all of that has come to a head in the 1990s, with the growth of unemployment and social exclusion, and the feeling in both industrialised and developing countries that governments are increasingly unable to master the social issues.

As far as the ILO is concerned of course, poverty is not a new issue. In 1944, the Organisation was relaunched with a major declaration in Philadelphia. One of the most powerful statements in that declaration was that poverty anywhere constitutes a threat to prosperity everywhere. So the fight against poverty, in which all the social partners governments, trade unions and employers were to be involved, has long been one of the major objectives of the ILO. In the course of the 30 years after the Second World War, a series of programmes aimed at poverty was developed within the Organisation, rather different in the industrialised states as compared with the developing countries. In the former, it was basically a question of social security welfare measures, unemployment benefits, social assistance systems, health and education. To some extent, these were divorced from economic policy. Economic growth occurred through other processes and state intervention attempted to prevent poverty from growing on the margins of the system. In developing countries, the notion was different. It quickly became apparent in the years after independence that the forms of social insurance being established in industrialised countries were financially out of reach sob the notion became built in that tackling poverty had somehow to be part of the development strategy. The idea was that you had to shift the production system in such a way that you were producing the goods consumed by the poor and that the incomes were spread throughout the economy. In other words, action against poverty should be a structural part of development strategy and not just a question of alleviation and social welfare measures. That approach very much influenced the work of the ILO, which attempted, in the 1970s, to set the terms of the debate on poverty with its 'Basic Needs Strategy'. The World Employment Programme, which was launched at the beginning of the 1970s, saw the creation of productive employment as the answer to poverty. Development strategy had to be oriented towards creating jobs. In the course of the 1970s a series of research projects was undertaken on how to orient technology towards job creation, what to do about population policy and how the informal sector could be developed. This came to a head in 1976 at the World Employment Conference, which spelled out 'the satisfaction of basic needs' as the priority objective for development strategy - covering consumption of food, clothing and housing, but also social services, health, education, access to productive employment and participation in the economic and social system. i think we have to admit that this strategy failed to take off. In fact, the types of policy changes which would have been required for it to work were never widely implemented. Many countries felt that the notion of basic needs was inappropriate. They didn't want to be confined to the production of basic goods and services. The political economy seemed to be wrong and it was not, therefore, possible to mobilise powerful political groups behind the strategy. The timing also seemed to be wrong: it was a period of economic crisis and recession.

Whatever the reasons, the notion of basic needs lost ground in the late 1970s and early 1980s as the world moved further into recession and structural adjustment issues came on to the agenda instead. It was a period of debt crises and huge budget deficits and the immediate problem seemed to be one of stabilisation - dealing with the fiscal and financial problems. In effect, the social questions dropped out of sight, and poverty increased in many countries.

In the 1990s these issues are back on the table again. The ILO is now in process of thinking about its past strategy, looking at what worked and what didn't, and at the elements which, under today's new conditions, could provide a basis for its future action.

· Can you tell us something about the results of the symposium which has just been held ? Beyond identifying the issues at a conceptual level, is it likely to lead to any practical measures ?

- The symposium was an attempt to take stock, to review the range of ILO activities that have a bearing on poverty, whether directly or indirectly, and to try and reflect on how effective they have been. We were also looking at the extent to which these activities have a direct impact on policy and how far they are linked together in a coherent way. On the basis of that, the aim was to think about what revisions are needed and to consider the new issues and ideas which might contribute to the ILO's work in the future.

The symposium was based on a series of papers Some of these were prepared inside the organisation, analysing the work we have done in the past. Others came from the academic community, governments, other international organisations, action groups, trade unions and employers' organisations. They had the opportunity to inform us about new issues, ideas and approaches which the ILO might have to deal with. So, overall, it was an attempt to be self-critical - to try and analyse what we have been doing and what might need to be changed for the future.

We began with a general paper which reviewed all the ILO's action against poverty, in terms of both the broader development strategy and the many specific projects which it is engaged in around the globe: in areas such as social security and public works programmes, employment promotion in the informal sector, asset distribution and mobilisation/ organisation of the poor.

I think there was a consistent view in the debate, from both 'insiders' and 'outsiders', that while the Organisation is doing many things quite effectively, we need to think about building up an overall framework to ensure that the different elements fit together. The ILO faces an enormous challenge of employment creation. Much of our work is focused on creating jobs but if we look at what is happening in the world, we see that unemployment is still rising. As one of the participants pointed out, there seems increasingly to be a labour-saving bias in technological change, whether in hightech industries or the agricultural sector.

