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The effect of COVID-19 and the 4IR on integration within global value chains

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The Global Manufacturing and Industrialisation (GMIS) Digital Series 2020 kicked-off with a high-level panel webinar addressing “glocalization: localizing production and capacity building for survival and success”. The focus was on the effect of COVID-19 and the Fourth Industrial Revolution (4IR) on integration within global value chains, the implications for micro, small and medium enterprises and the labour force, particularly in developing countries. The session featured UNIDO’s Cecilia Ugaz Estrada, Bright Simons, President, mPedigree, and Yi Xiaozhun, Deputy Director General of the World Trade Organization.

Yi stated that world merchandise trade may fall by 13 per cent due to the pandemic, and that the current disruption differs from that of the 2008 crisis. “I don’t believe that these changes are likely to stay with us forever,” he said. “Going forward, the structure of the supply chain will depend on whether the experience accelerates two trends that have been underway for several years. One trend is China moving up the value chain due to its industrial strategies or rising labour costs. Another important trend is increasing adoption of labour-saving technologies in modern manufacturing, such as industrial robots..

Ugaz Estrada stressed that closing borders would reduce the potential for trade integration and warned of the potential erosion of comparative advantage in many developing countries. “I think developing countries have a real opportunity to be able to expand their markets by exporting to and importing from their neighbours…there remains the possibility of expanding markets by using trends of regionalization,” she said.

Ugaz Estrada also pinpointed a number of factors which would be key to SMEs in developing countries being able to absorb advanced manufacturing technologies in the current challenging environment. These include upgrading digital infrastructure; creating preparedness strategies; digital upskilling and training; empowering women; and creating strong multi-stakeholder partnerships.

“It’s a moral imperative for international corporations to really provide a proper learning process for participation in the value chain; it’s a sine qua non condition. At UNIDO we are in the business of trying to help countries – the governments in particular -to be able to provide this learning infrastructure,” she said, citing UNIDO’s Centre for Mechatronics and Automation Technology in Uruguay as an example.

Simons stressed the dampening effects of COVID-19 on regional integration, connectivity and trade, as well as possible border closures.

“The barriers that COVID-19 has imposed affects regional trade, as much as it affects global trade,” he said. “So if you are following the discussion around the Continental Free Trade Agreement, which now has now been imperiled because of COVID-19, given that it is the avowed aim of all African governments to forward the continental integration agenda, it will be quite surprising if they will be able to achieve that by closing borders,” said Simons. 

He mentioned that SMEs in Africa had often been constrained in exporting by stringent standards and certification requirements, but that technologies are emerging that are helping to streamline these processes.

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Human Rights

ILO Child Labour Convention achieves universal ratification

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For the first time in the ILO’s history, an International Labour Convention has been ratified by all member States. Convention No. 182 on the Worst Forms of Child Labour  achieved universal ratification, following ratification by the Kingdom of Tonga.

Ambassador for the Kingdom of Tonga, Titilupe Fanetupouvava’u Tuivakano, formally deposited the ratification instruments with ILO Director-General, Guy Ryder on 4 August, 2020.

The Convention is the most rapidly ratified Convention in the history of the Organization, since its adoption 21 years ago by the International Labour Conference.

“Universal ratification of Convention 182 is an historic first that means that all children now have legal protection against the worst forms of child labour,” said ILO Director-General Guy Ryder. “It reflects a global commitment that the worst forms of child labour, such as slavery, sexual exploitation, the use of children in armed conflict or other illicit or hazardous work that compromises children’s health, morals or psychological wellbeing, have no place in our society.”

Secretary-General of the International Trade Union Confederation (ITUC), Sharan Burrow, welcomed the ratification.

“Universal ratification of Convention 182 is a potent and timely reminder of the importance of ILO standards and the need for multilateral solutions to global problems. Child labour is a grievous violation of fundamental rights, and it is incumbent on the ILO’s constituents and the international community to ensure that this Convention is fully implemented, including through due diligence in global supply chains,” she said.

“The universal ratification of ILO Convention No. 182 on the worst forms of child labour is an historic moment,” said Roberto Suárez Santos, Secretary-General of the International Organization of Employers (IOE). “Throughout the years, the IOE and its member organizations have supported the implementation of this Convention. Today, the business community is both aware of and acting on the need to do business with respect for children’s rights. This is even more urgent in the times of the COVID-19 pandemic . We cannot allow the fight against the worst form of child labour to backslide. Together we can work towards the end of child labour in all its forms.”

