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ILO's World Employment Report 2001: Despite Improved Employment Outlook, Digital Divide Looms Large

GENEVA (ILO News) - Despite improvements in labour market performance in industrialized countries and the growing potential of information technology to create jobs and spur development, the global employment picture remains 'deeply flawed' for workers in many parts of the world, according to a new report by the International Labour Office (ILO).

Press release | 24 January 2001

GENEVA (ILO News) - Despite improvements in labour market performance in industrialized countries and the growing potential of information technology to create jobs and spur development, the global employment picture remains "deeply flawed" for workers in many parts of the world, according to a new report by the International Labour Office (ILO).

The ILO's "World Employment Report 2001 * : Life at Work in the Information Economy" finds that despite the communications revolution taking place in the world today, increasing numbers of workers are unable to find jobs or gain access to the emerging technological resources needed to ensure productivity in an increasingly digitalized global economy.

In addition, the latest World Employment Report also finds that, given its different speed of diffusion in wealthy and poor countries, the information and communications technology (ICT) revolution is resulting in a widening global "digital divide."

The report says that unless this is addressed urgently, the employment aspirations and productivity potential of millions of workers in scores of developing countries cannot be realized. Access to the technologies and ensuring that workers possess the education and skills to use them are the fundamental policies that developing countries need to consider, the report notes.

"The ICT revolution offers genuine potential, but also raises the risk that a significant portion of the world will lose out," said Juan Somavia, Director-General of the ILO. "Let us strip out the hype. What is left? What's left is its effect on peoples' lives, wherever they live. We need to promote policies and develop institutions which will let everybody benefit. And it won't happen on its own."

Among key findings of the report are:

• As of 2001, as much as one-third of the world's workforce of three billion people are unemployed or underemployed. Of these, about 160 million people are openly unemployed, 20 million more than before the onset of the Asian financial crisis in 1997, and despite strong signs of economic recovery in most of Asia;

• The global economy will at least have to maintain its current pace of expansion in order to generate the 500 million new jobs needed during the next decade just to accommodate new entrants to the labour force and reduce the current number of unemployed;

• Throughout the world, the major turnaround in employment fortunes has only been in OECD countries where overall unemployment has declined sharply from the double-digit figures of the mid-1990s and even the incidence of long-term unemployment has dipped in recent years, from 35 to nearly 31 per cent;

• Despite the phenomenal growth of ICT in the industrialized world and its increasing penetration into developing countries, vast swathes of the globe remain "technologically disconnected" from the benefits of the electronic marvels revolutionizing life, work and communications in the digital era;

• ICT provides an "enabling potential" to improve women's lives. But the report does find that a "digital gender gap" is apparent within countries, as women often find themselves occupying lower-level ICT jobs while men rise to higher paying, more responsible positions.

"ICT can and will provide benefits for women," Mr. Somavia said, "and it is one of my highest priorities to make sure this digital gender gap doesn't grow wider, that women are not left behind on the digital highway."

Employment prospects improving

The report insists that ICT can have a far-reaching impact on the quality of life of workers in poorer countries if the right policies and institutions are in place and serve as important spurs to development and job growth. In some cases, the high mobility of ICT capital and its inherently knowledge-based nature may allow lower income countries to "leapfrog" stages in traditional economic development via investments in human resources.

For this to occur, three needs are most important: a coherent national strategy toward ICT, the existence of an affordable telecom infrastructure, and the availability of an educated workforce.

"We know that ICT is global in its reach, irreversible in its drive and pervasive in its impact," Mr. Somavia said. "But if the dotcoms are to play an effective role in contributing to our goal of providing decent work for everybody, we must make sure that the policy framework exists globally and that these three needs are addressed."

The report notes that the key to better global employment rests with the possibility for continued growth in industrialized countries and developments in a few large developing ones. Among the uncertainties clouding the labour-market outlook, the report cites "the trajectory of the US economy (toward a hard or soft landing), the possibility of Europe taking over as the global economy's dynamo, the sustainability of Russia's upturn and India's ability to maintain its high economic growth rate."

In spite of the difficulties, the report maintains that "overall recent developments present a favourable set of prospects for the world economy." However, achieving decent work for the world's unemployed will require much greater attention to "core labour market issues, including investments in human capital."

ICT revolutionizing the workplace

The report finds that nearly 90 per cent of all Internet users are in industrialized countries, with the United States and Canada alone accounting for 57 per cent of the total. In contrast, Internet users in Africa and the Middle East, together account for only 1 per cent of the global Internet users. Where ICT is most in use, changes in economic relations and behaviours are occurring.

"Changes in how the economy works will transform the world of work," Mr. Somavia noted. "The creation and loss of jobs, the content and quality of work, the location of work ... all are affected by the emerging era of digital globalization."

The report highlights "the very real constraints facing developing countries in their capacity to join the communications revolution", and the potentially major repercussions this risks provoking in world labour markets, adding: "Only some countries in east Asia appear to be keeping up with the developed countries in the diffusion of technological progress."

Those countries and regions that fail to make the technological leap risk not only missing out on the large and growing trade in information and communications technology products, but will be unable to profit from the economic efficiency and productivity gains that derive from these industries, the report says.

The east Asian economies of China, Malaysia, Thailand, Philippines and others, for example, have been able to make rapid progress in high-tech areas and were able to capture a significant share of the world market for semiconductors and other data-processing equipment.

Beyond hardware production, however, one factor that appears essential to the initiation of countries into the high-tech digital world, is the development of a domestic skill base in software production and use.

India has seen its software sector grow by 50 per cent throughout the 1990s, creating not just exports but thousands of domestic jobs and a technological talent pool that is drawing international attention from industrialized countries and large multinationals. Costa Rica has drawn some of the world's largest ICT companies seeking to employ its relatively educated workforce in a development effort that has seen jobs created and exports increase and is now spawning a domestic software industry.