Another important point is that while there are a lot of people working for the ILO in local or national projects in developing countries, on the whole, our operation is somewhat different from that of NGOs, for instance. They are working on the ground, with the homeless and the dispossessed, trying to develop actions at the level of local communities. It is not possible for an organisation like the ILO to be directly involved in highly dispersed actions of this kind. So, our problem is to try and find a mode of operation where we can complement this local activity effectively. In this the ILO has one major advantage in comparison with other bodies of the UN system: it has built into its structure two major nongovernmental groups - trade unions and employers. This means that a basis for developing modes of action at a nongovernmental level is already there. What is not there, and it is probably important to try and create it, is the linkage with other social actors at the local level. We know that many trade unionists are engaged in local action, so there is scope for building on the ILO's trade union base to try to involve other groups. There is also a great deal of scope for enterprise activities. We know of many people in businesses around the globe who are directly concerned with social policies aimed at the poor. Our problem is, how do we structure what we are doing so as to bring these different groups effectively into the work of the ILO, so that we can make a direct contribution to consensus-building and policy design at local level; in other words, creating a framework in which individual actions can add up to more than was the case sometimes in the past

Looking at the labour markets

The symposium went on to consider a number of specific items. We looked at patterns of labour market operation: at how the market is structured, what sorts of job are created and what kinds of intervention are likely to be effective. There is a major debate taking place in this area. Some are arguing that the most useful thing you can do in the labour market is to keep out of it. Their view is that the market will be efficient if you do not attempt to regulate it and that intervention simply reduces its potential to create jobs. That is not the ILO philosophy. Its approach is based on the view that you do need minimum conditions and that you want to take certain things out of the competitive arena. For instance, you do not want to allow competition on the basis of cheap child labour or of lousy working conditions. Everybody agrees on those two. Then you start to get into more controversial areas such as whether there should be competition on the basis of paying wages below a certain minimum, or through precarious irregular jobs as opposed to protected permanent ones. These are the kinds of things which the ILO debates actively all the time because it is in the business of trying to set standards in the labour market. And we try to look at how these debates and issues relate to the problem of poverty. We have also looked at policy for vulnerable groups in the labour market. How do you reach the disabled, for instance? It may come as a surprise to some people to discover that disability and poverty are closely related but this is the case in many countries. Handicapped people make up a significant proportion of the very poorest groups. How do you generate access to jobs for these people?

We looked at other vulnerable groups such as child workers and at the position of women in the labour market. We considered ways in which you can target specific types of intervention - in the social security field, for instance - so as to help female-headed households, which are particularly vulnerable to poverty. We looked at minimum wages and the circumstances under which these are likely to make a direct contribution to poverty reduction. The consensus here was that minimum wages are often very important, not just for the people who get them, but also because they provide a reference point for everybody else.

We considered other forms of labour market intervention such as training programmes, which are vital if skill-levels are to be raised. This is a crucial part of policy against poverty, but it is often not seen that way. The design of such programmes is particularly important, if the aim is genuinely to tackle poverty. Very often, they simply provide additional credentials for people who have access to the labour market anyway. They need, therefore, to be oriented in such a way as to reach the lowest income groups.

We also considered the macroeconomic framework within which labour market policies could be implemented. We discussed systems of social insurance and social assistance and the kinds of labour market institutions that might contribute to a macroeconomic strategy. There is some very interesting material coming out of Latin America on how a minimum wage policy can be an important element in redirecting structural adjustment programmes in such a way as to protect the lowest income groups and ensure that production and incomes do not fall so sharply. There is a very interesting experience in Costa Rica, for instance, where careful use of minimum wage policy has been very important in protecting the poor during the process of structural adjustment.

These are all areas where the ILO is already active. However, we then went on to two areas which, from the point of view of the ILO, are more innovative. These are the issues of social exclusion, and the organisation and mobilisation of the poor.

We looked at the notion of social exclusion as it applies to the work of the Organisation and we linked this to its more traditional work on social security. The ILO has been supporting social security programmes, as a major part of its work, for many years, but it has not really stressed the contribution of these programmes to poverty reduction, especially in developing countries. There is a wide demand for social security programmes but it tends to be concentrated in the formal sector so that on the whole, the people who are best protected by such programmes are those who are already relatively better off. Now, in the course of this discussion, I think we identified important roles for social security programmes as a means of fighting against exclusion. We had a very interesting paper based on Indian experience. We looked at the different ways you can intervene to provide a degree of security. Security, in the broad economic and social sense, was the key word here. I here are various groups who are vulnerable in different ways - the old, the disabled, the landless, migrants and so on The view was powerfully expressed in the debate that even in very low income settings, broadbased social assistance programmes could have a major role - at a cost of 1%-3% of GDP in reducing poverty, provided they are part of a wider package involving other types of policy as well. I think this is significant because it is somewhat contrary to the prevailing view, which is that social security cannot really perform that function.

In general, the notion of social exclusion, as it has come to be defined in industrialised countries, has not featured strongly in ILO programmes. It has not really informed the work on social security or on labour market policy and the papers which were presented raise questions as to whether it is actually a useful route to take. What does exclusion mean ? Does it tell us anything we didn't already know ? Is it just a relabelling of poverty or is it something which can help to develop new forms of action? We had a very powerful presentation by Jean-Baptiste de Foucauld, the French 'Commissaire au Plan', who argued that there is something new in the concept: that social exclusion equals exclusion from economic and social exchange and that this raises new policy issues and opens up new perspectives for intervention. But those sorts of perspectives must involve organisations at the local level.