This universal ratification is a further step towards making more concrete the aspirations of Kailash Satyarthi, Nobel Peace Prize laureate, when he said: “I dream of a world full of safe children and safe childhoods; …I dream of a world where every child enjoys the freedom to be a child.”

The ILO estimates that there are 152 million children in child labour , 73 million of whom are in hazardous work. Seventy per cent of all child labour takes place in agriculture and is mostly related to poverty and parents’ difficulties finding decent work.

Convention No. 182 calls for the prohibition and elimination of the worst forms of child labour, including slavery, forced labour and trafficking. It prohibits the use of children in armed conflict, prostitution, pornography and illicit activities such as drug trafficking, and in hazardous work.

It is one of the ILO’s eight Fundamental Conventions . These cover the abolition of child labour, the elimination of forced labour, the abolition of work-related discrimination and the rights to freedom of association and collective bargaining. These principles are also covered by the ILO Declaration on Fundamental Principles and Rights at Work (1998) .

Since the ILO’s founding in 1919, child labour has been a core concern. The Organization’s first Director, Albert Thomas, described child labour as, “the exploitation of childhood which constitutes the evil… most unbearable to the human heart. Serious work in social legislation begins always with the protection of children.”

It is the focus of one of the ILO’s largest development cooperation programmes – the International Programme on the Elimination of Child Labour and Forced Labour (IPEC+) , which has supported over 100 countries in all continents.

The incidence of child labour and its worst forms dropped by almost 40 per cent between 2000 and 2016, as ratification rates of Convention No. 182  and Convention No. 138 (on minimum age to work)  increased, and countries adopted effective laws and policies.

However, progress has slowed in recent years, particularly amongst the youngest age group (5-11 years) and in some geographical areas. With the COVID-19 pandemic, there is a real risk that years of progress will be reversed, leading to a potential increase in child labour for the first time in 20 years, unless appropriate action is taken.

“Ending child labour by 2025 in all its forms” is included under Target 8.7  of the Sustainable Development Goals , adopted by all UN Member States in 2015. The global partnership, Alliance 8.7 , for which the ILO provides the Secretariat, brings together over 250 partners and 21 Pathfinder Countries to coordinate, innovate and accelerate progress to end child labour, forced labour, human trafficking and modern slavery. The universal ratification of Convention No. 182 demonstrates the will of all ILO member States to ensure that every child, everywhere, is free from child labour and its worst forms.

This landmark achievement comes just months before the start of the International Year for the Elimination of Child Labour in 2021 , to be led by the ILO in collaboration with partners. Its aim is to raise awareness of the issue and to help accelerate the pace of progress.

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COVID-19 forced businesses in Ghana to reduce wages for over 770,000 workers

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The shock caused by the COVID-19 pandemic has had considerable impacts on Ghanaian businesses, forcing many firms to cut costs by reducing staff hours, cutting wages, and in some cases laying off workers.  

This is according to results from a new COVID-19 Business Tracker Survey conducted by the Ghana Statistical Service (GSS), in collaboration with the United Nations Development Programme (UNDP), and the World Bank. The results show that about 770,000 workers (25.7% of the total workforce), had their wages reduced and about 42,000 employees were laid off during the country’s COVID-19 partial lockdown. The pandemic also led to reduction in working hours for close to 700,000 workers. 

“Government has already put in place diverse supports for businesses including the establishment of a Coronavirus Alleviation Programme to protect jobs, livelihoods and support small businesses. And, also is the Government’s GH¢600 Million Stimulus Package to small and medium scale enterprises (SMEs). The findings of the Business Tracker provide specificity on the pathways of effects, variation in the effects for different categories of businesses, their geographical areas, and the extent of effects”, Professor Samuel Kobina Annim, Government Statistician noted. 

The survey was carried out between May 26 and June 17, 2020 across the country to assess how the novel coronavirus has impacted private businesses. Some 4,311 firms were interviewed. 

The data also show that during the lockdown, about 244,000 firms started adjusting their business models by relying more on digital solutions, such as mobile money and internet for sales. Firms within the agriculture sector and other industries used relatively more digital solutions (56%), with establishments in the accommodation and food sector being the least that adopted digital solutions (28%). 

