China's stellar economic performance has stood out not only among its neighbors in the Asian region, now slowly recovering from the financial crisis of the late nineties, but in the world economy as well, in spite of, and really because of, its accession into the World Trade Organization and the series of reforms that continue to change its very structures.China’s integration into the international trade and finance systems, and its growing stature in them, have transformed both the international economic landscape as well as its own domestic situation.

As this century opened, it has registered economic growth rates of 7 to 9 percent, with exports growing by 20% and imports by a little less annually.The strong external demand was only equalled by a strong domestic demand.Foreign direct investment has poured into China, making it the second largest recipient of FDI in the world.It is said that the provinces ofGuangdong, Fujian, Jiangsu , Chandongand Shanghai have claimed more than half of the cumulative inflows.

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*Dean Confesor was Philippine Secretary of Labor and Employment (1992-1995) ; served as Chairperson of the ILO Governing Body ion 1994-95; and presently serves as one of the ILO Declaration Expert-Advisers.

Globalization is currently characterized by structural imbalances arising from the different needs and capacities of developed and developing countries.China is a microcosm of this world of developing and developed regions.

The growing perception linking globalization and unemployment has caused increasing skepticism and heightening insecurity, generating political and social tensions forindividuals as well as challenged segments and groups within societies – yours and mine. We are told that academic opinion is moving to the view that the difficulties lie less with globalization, than with long-standing structural problems in the labor and product markets; with technological change, and with unchanged and unyielding problems associated with incorrect and inadequate macroeconomic policy.

On its way to becoming the manufacturing center of the world, China’s economic restructuring and accelerated economic development( in this case , made most visible by the removal of direct and indirect subsidies to the State-owned enterprises) has resulted in the short term removal of millions of workers.Economic development has pushed out and drawn out, like a magnet, millions of people in agriculture to industries and services, resulting in dramatic increases in employment of the manufacturing sector.The pace in which SOEs are restructured as well as the pace at which private firms are allowed to establish sets the pattern and level of employment.

China has decided to change in record time, in real time. Growth rtes have gone up; but so has social and economic tensions that threaten the sustainability of such growth. Globalization,coupled with innovations in the information and communication technology, has changed the way businesses transact. It has allowed for faster production cycles, added value to the creation of knowledge and innovation, and put a premium on skilled knowledge workers. The rapid increase in innovation has allowed the educated and skilled to compete, while leaving behind those who have not acquired the necessary education and skills needed for the new economy. It has given priority to the young and to the technologically savvy, and has left behind the older generation and those unfamiliar with new technology. Globalization is threatening – especially to those who cannot compete. It threatens to marginalize, and exclude outright, pockets of society.

In this week’s newspapers, President Hu Jintao is quoted to have said that excessive growth in fixed asset investment and blind investments in construction were to blame for the power shortages and transport bottlenecks that threaten to hurt the economy. Efforts to cool expansion may dampen job creation at a time when state companies are reported to be letting go of about 3 million workers per year.It is a difficult struggle for Chinese policy makers because there are some areas of the economy that are just growing too fast. But any slowdown in investment may worsen the job situation.

This is the dilemma of growth, of what the World Commission on Social Dimensions of Globalization has described as “fair” globalization. And the challenge for our policymakers is of managing the tensions of such a dilemma across many interests represented in the society that now drives China’s spectacular growth..

The challenges posed by and the recommendations outlined in the China Employment agenda reflect the desire the attend to this dilemma.Such an agenda will need to be implemented well – with much difficulty, yes. But not impossible.Political will, integrated strategies spanning sectors and groups of interest, focused interventions for specific disadvantaged groups, capable and working institutions are necessary ingredients addressed in your Agenda.

I remember the lament of one Filipino mother during a discussion about globalization and the community.She said : “ There is no point to a globalization that reduces the price of mychild’s shoes, but keeps my husband in the streets because he has lost hisjob.” Perception , yes. One causing the other., it may seem.But perceptions are the basis of action.They are the basis of conflict.

