Ginevra 13/06/2012

101st Session of the ILO's International Labour Conference Keynote Address of the President of the Italian Republic Giorgio Napolitano

Mr. President
Mr. Director General
Distinguished Delegates
Ladies and Gentlemen

I wish to thank Director-General Somavia for inviting me here today. Let me also grasp this opportunity to welcome and offer my best wishes to his successor designate, Guy Ryder. We feel a very close bond with the International Labour Organisation: indeed, Italy is proud to host one of its offices, in Turin.

Jobs, or rather the lack of them, especially for our younger citizens, are a crucial problem for all of us. It is more acute in many developing countries experiencing strong demographic growth. It is particularly destabilising in advanced economies suffering from the recession or from weak growth. But it is felt even by economies enjoying strong, rapid expansion, which do not always manage to translate rapid growth into an equally rapid creation of jobs.

There can be no doubt that the question, both of achieving a satisfactory employment rate and of strengthening employment rights, is posed in highly different terms in the different economic regions of the world. In my brief address, I shall refer to those differences and at the same time highlight a common strand: the committed effort that your organisation can both suggest and inspire.

I speak, naturally, from the vantage point of the European Union, of which Italy is an integral part. My country has been gravely affected by the financial and economic crisis and the resulting employment crisis that has hit the Eurozone in particular. And as a consequence, it is making every possible effort to emerge from the difficulties linked, in particular, to the weight of public debt accumulated in previous decades.

But the European institutions and the governments of the major member states are seeking to address the difficulties not just of Italy but of other countries too. And in their discussions the question of boosting growth is being thrown into increasingly sharp - and pressing - relief. For growth is a vital and urgent complement to the fiscal consolidation policies designed to decrease the weight of sovereign debt and lessen the pressure exerted on that debt by the financial markets.

There are no easy remedies that can bring about a marked recovery in economic growth. The call today is inevitably for sustainable growth, and we can understand why, and in what way, this qualification seems necessary.

The financial crisis that blew up in the United States in 2008 spread from there to other parts of the world, in an extremely acute form in the Eurozone. It laid bare the fragility and unhealthy aspects of the development that until then had, in some countries, been generated on artificial grounds. Not just the growth in public spending and public budgets, but financial and housing "bubbles" that subsequently burst - to dramatic and unsettling effect.

Kick-starting growth on foundations that are no longer precarious and unhealthy: on foundations that are financially sustainable and sound and durable in terms of competition. That is the right path to follow - in the knowledge, however, that it is a difficult and demanding path that requires innovative approaches.

A recovery of productive activity, a return to substantial rates of GDP growth in the Eurozone countries and most notably in a country like Italy, will not automatically bring with it a strong recovery in employment as a necessary response to the problem of unemployment, especially youth unemployment.

We should, however, note with satisfaction the effort now being made to guide the proposals for a recovery of growth in this direction, as emerges from the Communication addressed by the European Commission to the other institutions of the Union on 18 April.

The title of that Communication is significant: "Towards a job-rich recovery". So too is the content. While the objective formulated in the 2020 Growth Strategy is to get 75% of people aged 20-64 in work by 2020, we are starting out from the hard reality of the fall of Europe's employment rate to 68.9% in 2011 and the steep rise of unemployment to over 10% in February 2012.

Correctly, therefore, the Communication I have just mentioned sets out a broad range of policies specifically designed to support job creation. It formulates lines and goals for labour market reform, and even airs the possibility of a true European labour market.

The pillars of the strategy to revitalise growth in Europe, a strategy aiming for a substantial increase in jobs as an essential guarantee of equity, should include - along with structural reform - a decisive boost in public investment, infrastructure, human capital, and research and development, especially in regions lagging behind in development terms. And to achieve that we will need to draw on European resources, mobilise new instruments such as European bonds for common projects, and plan and manage the Union's existing, tried and tested structural funds more effectively.

But this by no means implies a return to theoretical approaches that neglect the risks of "active deficit-financed fiscal policy", over-estimate "the immediate effect of public spending on aggregate demand", attribute a positive function to inflation in relation to growth, or underestimate "the importance of financial frictions and the role of credit and money" or the potential of monetary policy.

To these and other shortcomings in certain theoretical and operational approaches of the past, Prof. Mario Draghi recently alerted us, in a sophisticated academic address that also provided him with an opportunity for a rigorous clarification of the decisions made by the European Central bank under his presidency.

We must, in effect, pursue growth through a correct combination of structural reforms, fiscal consolidation and targeted increases in public investment. Above all, we must recover our commitment to cultivate the goals and values of European integration.

As the Lisbon Treaty says, the Union "shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress". This was also the spirit inspiring the "Lisbon Strategy" in 2000, disappointing as its results may have been.

The reality is that the European development and welfare model is, more than ever, facing arduous tests and challenges as an effect of the profound transformations that have taken place, on a global scale, in recent decades. Very briefly, "the growing competition from emerging countries, the reorganisation of production processes on a global basis, the speed of innovation, the increasing fragmentation of career paths with ever looser ties to a 'permanent position', the greater instability of families, declining fertility, the prospective decrease in the workforce, an ageing population. The set of risks faced by individuals throughout their life has changed significantly."