Even where export opportunities in the ICT sector prove elusive, gains from access to the technology it generates can promote jobs and entrepreneurship in such industries as data processing and call centres. In Senegal, liberalization of telecommunications regulations has spawned a host of "telecentres" providing access to telecommunications and creating thousands of jobs. And in South Africa, the growth of such telecentres has provided unprecedented access to public services as well as vital information on health care, social benefits and other government services.

ICT can also be made relevant to the objective of poverty alleviation, not just through its effect on economic growth, but also through improving access to health care, education and other social services. Public and/or private assistance to community-based organizations to provide access tailored to the needs of poor persons is one place to begin.

Closing the gender divide

Although ICT has the potential to provide jobs for women and improve their lives, the report notes that women generally continue to earn lower incomes, suffer higher unemployment and are often concentrated in less skilled jobs.

The most striking digital gender divide relates to Internet use, with women in the minority of users in both developed and developing countries. For example, only 38 per cent of Internet users in Latin America are women, while in the European Union the figure is 25 per cent, in Russia 19 per cent, in Japan 18 per cent and in the Middle East 4 per cent.

Most Internet users are male, college-educated and earn higher-than-average incomes, the report says. Only where Internet access is well developed, for example in Scandinavia and the US, has the gender gap in use of the Internet closed.

The ILO report also finds that patterns of gender segregation are being reproduced in the information economy. The report adds: "Although pay inequality exists between those who have ICT skills and those who do not, pay polarization also exists within ICT use itself. This polarization is often gender-based."

Still, women in India have increased their share to 27 per cent of professional jobs in the software industry, while in the Caribbean and many other countries, in the 1990s thousands of women obtained jobs in the data-processing sector. In Uganda, women who have lost family members to AIDS weave traditional baskets as part of the "Sapphire Women" group which then sells the products on the Internet with the help of a US-based NGO.

The role of education and "lifelong learning"

The report warns that even if access to ICT becomes easier and more widespread, little may be gained from the digital revolution without adequate levels of education. The inability to assimilate and benefit from ICT which results, may be the most significant challenge inherent in the spread of the digital economy in coming years.

Reducing other aspects of the digital divide, such as wage differences and the gender gap, will also depend on improved education, the report says. In developed countries, the "returns to higher education" are already being reflected in "widening wage inequality" where technologies are in greatest use.

"Investment in basic and higher education is the most critical policy tool available to governments to reap the benefits of ICT," the report says. "No developing country has successfully secured a niche in global markets for intangible products without having a well-educated workforce. Education and economic growth, moreover, are complementary, and investment in the former is likely to result in the latter. This causal link might be truer still of the emerging knowledge-based economy, in which the most critical source of wealth creation is knowledge, not physical inputs or natural resources."

Lifelong learning, the report says, is becoming the fundamental source of job security or employability in the digital age. Access to lifelong learning provides a competitive advantage to employees and governments and employers. Lifelong learning is also rising to the top of many trade unions' list of priorities, and the need for lifelong learning and skills may revitalize the role of trade unions as the traditional source of a guaranteed "skill's base" of a mobile membership.

Other policy considerations

The report reaches a number of other policy conclusions, perhaps the most fundamental of which is the prediction that countries which fail to get on board the digital revolution, or are late starters, face loss of competitive economic strength and market share, as well as possible decline in national income. International assistance and technical cooperation to developing countries will be of value, but what is most needed are coherent strategies and actions at their own national levels.

"Indeed, in these early days of the communications revolution, the data, such as they are, illustrate more current risks than future rewards, for cleavages do exist and are widening and the quality of life on the job reveals negative as well as positive effects," the report says. "There are solutions to these problems, solutions that do not rely on turning back the technological clock."

The conclusions also concern:

Trade policies: Governments should encourage the growth of the domestic ICT sector while making imported inputs available at the right prices. The international trade regime needs to be sensitive to policies that encourage the growth of the ICT sector in the developing world.

Migration of skilled workers: In the case of migration of highly skilled workers in the digital economy, the report also notes that countries receiving such digital migrants should not neglect the training of their domestic workforce. At the same time, countries of origin should develop policies that encourage for retaining or repatriating their highly skilled workers.

Older workers: Regarding an ageing workforce, the report notes that more retraining on the job will be needed. Policies need to address the older worker in particular with respect to learning opportunities and to guarding against age discrimination in the workforce.

New workplace concerns: Existing laws and policies may need to be reviewed as new workplace concerns are rising - stress, privacy, intellectual property, right of access to communications media. Existing labour market policies and labour laws may not take adequate account of the fact that ICT affects the life at work of women and men differently.

Traditional industries: Application of ICT to traditional industries, agriculture and fisheries for example, could result in important efficiency gains in developing countries.

"The most important final conclusion is that we can make a difference," Mr. Somavia noted. "With the right policies and institutions, we can steer the ICT revolution. We must build partnerships, provide education and promote socially responsible connectivity to have social justice in our world as well as the e-world. Let's ensure that dotcoms are synonymous with decent work."

*The World Employment Report 2001: Life at work in the information economy is available on CD-ROM (in English) from ferranco@ilo.org , tel. +41.22/799. 7781, fax +41.22/ 799. 6095. Publication of the full report in book and CD-ROM format is scheduled for June 2001. Press contacts: Ms. Zohreh Tabatabai (tel.: +41.22/799.6027) or Mr. Tom Netter (tel.: +41.22/799.7973). Fax No. +41.22/799.8577, e-mail: communication@ilo.org

Unit responsible: Department of Communication (DCOMM)

Reference: ILO/01/03

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