High unemployment and growing inequality fuel social unrest around the world

More than half of 106 countries surveyed by the ILO face a growing risk of social unrest and discontent, says the new World of Work Report published by the International Institute for Labour Studies (IILS) – the research arm of the ILO. An interview with IILS Director, Raymond Torres.

Analysis | 27 April 2012
Q: What does the new ILO report tell us about the state of public confidence in the economy?

R: Close to five years after the global financial and economic meltdown, our analysis shows that there is a majority of countries where the risk of social unrest has increased. This is not surprising given that good jobs remain scarce and income inequality is rising. There is a growing sense that those most affected by the crisis are not receiving adequate policy attention.

Q: How important is the risk of social unrest today?

R: Out of 106 countries with available figures, 54 per cent reported an increase in the score for the risk of unrest in 2011 compared to 2010. The two regions with the highest risk are Sub-Saharan Africa, and the Middle East and North Africa. However, there are also important increases in advanced economies and in Central and Eastern Europe. On the other hand, Latin America and some Asian countries have experienced a decline in the risk of social unrest over this period.

Change in the risk of social unrest between 2010 and 2011 (scale of 0 to 1)
Fig 1.14 - Source: IILS estimates based on Gallup World Poll Data, 2012
Q: How do you explain that Latin American and parts of Asia fare much better than other regions?

R: Last year’s World of Work report highlighted that jobs and income matter much more to people than economic growth per se. And these regions have performed relatively well in terms of creating jobs and reducing income inequality — although there are still concerns regarding poverty and high informal employment in China, India and much of Latin America. In advanced economies, the situation is very different. Unemployment rates remain high in the majority of countries and income inequality has increased in more than half of the cases.

R: Another criterion that is measured by the social unrest index is confidence in government? What does it tell us?

R: We consider this as an important criterion since lower confidence in governments can be an indication of people’s dissatisfaction with how policy makers are responding to the crisis. In 2011, 54 per cent of the countries analyzed reported lower confidence in their national government compared to 2010. It is not surprising to see low levels of confidence in some Arab countries. This can be seen as a consequence of the recent struggle for democracy. In advanced economies, notably in Europe, there is also a decline in confidence towards national governments. On the other hand, we see an increase in confidence in Latin America and the Caribbean, East Asia and Sub-Saharan Africa.

Q: How can confidence in national governments be restored?

R: Policies aimed at creating good-quality jobs are crucial to reduce the risk of exclusion and promote a sense of fairness. Key policies include: strengthening labour market institutions and ensuring that wages grow in line with productivity (not less, as has been the case until now); adopting special measures – and there are many examples of good practices in this area -- for young workers and other vulnerable groups; restoring credit to small firms, which are key providers of jobs; and, in Europe, avoiding ill-conceived fiscal austerity – which has affected job prospects while failing to reduce fiscal deficits. Governments have also been long on promises and short on action when it comes to financial sector reform. All these measures would help to enhance the sense of fairness that the current model of globalization is so lacking.