Key messages from Employers in the Africa Region

Key messages from Employers in the Africa Region
ILO Global Summit on Covid-19 and the world of work- Building a better future of
work (Africa Regional Event)
2 July 2020 (9:00 am -12:30 pm GMT)

International Organisation of Employers  Organisation Internationale des Employeurs  Organización Internacional de Empleadores

Key messages from Employers in the
Africa Region

  Opening remarks by Mr. El Mahfoudh Megateli
      Monsieur le Président, Mesdames et Messieurs les Ministres
      Monsieur le Directeur Général du Bureau International du Travail,
      Mesdames et Messieurs les Délégués,
      Collègues employeurs
      Mesdames et Messieurs,

      Ce forum virtuel qui nous réunit aujourd’hui est le plus important rassemblement virtuel de
      travailleurs, d'employeurs et de gouvernements.
      Il y a maintenant un an (juin 2019), la Conférence Internationale du Travail adoptait la
      Déclaration du Centenaire sur l’avenir du travail, qui prévoit la mise en œuvre d’un programme
      centré sur l’humain pour un avenir du travail décent, offrant une garantie universelle pour les
      travailleurs, une protection sociale et un droit à l’apprentissage.
      En décembre de la même année la 14ème réunion régionale africaine adoptait la Déclaration
      d’Abidjan, dans le document final les quatre points suivants qui sont important pour les
      employeurs :
            Promouvoir des actions pour créer un environnement favorable aux entreprises
               durables.
            Améliorer la croissance de la productivité qui soutient le rôle du secteur privé en tant
               que source principale de croissance.
            Élaborer, promouvoir et mettre en œuvre des programmes de développement des
               compétences,
            Promouvoir des mesures efficaces et complètes pour éliminer les obstacles politiques
               et réglementaires à la formalisation et améliorer la compétitivité et la durabilité des
               entreprises du secteur formel.

      Ces deux instruments internationaux ont été adoptés dans un contexte caractérisé par un
      optimisme pour la croissance et le commerce et le développement économique de l’Afrique.
      Toutefois, ces deux instruments doivent être soutenus par une volonté politique forte plaçant
      l’humain au centre des politiques nationales de développement assurant aux jeunes les
      moyens d’un accès égal aux opportunités d’emploi dans leur pays, la promotion du bien- être

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de tous les individus sans discrimination, au moyen d’un dialogue social permanent entre les
principaux acteurs au sein du monde du travail.
Mais la crise du Covid-19, partie de Chine en décembre 2019, et qui s’est propagée dans toutes
les régions du monde, a mis sous tension les systèmes de santé et impacté très fortement les
économies de la plupart des pays du monde. Elle a remis en cause de façon brutale la
dynamique de croissance et l’optimisme régnant au début de cette année en Afrique.
Cette crise sans précédent dans l’histoire moderne est loin d’être maîtrisée puisque le virus
circule toujours avec ses impacts humains, économiques et sociales dramatiques.
Elle est venue nous rappeler une chose : que nos pays, nos économies et nos sociétés doivent
se préparer à faire face de façon fréquente à des chocs externes violents qui se transmettent
de façon presque instantanée entre les pays et les régions. Ici en Afrique, même si les
indicateurs sanitaires (nombre de personnes infectés, nombre de personnes décédées du
Covid-19, nombre de personnes hospitalisées, etc.,) sont moins dramatiques que dans
d’autres régions du monde, les mesures de confinement et de fermeture des frontières prises
par les autorités publiques pour contenir le virus ont impacté très fortement nos économies,
nos entreprises et nos travailleurs. Dans mon pays l’Algérie : les conséquences économiques
et sociales observées sont très importantes aussi.

