The global economy is going through an arduous process of recovery after the financial tsunami of 2008. The trade and employment processes during this period have been well documented in Trade & Employment in the Global Crisis . Based on the findings of the ILO-sponsored studies of employment impact in Brazil, Egypt, India, Liberia, South Africa, Uganda and Ukraine during the global crisis, the book by senior officials of the Geneva-based International Labour Organisation, Ms Marion Jansen, and Mr Erik von Uexkull, highlights with clarity how cross-border trade had acted as a transmission channel, transporting the crisis to developing and emerging economies.

The economic slowdown crippled labour markets in the OECD and post-Soviet countries, swayed, presumably, by both the financial and the trade impact of the crisis, the authors said. However, countries with relatively sheltered financial systems too felt substantial employment effects.

Studies show that the employment effects of the trade shocks have been significant in all countries surveyed, but particularly severe in countries with exports concentrated in the sectors that encountered the largest drop in trade during the crisis, such as iron and steel and products related to automobiles. The employment effects of the trade shocks are not circumscribed to trading sectors but affect the whole economy through two channels — a reduced demand for supplies by exporting companies and a general reduction in demand because of reduced incomes in the exporting sectors.

Create fiscal space

The authors' contention is that while measures to protect domestic producers against imports and sector-specific measures would be antithetical to each country's multilateral trade agreements, sectoral measures targeting employment are likely to be less problematic than those targeting capital. Again, their prescription that infrastructure projects are also less likely to be trade-distorting with “strong and multiplier employment creation effects” is a pragmatic one from the perspective of labour-surplus emerging economies such as India.

The ILO officials contend that social dialogue may turn out to be the most crucial element of crisis management in countries with no or low fiscal space. Again, nobody could fault them for suggesting that countries create fiscal space during times of growth so as to prepare economies for external or internal disruptions. So is their advocacy of a strong social protection system as a crucial element of a sustainable system of global trade. But this requires beefing up countries' capacity to put in place a robust social protection system for which multilateral moves should be made by global organisations.

Data machinery deficient

It is also time the authorities in India and South Africa wake up to the stark reality of deficiency in their data machinery even as they are in the big league of G-20.

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