In 2021, the ramifications of the COVID-19 pandemic, in terms of job losses, declining incomes, rising medical expenses, etc., have all increased the importance of the financial sector. For example, banks and mobile money operators served as a vital channel through which government relief payments could be channeled, where they were available – or at the very least, through which migrant workers, if they were able to keep their jobs, could send funds home to help loved ones stay afloat.
The financial sector also played a vital role in facilitating risk management, enabling households and businesses struggling to make ends meet to use their savings, insurance (if they had any) and perhaps lines of credit to get by until economic activity is allowed to resume. RESUME. And when resources are scarce, at the enterprise or household level, financial education becomes all the more important, as Section 1 of this report highlights.
The pandemic has spurred a move away from cash in favor of digital payments as public health authorities have encouraged people to keep their distance from each other and use contactless payment methods. Therefore, the timing of the launch of the ILO Global Center on Digital Wages for Decent Work, which aims to accelerate the transition to responsible digital wage payments and is supported by the Bill & Melinda Gates Foundation, was fortuitous ( see section 1). This initiative is fully in line with the Global Call to Action, adopted at the 2021 International Labor Conference, for a people-centred post-crisis recovery – an inclusive, sustainable and resilient recovery.
One of the biggest risks emerging from the pandemic is that we lose sight of the even bigger threat to the world of work: climate change. It is becoming more and more urgent to reach net zero. Banks, investors and insurers all have a vital role to play in shifting economic activity towards carbon neutrality, but they must do so with careful consideration of the impact this has on workers and their communities. . The pursuit of this just transition is gaining momentum in our work, as described in Section 3, and our efforts to manage the impact of climate change through insurance are discussed in Section 2.
Another important trend we are witnessing and participating in is the growing collaboration between the public and private sectors to advance public policy goals. It is clear that donor funding is insufficient to achieve the Sustainable Development Goals. Consequently, governments are exploring a range of strategies to mobilize private sector finance and channel it towards public policy outcomes. To this end, we are working on public-private partnerships for risk management (section 2), as well as blended finance, guarantee funds and impact bonds (section 3), to help financial markets contribute to economic and social development.
Finally, 2021 marked the 30th anniversary of the ILO Social Finance Program – for an introduction to the program see Box 1. To celebrate this milestone, we have organized two main activities. First, we hosted a virtual alumni reunion, bringing together 80 people who have worked in the program at some point over the past three decades. We also organized an ideation competition, to get new ideas for work that the ILO could or should do with the financial sector in the years to come. We will highlight these ideas in next year’s annual report. Until then, happy reading this one.
Chief, ILO Social Finance Program