Les mesures préventives prises de façon urgente (confinement de la population, fermeture
des frontières, etc..) dès le mois de mars ont mis l’économie à l’arrêt.
Des secteurs comme le transport, hôtels restaurants, bâtiments-travaux publics, tourisme,
etc… ont été paralysés et pour certains ils le sont encore jusqu’à aujourd’hui.
Malgré la levée partielle des mesures de confinement décidée par les autorités publiques il y
a quelques semaines, l’impact économique sur le secteur privé va se faire sentir pendant très
longtemps encore.
Les chiffres sur l’activité économique et commerciale qui me remontent de la part de nos
adhérentes sont très inquiétants, malgré les mesures d’urgence que le nouveau
gouvernement a mis en place (gel des payements des cotisations, annulations des pénalités,
etc.) Nous redoutons des faillites en série à l’avenir avec un impact fort sur la démographie
des entreprises et l’emploi et notamment l’emploi des jeunes. Nous redoutons aussi un
accroissement de l’économie informelle.

En Algérie, à la crise du Covid-19, est venue d’ajouter celle de la chute des prix des
hydrocarbures qui a aussi impacté fortement l’économie du pays. Pour faire face à cette
situation, le nouveau gouvernement a mis en place quelques mesures d’austérité, qui ont eu
un impact supplémentaire sur l’activité du secteur privé.

Devant une telle situation nous les employeurs du secteur privé sommes déterminés à
continuer à travailler main dans la main avec ce nouveau gouvernement (arrivé aux affaires il
y a seulement quelques mois suite à la chute de l’ancien régime) et les représentants des
travailleurs, dans le cadre d’un dialogue social effectif, pour faire réussir la politique de lutte
contre l’expansion de la pandémie et relancer l’activité économique et la création d’emplois.
La relance de l’économie appelle des mesures fortes et bien ciblées consistant à aider les
entreprises à redémarrer leur activité, encourager l’investissement dans les secteurs d’avenir
(comme les énergies renouvelables, l’agriculture, le tourisme, les industries de

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transformation), l’investissement dans le capital humain et le secteur de la santé et de
        l’éducation.
        Pour encourager la formalisation des entreprises et des travailleurs informels doit être aussi
        une priorité, Il nous faut aller vers des croissances à fort potentiel d’emplois décents pour
        réduire les taux de chômage élevés que connaissent nos pays, notamment chez les jeunes et
        les diplômés, chômage qui nourrit le phénomène des flux migratoires notamment clandestins,
        en direction des pays du nord, provoqués par l’absence de perspectives d’emploi dans les pays
        d’origine.
        Je voudrais aussi mentionner le secteur de start-ups qui doit figurer en tête de nos priorités
        car c’est dans ce segment que se trouvent les gisements d’emploi de demain.
        Pour ce faire mon organisation, la CGEA, vient de soumettre au Président de la République et
        au gouvernement un rapport important sur la situation actuelle de l’économie contenant des
        recommandations fortes sur les mesures qui devraient être prises pour relancer l’économie
        du pays sur des bases nouvelles et en réduire la dépendance par rapport au pétrole.

        Je vous remercie.

Panel 1- ILO policy framework for responding to the COVID-19 crisis
Building Back Better in Africa (Mr Mthunzi Ndwaba)

Question: What are the sectors of economic activity that require particular support and what is the
nature of support that in your view and experience, will ensure quick recovery, enhanced productivity
and protecting jobs as well?

       Africa is confronted with a double supply and demand shock that arrived in three successive
        waves.

       A first wave came from China through weakened trade channels and lower foreign direct
        investment (FDI).

       A second wave arrived from OECD countries, due to the EU demand slump associated with the
        lockdown and the halt in tourism. Most small island developing states, North African countries,
        as well as several West African economies depend on the EU for at least 50% of their trade.

       Finally, a third wave came from the shock on internal demand and the slowdown of intra-
        African trade. The shock to internal demand has been driven by disruptions in household and
        business spending and particularly impacted countries with strict confinement measures such
        as South Africa.

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Sectors of economic activity that require particular support

          Commodity-sensitive economies are suffering the largest disruptions to trade and exchange
           rate stability. Algeria, Angola, Cameroon, Chad, Equatorial Guinea, Gabon, Ghana, Nigeria, and
           the Republic of the Congo are among the most affected.

          The crisis is having a significant impact on tourism in Africa and has directly and indirectly
           affected jobs.

