Thank you Mr. Chairperson.

Distinguished members of the Finance Committee of Government Representatives,

You have before you for decision the Programme and Budget proposals for 2002-2003 as recommended for approval by the Governing Body of the ILO at its March session.

Two years ago, your Committee endorsed and the Conference unanimously adopted the budget for this biennium, built around the vision of decent work and the discipline of results-based strategic budgeting. Since then, much has been done to move our Organization forward in that direction. Allow me to cite a few examples:

• We have reorganized the structure of the Office so that it corresponds to our strategic objectives, thus increasing transparency and accountability.
• We have introduced a major new programming device, the Strategic Policy Framework, through which the Governing Body sets objectives and establishes strategies for a medium-term planning horizon.
• We have set up an evaluation plan covering all eight In-Focus programmes over a four-year period.
• We have begun to report on the ILO's performance rather than just its activities, and we have increased the frequency of reporting to the Governing Body.
• We have developed mechanisms for programme consultation between headquarters and regional structures to provide better service to our constituents.

This budget is, like its predecessor, organized around the four strategic objectives of principles and rights at work, employment, social protection and social dialogue.

The proposals reflect a number of measures designed to increase efficiency. Special emphasis is already being given to improvements in the delivery of technical cooperation, and this will be further enhanced. A major study has just been completed with concrete proposals to enhance documentation processes, and these will be implemented. We are about to embark on a study of administrative operations in the International Labour Standards Department. Publications policies and practices are being revised to ensure better dissemination of ILO information.

We will continue to upgrade the use of information and communications technologies to streamline operations and reduce costs. We will deepen the concepts of strategic budgeting introduced in the 2000-2001 biennium so as to make objectives, indicators, and targets and systems for monitoring performance, a regular part of daily operations within the Office. We are not yet there but we are moving in that direction.

Development of the corresponding human resources policies is continuing.

We will reinforce collaboration across sectors, reward innovation and excellence, and encourage dynamism and visibility.

Mr. Chairperson, distinguished delegates,

We are now ready to move towards a new stage emphasizing the practical implementation of the decent work agenda according to the specific needs of individual countries. In doing so, we will again rely on the guidance of the Conference through its discussion of my report on Reducing the decent work deficit.

Progress on this agenda requires a much better integration of the different means of action of the ILO, and enhanced collaboration across the four strategic objectives that fall within our mandate, so that we can attack problems understanding the full complexity of diverse national situations.

The Programme and Budget proposals before you provide us with the means necessary to move forward in this next stage, including a key programme on Inter-sectoral operational support to decent work. The standards and fundamental principles and rights at work sector has been strengthened in the regular budget and there will in addition be an increase in extra-budgetary resources. The employment sector, which is expected to decline in terms of extra-budgetary resources, will be reinforced through a strengthened capacity to develop technical cooperation proposals and a special initiative with donors. The social protection and social dialogue sectors remain very nearly the same size in budgetary terms, but they accommodate new initiatives such as the ILO programme on HIV/AIDS.

I would have liked to see additional resources for the field structure in the proposals, as we provided in the budget for the current biennium. This was not possible within a zero-growth constraint, but I have committed myself to work with Executive Directors and Regional Directors to identify posts that can be transferred from Headquarters to the regions. This will take place within the framework of initiatives to improve the delivery of services in the field, in particular through greater decentralization of responsibility for technical cooperation.

These programme and budget proposals are different in form and substance from those for previous biennia. We have made serious efforts to provide proposals earlier, in clear language and a transparent format, integrating both regular budget and extra-budgetary funding, and built on a framework of measurable performance indicators. We have multiplied opportunities for informal discussion with our constituents on strategies and priorities.

The discussion of the Programme and Budget proposals in the Programme, Financial and Administrative Committee of the Governing Body demonstrates the value of these steps. There was a robust consensus on the next stage of the decent work agenda which are detailed in the proposals. A rich debate provided guidance on priorities and strategies, and I am of course committed to following that guidance in the implementation of the programme.