I would like to share another set of perceptions with you.These are the chief executive officers who are part of a global survey on competitiveness conducted by the IMD (Institute of Management Development) in Switzerland with the participation of a number of institutes across the globe, including mine– the Asian Institute of Management.These CEOs rated China as very competitive across some 120 variables,compared to 29 other countries which had populations of 20 million people or more. In fact, the 2003 survey showed that China ranked 12th in terms of overall competitiveness and 2nd in terms of economic performance. However,let me share with you some of the other findings which provide us with the “picture” that the Employment Agenda has seen.These are ---

• Although China ranked high on most of the factors of the survey, its rankings in terms of business efficiency pulled it down. It ranked only 24th out of 30 countries. Enterprise development and governance are areas of major concern for many of the company respondents. If the private sector is to be the major driver of job creation, then this is an area requiring immediate and dignificant attention and action.

• Further, while China ranked 1st in terms of labor force, with around 750 million people in the workforce, it ranked only 28th in terms of the availability of skilled labor, and 29th in terms of availability of IT skills. The Employment Agenda addresses this major concern .

• In terms of knowledge transfer between companies and universities, China ranked 23rd out of 30, and ranked 29th in terms of technological cooperation between companies. This aspect is critical in the development of the human resource pool necessary to make China THE manufacturing center of the world as well ensure its place in the knowledge economy.

While China has the world’s largest pool of unskilled labor, it does have a smaller pool of skilled labor, almost a worker elite.

Globalization, restructuring and employment must result in a race to the top --- not a race to the bottom.

The Global Employment Agenda, the World Commission on the Social Dimension of Globalization and theILO Declaration onFundamentalPrinciples and Rights at Work – where China was very much part of the debate and one of the guiding hands in reaching agreement – all profess that economic growth alone is not enough.The Declaration offered the singular opportunity to build the “social consensus which gives sustainability to the political and economic consensus and introduces fraternity and solidarity as a central component of human relations.”

In the context of contemporary globalization, the 1998 Declaration and its Follow-up is an instrument of partnership between member States and the Organization, and our desire for consensus on the social ground rules and the minimum to face the realities of globalization.

Every year, my colleagues and I, with the Office, prepare a review of how the different member-countries have progressed towards ratifying the conventions related to the basic principles.Such a review have brought countries to examine how they may face the challenges posed by the new world order as they attempt to provide employment and a better life for their people.

In their Reports to the ILO Governing Body, the Independent Declaration Expert Advisers (IDEA) are heartened that a number of governments, including China, have seized this opportunity to cooperate more closely with the ILO to realize progressively the principles and rights of the Declaration.

In this respect, we have commended China for requesting ILO technical cooperation, through the Annual Review process - and we call on other countries to follow suit.This is an important aspect of the Follow-up, because in the past we drew attention to China, in terms of progress that we wanted to see.So we were particularly glad to note what seems to us to be a change in this direction.The Declaration is a promotional approach to pursuing the principles and rights at work, and for this, it is necessary to build upon good experience and progress, wherever and whenever this occurs.

The technical cooperation that the Government of China has requested through the Declaration Follow-up relates to three principles/rights of the Declaration:(1) freedom of association and the effective recognition of the right to collective bargaining; (2) the abolition of forced or compulsory labour; (3) elimination ofdiscrimination in employment and occupation.I propose to address the first two of these to start with, leaving discrimination to the end.I will also briefly mention the elimination of child labour, the fourth principle/right covered by the Declaration.

I will start with the second principle - freedom from forced labour – because it seems you may be according particular emphasis to this area.The Governmentof China stated in its report in 2003 that there was no national policy, but that you would like to adopt such a policy, and would appreciate ILO assistance in doing so. The process was initiated at the beginning of 2003 by an explanatory seminar on the subject, to better understand the provisions of the international labour standards on the subject, and how these relate to your national law and practice.You recognized that a number of state agencies (e.g. Ministries of Labour, of Education and of Public Security) as well as non-state partners (e.g. trade unions, federations of youth and of women) are responsible for the identification, emancipation and rehabilitation of persons subject to forced labour.This shows the complexity of this problem, requiring a concerted , integrated national approach to its resolution.