          IATA estimates the economic contribution of the air transport industry in Africa at USD 55.8
           billion, supporting 6.2 million jobs and contributing 2.6% of the continent’s GDP. Restrictions
           to international travel have affected African airlines such as Ethiopian Airlines, Egyptair, Kenya
           Airways, and South African Airways, which are large employers and have linkages to other
           domestic businesses. In normal times, airlines transport around 35% of world trade and each
           job in air transport supports 24 others jobs in the travel and tourism value chain, which creates
           around 70 million jobs. 1

          The Covid-19 crisis is shattering the hotel industry. No flights means no guests. Hotels have
           reported having extremely low occupancy rates or have experienced closures on a massive
           scale. Big hotel chains have seen their stock price plunge as a result.

          The contraction of world trade is affecting the productive apparatus of several sectors across
           the region. African industries import over 50% of their industrial machinery and manufacturing
           and transport equipment from outside the continent. The most important suppliers are
           Europe (35%), China (16%) and the rest of Asia, including India (14%). As such, COVID-19-
           related disruptions in global supply chains, especially from China and Europe, led to a decrease
           in the availability of final and intermediate goods imported to Africa. Lower value-added
           sectors such as agribusiness, flowers, or garments have suffered the most from shortages in
           supply and reshoring of production activities closer to final markets. 2

          Small and medium-sized enterprises (SMEs) and own-account workers have been those hit the
           hardest by the Covid-19 crisis. We must have governments partner with all social partners
           especially businesses to have meaningful support for SMEs. Governments should go beyond
           just enabling the environment and be funders of first resort for SMEs.

1
    IATA (2020), Africa & Middle East - Urgent Emergency Support Requested for Airlines
2 COVID-19 and Africa: Socio-economic implications and policy responses

http://www.oecd.org/coronavirus/policy-responses/covid-19-and-africa-socio-economic-implications-and-
policy-responses-96e1b282/

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Support for quick recovery

   The private sector is central to the recovery to drive economies forward. However,
    businesses will not restart operations spontaneously without any support. Businesses need
    governments to facilitate and create an enabling environment for private sector growth and
    resilience.
   Emergency assistance is needed. Drastic and well-informed policy choices should be made in a
    matter of hours rather than years. Employer organizations, together with their governments, will
    need to show real leadership and effective advocacy in the process of building back resilience and
    supporting a sustainable and inclusive recovery.

   Liquidity and solvency must reach the real economy. Not only in an effective manner, but most
    importantly, in a timely manner. Central banks and other financial institutions have a big role to
    play to ensure liquidity, maintain the flow of credit to the economy and safeguard financial stability
    against global market shocks.

   The removal of barriers to financial aid. Bureaucracy needs to be minimized to help businesses at
    risk of bankruptcy. Grants, bank loans, interest-free credit, moratorium of loan payments, waiver
    of public utility bills and other economic packages should reach business owners as fast as possible.
    Simplifying the application process for those in need is also crucial.

   Ensuring fiscal and monetary policies work together to stabilize the economy and address the
    needs of the private sector. Depending on the fiscal and monetary space available, taxes and
    interest rates should be determined to allow for a faster, steady, and sustainable recovery once
    the pandemic is under control. Close, continuous international coordination will be essential to
    support Africa.

   Governments should consider re-prioritising resources from non-essential services and
    prioritise funding to essential services such as medical support and PES. Short term work
    schemes can help prevent unemployment. Digital tools can help alleviate the problem of the
    volume of claims. However, extra support needs to be offered to applicants who do not have
    digital skills or access to the internet.

   Strengthen food chain security: encourage food crop production, rather than cash crops;
    ensure continuity of agriculture activities and food supplies to most vulnerable towns and
    cities.

   It is important for the ILO, as the international specialized labour agency, to play a central role
    in this unprecedented situation in a rapid, decisive and a balanced manner. The ILO must take
    a bold, innovative and balanced approach in its actions and messages to the world in
    addressing the concerns of all its constituents – including employers

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   Political will and innovative solutions should be developed to tackle this global issue, using a
        bottom-up, differentiated approach. Policy guidance should particularly look at how to
        promote the digital transformation of work. As the world is getting ready to enter in the post-
        Covid-19 phases, much lessons have been learnt regarding the importance of digital tools.
        Going digital is unavoidable. It requires openness, innovation, agility and flexibility.
        Digitalisation should help us to work in a more efficient manner, with better impact and to
        avoid unnecessary heavy workload.