There was in addition considerable emphasis on management improvement: better planning, better measurement of performance, improved monitoring and evaluation, clearer accountability. I myself raised the point, that the quality of our performance and the way to appraise it needed to be emphasized as much as the quantitative targets we were setting. As a result of these discussions, I made a commitment to introduce specifications for performance measurement, Office-wide work planning, and where necessary, revisions to indicators and targets by the end of this year.

I have placed management of the implementation of the programme at the top of my personal agenda. Improved overall programme implementation is the responsibility of management at all levels but particularly of the Senior Management Team. To assist with the exercise of these responsibilities, I have decided to appoint a Director of Operations who will recommend actions to support management in overcoming problems of programme implementation and delivery and ensure follow-up of decisions resulting from deliberations of the Senior Management Team.

All these developments have been positive and constructive. Let me now turn to our resource base.

Ideally, our budget should be based on what we could and should accomplish in the service of our constituents. We should have not only a results-based budget but also a needs-based budget. There can be little doubt that in recent years the demands on the ILO have increased. Our membership is larger. The global economic and social environment is more challenging on social issues. We have added major new operational activities such as our work on Convention No. 182 on child labour, the follow-up to the Declaration, HIV/AIDS or the programmes on socio-economic security and rapid response capacities in crisis situations. Finally, the greater visibility of our Organization has stimulated widespread interest and appeals for action.

However, whether our period of reference is five years or twenty-five, the resources available to our Organization have decreased. This is true whether we consider the assessed budget or extra-budgetary resources. The relationship between our mandate and our resources is strained. Frankly, our resources are quite simply inadequate to meet the high goals set by our Constitution. Those who suffer from this are firstly our constituents and ultimately the working populations of the world.

So, our first responsibility is to make better and better use of the resources we have. I am the first to believe that we should constantly strive for greater efficiency and I already have mentioned a number of measures we are introducing to enhance efficiency and reduce costs. In these budget proposals together with those for the current biennium, there have been a total of more than $7 million of reductions in resources for support and administrative services. These reductions add to those of earlier biennia. We have now reached the point where any further drop in resources requires cuts in programme and technical cooperation services provided directly to constituents.

Having said this, it is my sincere hope that the Finance Committee of the Conference will consider positively the recommendations of the Governing Body as presented to you in Report II and that you will approve, both in terms of levels and assessments, the Programme and Budget proposals for 2002-03.

I fully understand that a consensus on the Governing Body's recommendation does not fully satisfy some developed countries who would like to see a further reduction of the budget and some developing countries whose contributions go up. But the fact is that the budget level proposed will help to reinforce the base for programme activities and technical cooperation for constituents and that the assessments for a very large majority of countries either goes down, stays the same or is only slightly increased. In dollar terms, the actual contribution of 110 countries will go down at present Swiss franc exchange rates and for only 12 developing countries will the contribution increase by more than $50,000 dollars annually, and for a very few, substantially. All these questions were, of course, already discussed by the Governing Body. The document transmitted to you is respectful of the fact that a number of reservations were noted although the decision to recommend the budget to the Conference was taken without dissent. All the information on that discussion is available to you, including my opening statement and detailed response.

As all of you know quite well, the Budget preparation process in the ILO is very orderly and highly institutionalized. Before reaching you for decision-making, it goes through a series of analyses and discussion at the PFAC and the Governing Body. To the standard procedures, I have multiplied different instances of consultation and exchanges with constituents. The essence of the ILO style on these issues is participatory, with no surprises for the constituent and a common desire to deal cooperatively with real problems.

As I have said on other occasions, I attach the greatest importance to the programme and budget process in the ILO. Even before assuming officially my post as Director-General, I gave my priority and personal attention to the preparation of the budget for the current biennium. Why is this? Because I believe the budget is the operational backbone of our institution. It expresses the priorities that our tripartite constituents want to pursue. It is a key instrument in the management of the organization. But above all, it is where the Office, the Governing Body and the Conference come together to give stable, strategic and autonomous tripartite direction to the International Labour Organization.

Thank you for your attention.