Hence the review and evolution, in a number of countries, of social protection systems. A necessary step that no one can shirk, if they do not want to put at risk the civil model that in the second half of the 20th century made the united Europe a global benchmark.

The European experience is not, naturally, an example that can be easily transposed, in any respect, to other continents. It does, however, provide us with plenty of lessons and points for reflection.

Europe today is largely looking inwards to seek solutions to its own internal crisis. Yet it has a duty to provide a far-sighted input, inspired by solidarity, to the questions of growth, jobs and employment rights that are being posed in complex situations that are, in turn, highly critical. In, for example, those areas of the Mediterranean and Africa that are being swept most strongly by new forms of political and social turmoil.

In the countries of the Arab Spring, youth unemployment has recently grown by 5 points. We need, therefore, to be aware - the European Union needs to be aware - of the potential repercussions that this spreading exclusion and poverty could have among the younger generations. Repercussions that could undermine each attempt at, and hope of, stabilising, on democratic foundations, those movements that sprang up in a spirit of rejecting dictatorship and making courageous claims for freedom and dignity.

At the same time, rapid and sweeping processes of transformation and growth, especially in the last decade, have seen major countries in Asia and Latin America emerge as driving forces of the global economy. These processes have, however, given rise to problems that are crucial to the quality of working conditions and workers' rights in those same countries and, indirectly, in the most socially advanced European countries.

The welfare gains that have been increasingly subjected to tensions arising from the explosion of global competition were concentrated in the countries of the old G7, countries which made a decisive contribution to the production and distribution of the world's wealth. Is it inevitable, therefore - we must ask - for countries like Italy to renounce the well-being that we worked so hard to achieve in the years following the Second World War? To renounce those hard-won gains in order to meet the difficult new challenges of a competitiveness that knows no frontiers?

In effect, those challenges call for profound innovations at all levels in the countries that were the first to industrialise and that have achieved the most widespread material well-being. And without a doubt, not all of the conquests of the past can still be considered sustainable or even equally valid with respect to new concepts and measures of well-being and quality of life. It is significant, for example, that in a number of countries the emphasis has shifted to choices that recognise the trend to an inevitable increase in labour market flexibility and mobility. Choices that place a growing value on lifelong learning and efficient re-employment or outplacement policies linked to new job opportunities.

It is precisely in the interest of the emerging countries, however, and indeed necessary if we are to achieve balanced global growth, that we should take steps to define "social protection floors", in the form of a recommendation. And that is what your Conference is preparing to adopt tomorrow. The International Labour Organisation can, in this area, re-assert the unique historic role that it has played since the dawn of the United Nations system.

More generally, the common thread linking our efforts, no matter where we are called upon to operate, and in the most diverse conditions, must be a strong, convinced and impassioned reaffirmation of the value of work. We need to overcome the obstacles posed by the judicial, technical and operational complexity of the situations faced and decisions to be made. In this respect too, the decisive factor will be a resolute effort to inject new life into those grand ideals that the tragic experiences of the first half of the 20th century led us to embrace and which were sealed by the birth and growth of the United Nations.

The Great Depression and unprecedented large-scale unemployment produced by the crisis of 1929 led, on the political level, to the establishment of authoritarian and warmongering regimes in Germany and Japan, while the existing regime in Italy put down stronger roots. From the terrible lesson of the Nazi-Fascist dictatorships and aggression, and finally from the devastation of the Second World War, the victorious democratic forces that re-emerged everywhere from the ruins drew the lesson of the imperative need for a determined and concrete commitment to pursue policies of development and social justice.

In Western Europe in particular, with the decisive contribution of the United States, three decades of exceptional advances and progress opened up. Three decades that were called the "golden age" of capitalist development based on democratic foundations. For Italy, those were the years of the "economic miracle", which peaked in 1958-63. And the fundamental line that was followed, and which summed up all of the unprecedented progress being achieved at that time, was "full employment".

There is no denying that in recent years "full employment" - although sanctioned by the Constitution, and as I mentioned by the European Treaties - has never again occupied a primary position either as a watchword or as a public policy objective. Well, it needs to regain that status, albeit in the knowledge that it is a much more problematic and complex goal today than it was in the 1950s and '60s in Western Europe. We must not hesitate: we cannot mark the goals to be achieved only in terms of GDP growth, or of greater financial stability.

Because, as the late, and most distinguished Italian economist, Federico Caffè, wrote, "Full employment is not only a means of increasing production..., it is an end in itself, since it leads to overcoming the servile attitude of those who find it hard to obtain a job opportunity or live in constant fear of being deprived of one". Achieving a situation of full employment should, therefore, also and above all be measured in terms of "human dignity". In the words of a most sensible Italian writer, "in work lies man's very existence, and his history; work is freedom".

And are freedom and human dignity not two of the supreme ideals of Europe and the United Nations?