       Help build a productive private sector. Without employers there cannot be job creation in the
        private sector. Without businesses and enterprises, there can never be full and productive
        employment, and concomitantly, there can be no decent work as per our Centenary Declaration
        that stresses this from our ILO celebration last year. Without this there can never be any social
        justice. Period. A productivity focus is required. Productivity brings revenue, which in turn pays for
        the wages and benefits. All of which are important to earn a good living and sustain families.
        Productivity means businesses can compete, especially in a world now where businesses not only
        compete domestically but internationally. A thriving private sector contributes to the GDP, to
        economic growth and development, and it stimulates trade and attracts foreign direct
        investments. Most importantly, the private sector creates jobs for the population and reduces the
        dependency on the state in creating employment.

       We must turn over a new leaf, do away with ideology fixation and fetish, playing to the gallery,
        using words that never translate to action. We must urgently do things differently for different
        positive results…to quote the Minister of Labour and Employment of India, the Honourable Santosh
        Kumar Gangwar, from this morning at the Asia Regional Conference - “…there is a need to rewrite
        the rules of the world of work and accept things must be done differently…”

Panel 2- Addressing Challenges of the formalization of the Informal
Economy in Africa (Mr Timothy Olawale)
• Two thirds of Africa’s population live and work in rural areas; informality has a strong rural
dimension. Rural areas host nearly 80 per cent of the world’s poor and account for 65 per cent of the
total informal employment. Agriculture is the sector with the highest level of informal employment.
Informality, particularly in rural areas, is a phenomenon of great magnitude which, contrary to
previous forecasts, has not diminished over time and is still increasing in many countries.

• Small firms with poor performance tend to be the norm, rather than the exception, in less developed
economies. The fact that they underperform and create poor-quality jobs (without social protection
and poorly remunerated or even unpaid) has an impact on the overall growth of the economy and the
persistence of poverty. Their low productivity and low profitability reproduce a vicious circle of
stagnation-unprofitability-informality thus creating a low-level equilibrium trap. At this low-level
equilibrium, both savings and investment rates are negligible or zero, while small firms’ opportunity
cost of being formal is higher than their net returns.

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• Without meaningful structural change, most of the jobs generated are likely to be in the informal
economy where productivity and income are low and work is insecure, making the global objective of
leaving no one behind and progress towards the 2030 Agenda for Sustainable Development and the.
Informality in Africa cannot be attributed to the so called ‘growth pattern “It is rather the lack of
growth in the face of rapidly population growth and urbanization for over four decades starting from
the 1940s that caused formalization. The reasons are multiple and complex.

• Informality is Africa’s pressing challenge and should be, examined its particularity. Formal business
is facing a fierce competition from informal operating business. We should ask questions as to how do
we deal with informality and how have, we been dealing with it in the past. Has the route taken lead
us to a right destination? We need to assess our past efforts and strategies to identify where we went
wrong. Enterprises, particularly small firms, face barriers to obtain credit from commercial banks
because of their low profitability. It is essential to examine alternative sources of financing and
governments’ resource allocation criteria so that public funds reach both small firms with positive
prospects and individuals with entrepreneurial potential.

• Productivity in formal sectors should be boosted to facilitate formalisation of the informal sectors in
this respect recommendation 20154 of 2015 calls for “ enterprise policies that promote sustainable
enterprises and, in particular, the conditions for a conducive environment, taking into account the
resolution and Conclusions concerning the promotion of sustainable enterprises adopted by the
International Labour Conference at its 96th Session (2007), including support to micro, small and
medium-sized enterprises and entrepreneurship, and well- designed, transparent and well-
communicated regulations to facilitate formalization and fair competition; (recommendation 204 or
2015 section IV (15) (C).