Since that start in 2003, Chinese experts (not only from the Ministry of Labour, but also from public security, justice and legislative bodies) undertook seminars and international study tours, in cooperation with the ILO, to better understand this phenomenon, and to compare their national situation with international standards and practice.In your inter-Ministerial workshop on this subject in January 2004, participants stressed that cooperation with the ILO should also cover the issue of trafficking in human beings, as a form of forced labour.There is certainly scope for integrated initiatives to stem such trafficking in places of origin, and to secure greater protection of the Chinese workers migrating overseas in larger numbers.

As to the first principle, freedom of association and collective bargaining, I should start by stating what my IDEA colleagues and I have reiterated in this year’s Introduction to the Annual Review under the Declaration follow-up.The principle of freedom of association and collective bargaining must be respected irrespective of the specific economic, social, cultural and political conditions of countries.When respect for this principle is denied, when no true collective bargaining or social dialogue takes place, there can be no real progress in relation to the other categories of principles.Freedom of association and collective bargaining enable workers and employers to manage their own affairs, to negotiate with one another, and to make their voice heard vis-à-vis the State.The situations where this basic right is denied are fundamentally different from those where it is respected.

A number of positive developments seem to have occurred recently in China as regards this principle.In the 2003 government report under the Declaration Annual follow-up, your government noted that a tripartite mechanism has been set up at the national level, and reflected at provincial level, in order to promote the right to collective bargaining at enterprise level.However, much remains to be done in terms of giving effect to the right to establish free and independent workers’ and employers’ organizations.I would think that the request by the government to the ILO for cooperation in the areas of legal reform, capacity building and strengthening tripartite dialogue as well as in bargaining skills at enterprise level will help to open the way in this respect.

So far, I have been speaking with my hat of the Chair of the Declaration Expert-Advisers group.Now (lest you consider me one of those that can safely sit on the pinnacle of international independence and make lofty statements removed from difficult reality), let me tell you another good reason why I make these statements.I have also had the privilege to sit in my Government and had the duty of serving as Minister of Labour in my country, the Philippines. That experience only strengthened my persistent conviction in what I practice and advocate today as a teacher and researcher : economic development and employment are not undermined by rights; rather, rights – irrespective of levels of development - tend to strengthen the sustainability of development.

I have spoken mainly about two of these rights, but we cannot ignore the other two principles/rights: freedom from child labour and freedom from discrimination in employment and occupation.Child labour is a blight on the employment market in any country, and reinforces inter-generational poverty.I know that employment, training and education are key themes of this Forum, and income-generating policies and programmes may help in particular to overcome the incidence of child labour and forced labour.

This brings me to the principle of eliminating discrimination with respect to employment and occupation.It is the last but certainly not least of the four principles and rights.China has also requested ILO assistance in developing a policy in this respect.The 2003 International Labour Conference discussed a Global Report on this subject for the first time, and opened the way for the ILO to work further in this area.In many ways, this principle and the related International Labour Standards on this subject may be considered the most far-reaching of rights at work, and the one most closely related to employment.And for good cause: ---- discrimination can obstruct economies from making full and productive utilization of all their human resources.

Therefore, I am glad to recall that China has in fact ratified the Employment Policy Convention, 1964 (No.122), which includes the principle of non-discrimination in training and employment.A labour market that is free from discrimination in respect of race, color, sex, age, religion, political opinion, national extraction or social origin, and that guarantees freedom of choice of employment is one where more productive matching between supply and demand of labour will be made.

As I “walked” through your Employment Agenda, I could not help but feel that I was “walking” again through my own country’s agenda as well --- micro-credit schemes, education and training, social dialogue and tripartism, small and medium sized enterprises who continue to serve as the backbone of most Asian economies including yours and mine ,the informal economy .But the similarities end here.We face the challenge of 80 million people.The China Employment Agenda seeks to serve more than a billion people.

We are all encouraged that China -as a member of myRegion, as a member of the ILO, and as a primary actor in the new world order- undertakes to respect, promote and realize the fundamental principles and rights at work we had reached consensus onin the pursuit ofgrowth and development.

Furthermore, we pray that China’s insistence on making employment the “heart” of social and economic policies truly succeed.After all, our own Governments and many labor ministers in the Region have tried to place employment at the center of the socio-economic policy.And we continue to do so.

Again, my warmest congratulations to the Ministry of Labor and Social Security and the ILO for this conference and my special thanks to the Labor Minister Zheng Silin abd his people for their hospitality.