Global Employment Trends 2004-2005 Global Report: More jobs, but not enough growth

Despite robust economic growth, the global employment situation improved only slightly in 2004, with employment increasing and unemployment down marginally. The ILO's annual Global Employment Trends says employment creation is still a major challenge for policy makers.

GENEVA - Granted, the global decline in unemployment in 2004, though slight, marked the first time since the year 2000 that year-over-year unemployment decreased and was only the second decrease since 1994. Robust global economic growth of 5 per cent in 2004 played a large role in these developments.

However, the growth of global employment by 47.7 million, an increase of only 1.7 per cent in the total number of jobs worldwide, remained disappointing, the Global Employment Trends showed, and employment as a share of the working-age population stayed virtually unchanged at 61.8 per cent in 2004, from a revised 61.7 per cent in 2003.

"While any global decline in unemployment is positive, we must not lose sight of the reality that employment creation still remains a major challenge for policy makers", said ILO Director-General Juan Somavia. "In other words, we need policies that encourage more employment-intensive growth."

Region by region

The regional employment trend which showed the strongest decline in unemployment was that of Latin American and the Caribbean, where it dropped from 9.3 per cent in 2003 to 8.6 per cent in 2004, but the improvement in the employment picture was more modest elsewhere.

In the developed economies (which include the EU-25) there was only a slight decline from 7.4 to 7.2 per cent. In Southeast Asia and the Pacific, the rate evolved from 6.5 per cent in 2003 to 6.4 per cent in 2004, while in South Asia the change was from 4.8 per cent to 4.7 per cent. The rate remained unchanged in East Asia at 3.3 per cent and in the Middle East and North Africa at 11.7 per cent. Meanwhile, in sub-Saharan Africa, unemployment edged up slightly from 10 per cent to 10.1 per cent despite a 4.4 per cent GDP growth rate registered in 2004.

The ILO report says that in addition to creating new jobs, other key challenges facing policy makers today included eliminating decent work "deficits" wherever they exist. Declines in unemployment rates do not in themselves indicate improvements in decent work "deficits"; they are only the tip of the iceberg. In most of the developing world, "employment" and "unemployment" are crude measures of the state of people's livelihoods and well-being. In developing countries, which often lack effective unemployment insurance mechanisms, most people simply cannot afford to be unemployed. For example, of the over 2.8 billion workers in the world, nearly half still do not earn enough to lift themselves and their families above the US$2 a day poverty line. Among these working poor, 535 million live with their families in extreme poverty on less than US$1 a day. The focus of policy should therefore not be on unemployment alone, but also on the conditions of work of those who are employed ( Note 1).

In this regard, the report addresses issues which require immediate attention and a sustained response by governments, international organizations and civil society:

  • First, the 26 December Asian Tsunami disaster has left in its wake hundreds of thousands and perhaps millions of individuals who, in addition to suffering unimaginable personal loss, now find themselves stripped of their livelihoods and at risk of slipping deeply into poverty if their jobs and incomes are not restored.
  • Second, the HIV/AIDS epidemic, which the ILO estimates will be responsible for the death of 3.2 million people of working-age globally in the course of this one year - 2005 - requires that attention be focused on the labour market impact of the epidemic and mitigating the economic and social effects.
  • Third, globalization is bringing both opportunities and challenges to the world's workers. Developments in global trade policies in 2005, such as trade in agricultural goods between developing and developed economies, will likely have important consequences.
  • Fourth, the trend towards the outsourcing as well as the insourcing of manufacturing and service sector jobs brings labour market challenges for both developing and developed economies.
  • Fifth, the ongoing decent work "deficits" in the growing informal economy in many developing countries highlights the need for a specific focus on improving working conditions and creating more and better job opportunities in the formal economy.
  • Finally, the significant problem of youth unemployment remains as relevant as ever in 2005, particularly in regions marked with civil conflict.

In sum, the world faces serious and very diverse employment challenges in the coming year. The Global Employment Trends Brief provides further details on these important issues that will shape labour market policies throughout the coming year.

Note 1 - Subsequent ILO work on this subject will incorporate additional labour market indicators, including status in employment and employment by sector. These indicators are particularly relevant for developing regions, because they measure the number of people in wage employment and in sectors that may be dominated by informal employment and unpaid family work.