• There are push as well as pull factors to informality raging from inadequate regulatory framework, a
weak enforcement system, a lack of transparency and accountability of public institutions to tax
evasion or generally, informality by choice. Tackling informality requires recognising the its multiple
cause as put recognised in the preamble of the recommendations204 of 2015.

• Access to technology is a key to rural and informal sector transformation. New technologies tend to
be mainly within reach of large enterprises often located in urban areas. It is key to help small firms
have access to new technological developments. Hence, tackling barriers to tech adoption is key for
productivity growth and to prevent inequality from rising further. Technological progress tends to
benefit more skilled (educated) workers, thus increasing demand for [specific] skills. It is then argued
that there is a causal relationship between tech developments and changes in the wage distribution
(Acemoglu, 2003). Moreover, labour market-disrupting technological innovation may lead to job
destruction and creation. This new wave of technological change calls to investing in on-the-job
training for up-skilling and re-skilling so that individuals can remain active in the labour market and
raise their productivity. Such transition is to be accompanied by active and passive labour market
policies to prevent individuals from taking premature risks to undertake necessity entrepreneurship.

• For countries in Africa, adoption of new technologies is vital for their successful participation in
regional and international markets and improved livelihoods. And yet, without robust skills base,
effective adoption of new technologies will not be possible. Technological advances and digitalization

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drive skills needs, while skills determine the extent to which technologies can be used effectively.
Given this close connection between skills and technologies, it is essential for countries at all levels of
development to plan not just for current skills needs but also for the implications of the trends in
technology for the future skills needs.

•It is important to undertake an economy’s structural transformation to shift, for instance, from a
commodity-dependent growth model to a knowledge-based economy, leading to set up and develop
knowledge hubs and knowledge clusters, that is, networks of entrepreneurs with skills-complementing
profiles and quality-alike skills profiles so that no one falls behind by allocating resources in such a way
that entrepreneurs achieve to be better off without making anyone worse off. Moreover, more often
than not, public and private polies are not coordinated between and among them to achieve a
common objective. Hence, it is also necessary to design, implement, and coordinate policies and
resources for productivity growth. In particular, fiscal (tax and expenditure), social security, and
financial policies.

• It is estimated that 9 out of 10 economic units in Africa are part of the informal sector, providing
employment to more than 75 per cent of all workers. The rate of informal employment in Africa is the
highest in the world. In the agricultural sector it is estimated above 90 per cent.

• Policies are not enough; Conducive policies need to be complemented by its implementation follow-
up and midterms reviews. This is echoed in the recommendation 204 of 2015 paragraph 39 which gives
instructions to review on a regular basis, as appropriate, the effectiveness of policies and measures
to facilitate the transition to the formal economy, in consultation with the most representative
employers’ and workers’ organizations, which should include in their rank, according to national
practice, representatives of membership-based representative organizations of workers and economic
units in the informal economy.

Closing remarks by Mr. Jacqueline Mugo

Your Excellencies, Distinguished Ministers/Government representatives and delegations, ILO
Director-General, Regional Director for Africa and other ILO representatives,
Workers’ representatives,
And fellow colleagues from Employers’ Organizations,

I am honored to speak on behalf of the employers’ group at the close of this Regional meeting at such
a critical moment for the World of Work.
    1) Covid-19 has changed the Landscape:

The Covid-19 pandemic came upon us just a few months after the unanimous adoption of the “Abidjan
Declaration: Advancing Social Justice: Shaping the Future of work in Africa” where we adopted many
important priorities for our continent. The reality is that the Covid-19 pandemic has drastically
changed the landscape. We must now review and further refine our immediate areas of focus within
the agreed Strategic priorities

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We commend the quick action by African governments following the emergence of the Coronavirus in
our region as they immediately moved to declare a health emergency and put in place necessary
measures to control its spread. As mentioned by many of you during this Virtual Meeting, these
measures have also had significant negative impacts on the economy. Many governments, including
my own country Kenya, have availed considerable economic stimulus packages to support the
population and businesses. Unfortunately, these packages have proved inadequate due to the
prolonged duration of the crisis, the far-reaching measures and restrictions put in place to keep the
virus in check and the inability of many governments to cushion employers on payroll costs despite
our efforts to push for this. The Covid – 19 crises have brought about huge job losses as enterprises
have been unable to cope. Businesses can only keep people in jobs if they are viable and running. The
economic and social impacts are grave and likely to outlive the health crisis for years to come.
 1)     Negative Impact on Employers’ Organization:

 Employers’ Organizations are facing significant loss of membership and income due to the financial
difficulties that our member enterprises are facing ranging from the risk of insolvency or actual closure.
This has made it difficult for them to pay their membership fees. As a result, some Employers
‘organizations are in a dire financial situation and have been forced to suspend certain critical services
and operations to survive. This situation puts at risk our capacity to fully represent the private sector’s
voice and effectively engage in advocacy and social dialogue. So, the pandemic also poses an
unprecedented challenge to social dialogue and tripartism, at the very moment when we need it most
in order to chart the path to recovery to build back better in Africa. This unfortunate trend should be
a matter of great concern to the ILO and indeed to all of us here today!

The ILO has a central role to play in assisting tripartite constituents to navigate the crisis and recover
from it in a n inclusive and sustainable manner. Social dialogue requires, independent, strong and
representative employers’ and Workers’ organizations able to engage and exercise their rights and
freedoms. Employers’ organizations are also key allies to deploy technical assistance and capacity
building that will help SMEs build their resilience.

2)      Long-term Support needed by business beyond the peak of the pandemic:

Apart from the challenges Africa is facing, including low productivity, a tough business environment,
skills shortages and prevalent informality, coping with the impact of Covid-19 must not become a
long-term challenge. To put it straight: we simply cannot afford it. In this regard, our governments
should urgently provide further and effective support to businesses to stay afloat and avoid large scale
job losses. They should ensure that financial support reaches enterprises, especially SMEs.

3)      Expanding the scope of social dialogue to address economic and social policy issues

The crisis has exposed the need to expand the scope of social dialogue and tripartism in Africa to
encompass the economic and social policy issues. We commend the initiative taken by Social Partners
in some countries, like Kenya to enter into Agreements on interventions to manage the crisis.
However, only a few African countries, have an institutional mechanism for involving social partners
in policy issues outside of labour matters. ILO should assist its constituents to increase their capacity
on social and economic key drivers, including those for productivity growth, while at the same time
promoting social dialogue and tripartism through the UN Cooperation Framework and the
sensitization of line Ministries at national level.

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Excellences and Colleagues,

4)      Let us seize opportunities from Covid-19:

As difficult as the situation might be, we must seize the opportunities that the crisis offers and
accelerate reforms in our continent. For example, in the integrated and borderless world of today,
digital technologies offer opportunities for productivity growth which did not exist before and these
can be used to enhance learning and business activities. Africa should not be left behind. For this to
happen, the IT infrastructures in our countries should be substantially improved and made accessible.
The adoption of digital technologies could offer a solution to financial exclusion driven by informality
and improve productivity, market access and the supply of goods and services.
The main reason for informality in Africa is decades of low productivity in the face of high population
growth. It is time to mainstream productivity in all that we do going forward. Our continent has been
trapped for decades in a low productivity – high informality vicious cycle, while keeping us locked in
low per-capita income and pervasive poverty. To break out of this trap we need to consistently
promote and ensure an enabling environment that allows businesses to grow, to thrive and innovate.
This requires removal of all barriers to the development of the private sector and facilitating
transformation of the informal economy among other interventions.

Excellences and Colleagues,
I would like to conclude on a positive note and encourage us all to remain focused on action! This
pandemic is unprecedented, but we have no option but to be resilient as the Continent has always
been. What we must do now is rise to the occasion, build trust and work together better than we
have ever done before in order to minimize the health, economic and employment impacts of this
crisis and build back better and stronger in Africa!

Thank you all for your kind attention.

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© IOE July 2020

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         Avenue Louis-Casaï 71 – CH-1216 Geneva  T +41 22 929 00 00 F +41 22 929 00 01  ioe@ioe-emp.com ioe-emp.org

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