ILO director: China key to global economic recovery

China has played an extremely important role in lifting the global economy since 2008 and in the governance shakeup, according to Guy Ryder, director-general of the International Labor Organization in Geneva.

Guy Ryder, director-general of the International Labor Organization.

In an exclusive interview before flying to China to attend the G20 Leaders Summit on Sept 4 and 5, he endorses China's growing role and says it would be "hard to imagine" the world attempting to improve international economic policy coordination "without China and other major emerging economies at the table".

It is important that China participates with other large economies to improve the coordination of policy responses to global challenges, he says. "It's not an easy process for any country, and China has engaged with increasing commitment to the process, as demonstrated by its hosting of the G20 this year."

Looking back, Ryder says, no other country responded as decisively as China to the call by G20 leaders in Washington in 2008 to "use fiscal measures to stimulate domestic demand to rapid effect".

Within months of the crisis, China launched a 4 trillion yuan ($600 billion) stimulus package that saved tens of millions of jobs and set the economy on a high-growth trajectory that supported demand, created employment and increased real wages in the rest of the region and the world.

Ryder says China also provided strong support for the Global Jobs Pact adopted by his organization in 2009, taking the position that the global financial crisis did not provide an excuse to disregard or weaken internationally recognized labor standards.

In addition, he says, China is playing an increasingly active role in the broader multilateral system of the United Nations, of which the ILO is part, as well as in the G20.

He adds that the universal framework for cooperation in the UN system is important and that China is demonstrating this by, for example, fully supporting the 2030 Agenda for Sustainable Development, which states that global institutions must be strengthened to make the G20 effective. "Of course, there has been a learning process for China and her partners," Ryder says, adding that he believes the rest of the world now knows a lot more about China, its development goals, challenges and ways of working, while China has gained insights from other countries that have helped the internal process of reform and change.

"I like to think the ILO has contributed to facilitating this two-way channel of learning in our areas of expertise."

Ryder says he is impressed that China has made great efforts in job creation.

Citing official figures, he says that from 2003 to 2014, 137 million jobs were created in urban areas, and between 1978 and 2014, the per capita disposable income of urban and rural residents increased 13 and 14 times respectively when adjusted for inflation.

"Now, employment policy is becoming more complex," he says.

In a sense, Ryder says, China is now digesting the effects of its stimulus package, which has fostered an employment structure suited to an export-oriented development strategy relying on an abundant labor supply, and served up with a hefty environmental bill.

"Export markets are still recovering from the crisis, while China's labor force has started to shrink since 2012 and is becoming more determined in pressing its case for all-around well-being." China's rapidly ageing society also has significant implications for the employment structure, he adds.

First, demand for quality health and long-term care services are set to grow exponentially. Second, social protection policies will play a much bigger role in making these services affordable on a more equitable basis. Third, labor productivity – and commensurate compensation – of a gradually smaller workforce will need to rise to sustain higher social spending.

"That requires higher investments in human capital, but also better protection of decent working conditions and invigorated pro-equality measures that enable labor markets to get more out of the available productive potential," he says.

China's Belt and Road Initiative also makes the case that other countries stand to benefit from much needed infrastructure development and the resurrection of ancient trading routes.

"China's leadership is keen to revitalize the international trade and investment regime as part of a coordinated effort to stimulate growth," Ryder adds.