strategy

Elaborating national employment policies

Synonyms:
Formulating labour market policies
Improving manpower utilization
Strengthening manpower planning policies
Implementation:
ILO improves knowledge of labour market processes, including labour mobility, self-employment and payment systems, and of the measures that can be taken through employment and manpower planning policies to cope with fluctuations in labour market supply and demand resulting from factors such as demographic growth on the supply side and the impact of disarmament on the pattern of employment on the demand side. Attention is given to strengthening labour market information systems and improving methodologies for dealing with employment and manpower problems in the context of structural adjustment.

Virtually all trade development policies influence the relative price of labour. Inward-oriented trade strategies tend to protect capital-intensive industries at the expense of labour-intensive industries; this increases the demand for capital relative to labour and raises the rental on capital relative to the price of labour. But, at the same time, inward-oriented trade strategies may have effects that work in the opposite direction. Overvaluation of the exchange rate, common in inward-oriented economies, reduces the cost of imported capital goods and therefore raises wages in relation to the rental on capital. Interest rate controls cut the cost of capital to some firms; so do tax holidays, tax discounts, and accelerated depreciation. Minimum wage legislation, payroll taxation, and high public sector pay scales raise the cost of labour. Thus, policies on finance, labour, and taxes tend to work in the same direction: they raise wages relative to the cost of capital and therefore depress employment. A study based on a seventy-country sample showed that if the level of wages increased by, say, 10% relative to the rental rate of capital, the proportion of labour employed would fall on average by 10% relative to the amount of capital.

Claim:
Policies designed to increase production increase employment; policies designed to increase employment do everything but. (One of Parkinson's laws).
Subjects:
Human resources
Employment
Planning
Resource utilization
Reform
Policy
Type Classification:
C: Cross-sectoral strategies