“If businesses, especially SMEs are provided with the needed support to adopt best practices, particularly in the use of digital solutions, this could go a long way to increase their productivity and resilience to future challenges”, said Fredrick Mugisha, UNDP Economic Advisor for Ghana and The Gambia.  

Generally, the results indicate that during the country’s COVID-19 partial lockdown, businesses received shocks in supply and demand for goods and services. Close to 131,000 businesses had challenges accessing finance and expressed uncertainty in business environment.  

The average decrease in sales, according to the findings, was estimated at 115.2 million Ghana Cedis, with firms in the trade and manufacturing sectors (including exporting firms) largely affected.  More than half of these firms had difficulties in sourcing inputs due to non-availability or increase in costs, leading to challenges in covering revenue shortfalls.  

Even though the lockdown measures have been relaxed, the survey results show a high degree of uncertainty in the expectations of firms regarding sales and employment over the next 6 months.  

“The survey shows that COVID-19 has had a deep impact on Ghana’s private sector, through several channels. Firms are experiencing lower demand for their products, difficulties in accessing finance and sourcing inputs, and face an extended period of uncertainty. The World Bank is working closely with the Government of Ghana to mitigate these negative impacts and assist businesses to survive the pandemic and build resilience in the face of the changed economic conditions”, noted Pierre Laporte, World Bank Country Director for Ghana, Liberia, and Sierra Leone.  

To lessen the impacts of COVID-19, the survey results suggest the need for policies to support firms in the short and medium term. The most desired policies cited by the private sector include measures to improve liquidity such as subsidized interest rates, cash transfers and deferral of tax payments. Many firms were not aware of the Government’s support programs, suggesting the need for increased awareness and clarity on the guidelines and requirements of current interventions. 

The results of the survey also suggest that efforts should be concentrated on re-establishing channels that were adversely affected during the pandemic. These should include re-establishing supply chains by providing credit guarantee schemes for those accessing finance, facilitating input procurement, and access to foreign markets to boost demand. The report also proposes support for firms with grants and business development services to upgrade technologies to increase productivity. 

The Business Tracker Survey is part of a global Business Pulse Survey (BPS) initiative of the World Bank, surveying the impact of COVID-19 on the private sector in more than 40 countries. 

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UN ‘actively assisting’ in response to huge explosions at Beirut port

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The United Nations has said that it is “actively assisting” in the response to the horrific explosions that ripped through the port area of Beirut on Tuesday, reportedly leaving dozens dead and thousands wounded, among them some UN naval peacekeepers.

A statement from a UN spokesperson  said Secretary-General António Guterres  expressed his deepest condolences to the families of the victims, as well as to the people and Government of Lebanon, following the horrific explosions in the capital.

The UN chief wished a speedy recovery to the injured, including several UN personnel working in Lebanon.

News reports suggest that along with dozens of deaths, perhaps several thousand people were injured in the massive blasts, which sent shockwaves across the bustling city of Beirut, bursting out windows and shaking buildings. The cause of the explosions has not yet been confirmed.

“The United Nations remains committed to supporting Lebanon at this difficult time and is actively assisting in the response to this incident,” Mr. Guterres said.

Separately, Tijjani Muhammad-Bande, the President of the UN General Assembly, also extended his deepest condolences to the families who lost loved ones in the explosion in Beirut today and wished a speedy recovery for the injured.

“Mr. Muhammad-Bande would like to reiterate his solidarity with Lebanon during this time,” said the Assembly President’s Spokesperson.

Meanwhile, earlier in the day the UN Interim Force in Lebanon (UNIFIL) said that as a result of a huge explosion, a ship from its Maritime Task Force docked in the port was damaged, leaving some UNIFIL naval peacekeepers injured – some of them seriously.

“UNIFIL is transporting the injured peacekeepers to the nearest hospitals for medical treatment. UNIFIL is currently assessing the situation, including the scale of the impact on UNIFIL personnel,” said a statement from the operation, which was set up in 1978 initially to confirm the withdrawal of Israeli forces from southern Lebanon, as well as to ensure the area returned to Beirut’s control.

UNIFIL Head of Mission and Force Commander Major General Del Col said: “We are with the people and the Government of Lebanon during this difficult time and stand ready to help and provide any assistance and support.”

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