De Foucauld argued that new forms of organisation, perhaps allied to traditional trade unionism, are most effective in representing the excluded. If people are excluded from the labour market and from productive activity, then trade unions, on the whole, will not have a basis for representing them. So the idea of alliance is very important because the representatives of those in work and of the unemployed or non-employed have many common interests. If each organises and promotes his own interests in a sectional and fragmented way, then there is little hope of making progress at the level of society as a whole. There is even a danger of direct conflict between the two groups. 50 there is a really basic problem of creating alliances.

Mobilising the poor

The other 'new' issue was the mobilisation and organisation of the poor. There was a presentation by a trade unionist from the Philippines, who has a lot of experience with casual labour in rural areas. He explained the problems he faces in organising such groups, but also emphasised the importance of building up local level organisations to achieve collective action. ATD Quart Monde, which gave an NGO perspective, offered a contrasting view. Their approach, which is highly decentralised and participative, is geared towards the poor expressing their own needs. Somewhere between these two, we had a contribution from the 'Programa Economia y Trabajo' in Chile, which has become very influential in the debate about social organisation in that country. They have done an analysis of the different types of organisation in society: trade unions, cooperatives, local alliances of producers, popular economic organisations and so on, and have looked at the way in which these different groups could link together. I think there are many lessons here for the type of action which can be proposed.

· You referred to the difference between the formal and informal sectors with organisations such as your own tending to be more involved in the first of these. The governments of many developing countries argue that they do not have the capacity to create jobs. From both the conceptual and the practical standpoint, what is your view of the relationship between employment and poverty in the developing countries ?

- Employment is central. If there is one point on which everybody agrees, it is that the route to reducing poverty is through creating jobs. But what sort of jobs and how do you create them ? This is not a new debate. Twenty years ago, the strategy was already to create jobs and even then it was clear the the formal sector could not do it on its own. So we need to promote activities in the informal sector. But we are also increasingly recognising that the distinction between the two is perhaps not as clear as was once thought. There are many different levels of informal activity: small-scale, marginal types of work, small but highly productive enterprises and large firms which appear to belong to the formal sector but which subcontract a lot of their work, or use a great deal of casual labour and are therefore, in fact, based very largely on informal types of employment relationship.

I think the evidence of the last 20 years is that we do not know how to guarantee that a particular pattern of growth will create enough jobs. This is true of the industrialised countries, as well as the developing ones. The countries which are successful in employment creation are basically those that are growing at 8%-10% a year. But we have a fundamental problem. The globalisation of the economy means that in order to survive you have to be competitive. In order to be competitive, productivity has to rise fast. Rising productivity implies that you are creating fewer jobs which means that growth has to be even faster. The way in which the global economic system is structured, we are always directed towards a process of creating fewer jobs for every additional unit of output. Now, I guess that there are partial solutions. We do have ideas about how you can create jobs in specific circumstances. There have been employment guarantee schemes which have been quite effective, for instance. There is a lot of experience in small-scale enterprise development which suggests that you can create many jobs in small firms and you can redirect the rural economy in more labour-intensive directions. The problem is that, taken together, these different elements do not lead to the creation of sufficient jobs to tackle the problem of poverty.

I believe that that is our major research and policy challenge for the future. How do we handle it ? Do we accept the argument that there are only a certain number of job opportunities to go round, in which case the problem is one of sharing the proceeds of employment? In other words, do we try and develop systems where a basic income is guaranteed to all? And then we can focus on growth of productivity and output without worrying about jobs. There are people who think that the solution is not to try to change the production system, because we do not have the capacity to do that, but simply to try and make sure that everyone's basic living standards are satisfied. But even if a system like that functions, it does so at the expense of participation. One of the commentators in the symposium quoted a novel by Kurt Vonnegut which describes a society in which there is a guarantee of subsistence for the population at large, but they still ultimately rebel. What happens is that you create an underclass, not in the sense that is used in the poverty debates today, but a group which is nevertheless marginalised and excluded from society. They are able to exist because their basic consumption needs are met but they do not actually participate in the life of society. That sort of solution does not really seem to be viable. And in any case, in developing countries, it is not the way things are structured. Incomes are available only to those who have some foothold in the production system.

We haven't found the answer to this problem yet and we need a very considerable research effort. We have to try to understand what is going on, reflect on new types of social and economic system and design institutions which provide access. One of the problems is that labour markets are very fragmented and the sorts of jobs which provide a decent income are strongly defended, by all sorts of mechanisms. Even the lower levels of labour markets in low-income countries are often protected because, regardless of the fact that jobs might be irregular or poorly paid, they nevertheless assure survival, so all sorts of social mechanisms come into play to control access to them. All the actors involved in the labour market have an interest in trying to put up barriers to protect their livelihood. In order to change that and to widen access, you need to bring about a radical transformation in the institutions of the labour market. You need to open up access to jobs at all levees and to bring down the barriers. You need to transform both the formal and the informal institutions. This is an enormous task and we don't have all the answers yet. I would argue for a considerable research effort to try and understand how labour market institutions function and to find out what sort of interventions might be effective in broadening access to jobs.

So I think your question is absolutely right. The fundamental issue in dealing with poverty is employment and it is one which remains to be solved.

interview by Dominique DAVID