SDGs: Full Employment As A Top Priority Goal

[South Centre Paper on Sustainable Development Goals]

The following South Centre paper on SDGs and Employment argues that Full Employment should be a top priority development goal, on a similar level to poverty eradication and economic growth. Thus it should be a major objective of developing countries to get Full Employment accepted as a major SDG.  The Rio+20 outcome document mentions Full Employment in several paragraphs (see details of this at the end of the General Section below).

This paper first stresses the global dimension (what developed countries and international organisations can do for developing countries) in each goal, then addresses national level efforts, and concludes with means of implementation (finance and technology).

A.  General  

Employment is a very important issue, for many obvious reasons.  It is the great connection between the most important economic and social goals.  Economic policies should lead to creation and expansion of jobs and livelihoods.  Socially, if people have gainful employment or livelihoods, they can earn the income that enables them to escape poverty and to fulfill their basic needs such as food, healthcare and shelter.

We therefore propose that “the attainment of full employment” be accepted as a major SDG.  It should be understood that by employment we mean jobs in the formal sector as well as livelihoods in the agriculture sector and in the informal sector.

Full employment was widely recognised as the major goal of economic policy in the post-Second World War period.  This was because a long period of relatively high unemployment, suffered during the pre-war Great Depression, was seen as a major problem that even contributed to the conditions for war.  After the war, international organisations like the UN, the IMF, the ILO, the GATT and later UNCTAD were set up, and employment was one of their top priorities.  One of the first UN conferences was held in Havana in 1947 and it was titled United Nations Conference on Trade and Employment, and which led to the creation of the multilateral trading system.

Organisations like IMF and WTO had employment generation or full employment as their main objective, or among their top objectives.  In the agreement to establish the WTO, the preamble states that Parties recognise they should conduct their relations with a view to “raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand”. The IMF in Article I of its purposes includes the “promotion and maintenance of high levels of employment and real income” as primary objectives of economic policy. In standard macro-economics taught in school and universities, and in government policy circles, the attainment of full employment was accepted as the main priority in economic policy.  It was also understood that full employment could be attained only if there was sufficient economic growth and economic development.  Thus growth and employment went together as top priorities.

Many decades later, the prioritisation of full employment as a goal became significantly diluted as other goals were given equal or even greater prominence.  These other goals included controlling inflation, reducing the budget deficit, reducing tariffs, cutting the size of the government bureaucracy and the number of government agencies.  These other goals became components of the typical “structural adjustment policies” that accompanied loans provided by international financial institutions to developing countries, and they sometimes also became conditionalities for aid.  As a result, many developing countries took on these policies, and one of the negative side effects was that employment generation and economic growth became sidelined.

There is however in recent years a recognition that job creation and viable livelihoods are the most important development goals, and that achieving these goals is the key to achieving many other goals such as poverty eradication and social development including access to food, health care and education.

Therefore it is vital to recognise that the attainment of full employment must be adopted as one of the most important of the SDGs.

This is recognised in The Future We Want (Rio plus 20 outcome document).  In the general part, Para 24 expressed “deep concern about the continuing high levels of unemployment and underemployment, particularly among young people.”  Para 23 reaffirmed the importance of supporting developing countries in their efforts to eradicate poverty including by “promoting full and productive employment.”  The outcome document also has a whole section on “promoting full and productive employment, decent work for all and social protections.”  The section recognised full and productive employment as a major need to be promoted and created at all levels.

There is thus a need to adopt “the attainment of full employment as a top-priority goal of economic and social policies”.

B.  International Cooperation

Developing countries need an enabling international policy environment to enable them to move towards full employment as an operational development goal.  This is because the policies of developed countries, and of international agencies, have great influence over the policies of developing countries, which affect employment levels.

The following are proposals for sub-goals or targets at international level that are crucial for developing countries:

1.  Developed countries in formulating national economic policies shall take fully into account the effects of these policies on the employment level and future employment prospects of developing countries.  They should not adopt policies that adversely affect the employment and employment prospects of developing countries.

2.  International financial institutions and aid agencies should comprehensively consider the impact on employment and livelihoods in developing counties of their policy advice and conditions linked to their loans or aid.  Such policy advice or conditions should aim at generating employment and contribute to full employment in the developing countries.

3. In the consideration of priorities of objectives of macro-economic policy, the attainment of full employment should be adopted as a top priority objective, in the policies of international agencies, especially as they pertain to developing countries.

4. Criteria for debt sustainability for developing countries should fully take account of the requirements for generating sufficient employment as a major SDG.

5. In the development of international trade-related rules and negotiations, the maintenance and promotion of employment and livelihoods in developing countries shall be given the highest priority as a goal.

C.  National Level Policies

1.  All countries should consider the attainment of full employment as a top priority economic and social goal.  It is understood that employment includes jobs in the formal sector and livelihoods in the small-agriculture and informal sectors.

2.  It is also understood that in the context of sustainable development, full employment as a goal should be accompanied by:

(a)  policies of job-intensive economic growth,

(b) the prioritising of small and medium industries and of small farmers as the focus of policy attention and incentives for growth,

(c) employment and livelihoods be of a socially and economically decent and sustainable level,

(d) environment and health related concerns are taken fully into account in the policies for generating employment,

(e) a special focus should be given to reducing youth unemployment.

3.  In the formulation of fiscal policy, high priority should be given to the generation of employment and the move to attain full employment.

4.  Shortfalls in domestic government budgets required to fund programmes that generate employment-intensive growth to a level sufficient to attain full employment, should be met by international financing and through international cooperation.

D.  Means of Implementation

1.  Adequate financial resources and appropriate technology and technical assistance and capacity building should be provided to developing countries that require such support in enabling them to have the ability to adopt national policies that give the highest priority to employment generation and full employment as a goal.

(This paper was written by Martin Khor of the South Centre. )