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ILO: learning lessons from success key to economic improvement for the Least Developed Countries

A new report by the International Labour Office (ILO) recognizes the growth revival in least developed countries (LDC) in the last decade, but argues that major structural challenges in the nature of growth, employment and decent work remain.

Press release | Geneva | 29 March 2011

NEW YORK (ILO News) – A new report by the International Labour Office (ILO) recognizes the growth revival in least developed countries (LDC) in the last decade, but argues that major structural challenges in the nature of growth, employment and decent work remain.

The new study, entitled “Growth, Employment and Decent Work in the Least Developed Countries” has been prepared on the occasion of the Fourth United Nations Conference on the Least Developed Countries to be held in Istanbul from 9-13 May, 2011.

The report especially examines the relationship between GDP growth, employment and decent work in the LDCs within a longer term perspective but focusing on the last decade. It addresses a number of key issues in growth and development across the three main regions of Africa, Asia and the Island countries, also highlighting challenges and opportunities for structural changes, job creation and poverty eradication.

The ILO study includes key figures and trends. It shows that over the 2000-2009 period, employment in LDCs has grown at an annual average rate of 2.9 per cent, slightly above population growth but much weaker than GDP growth. Most of the increase took place in the services sector, with industry accounting for a mere 10 per cent of total employment in 2008 from 8 per cent in 2000. The share of wage and salary workers increased slightly, from 14 per cent in 2000 to 18 per cent in 2008 but the large majority of workers remained trapped in vulnerable forms of employment that cannot lift them above the poverty line.

“The primary labour market challenge in the Least Developed Countries is not unemployment but the lack of productive employment and decent work for the large numbers of working poor. This is the main obstacle to the efforts to achieve the Millennium Development Goals and set the Least Developed Countries on a sustainable development route”, says ILO Director-General, Juan Somavia.

The ILO report also finds that “growth in the last decade has been high but volatile because it has been based on exports of primary commodities rather than a diversified production structure”. It also emphasises the “massive deficits in public infrastructure, education and skills, constraining a more sustainable and balanced growth strategy”. As a result of policy neglect and therefore a stagnation of agriculture, as well as weak growth in manufacturing and a failure to diversify, there has been a weak increase in productive employment, especially for women and young people, with a high level of working poverty, vulnerable employment, informality and low productivity.

However, some regions and some countries have done better than others in their patterns of growth, investment, reducing poverty and social protection, among others. A key finding of the report is that what a country produces matters because it enhances learning capabilities that are the basis of productive transformation and productivity growth.

The ILO study concludes with a list of 20 policy recommendations and guidelines including the need to promote sectoral and export diversification moving from commodities to manufacturing and macroeconomic frameworks that are more friendly to job creation and poverty reduction. It also recommends policies that support the building of productive capacities in industry and agriculture, infrastructure and a critical mass of job-creating sustainable enterprises. It also calls for better social protection and innovative public employment programmes targeting vulnerable groups, especially women and youth.

The report also recommends implementing labour market and social policies that encourage the transition from the informal to the formal economy, protecting the incomes of the most vulnerable groups as well as setting up a range of labour market institutions to cover areas such as employment protection legislation and minimum wage. “Minimum wage legislation, in particular, is a proven means to ensure that all workers receive at least a salary allowing a decent life for their families”, it says, also arguing that collective bargaining and freedom of association have important developmental impacts.

“Least Developed Countries can draw on a range of experience of policy mixes to drive an agenda of structural transformation and decent work”, says Mr. Somavia. “Yet, each country must design a mix of policies best fitting national circumstances and priorities. These countries also need a more supportive external environment driven by a fairer globalization and greater policy coherence. The ILO is ready to partner with LDCs, donors as well as international and regional organizations in a new era of growth, development and social justice”, he concludes.

For more information and to arrange interviews, please contact the ILO Office for the United Nations at + 1 212 697-1050 ext 110,

The International Labour Office is the permanent secretariat of the International Labour Organization.