Global Economic Recovery and Job Creation

Global Economic Recovery and Job Creation

The 2008 financial crisis and subsequent “Great Recession” has caused hardship to many working women and men, families and communities. Since the beginning of the crisis the global jobs gap increased by 67 million. In spite of positive employment gains over the past years, global unemployment is still high and expected to approach 208 million people by 2015 and 214 million people by 2018. The challenge is greater in advanced economies and among the youth.

The incidence of long-term unemployment (which lasts 27 consecutive weeks or more) has increased in the majority of advanced and developing countries, while labor force participation rates have declined in most countries. The recession has also brought rising underemployment in advanced countries and vulnerable employment in developing countries. In 2012, 56% of all workers in developing countries were occupied in vulnerable employment, which carries high economic risk.

Youth have been particularly affected by the recession. In 2013, almost 74 million youth were unemployed (or 12.6%) compared to 70 million (11.5%) in 2007. After declining from 2009 to 2011, youth unemployment is again on the rise. ILO’s World of Work Report 2013 notes that high unemployment and inequality are likely to cause lower future wages and further social unrest in many parts of the world.

Over 30 million jobs are still needed to return employment to the pre-crisis level. Approximately 80 percent of the global population remains without any access to social protection and 900 million workers still do not earn enough to keep themselves and their families above the $2-a-day poverty line. In the next 15 years, more than 600 million new jobs will be needed to absorb new entrants into the labor force, and still more to reverse the unemployment caused by the crisis. The prospect of strong job creation has continued to diminish since 2011, as global economic growth remains weak and uncertainty spreads beyond advanced economies.

Crisis and Jobs recovery in the US

In the US, the Great Recession lasted 18 months, from December 2007 to June 2009 (see National Bureau of Economic Research) --- the longest recession since World War II. The unemployment rate rose from 5% in December 2007 to 10.2% in October 2009, with the unemployment level increasing from 7.6 million to 15.7 million people during the same period. The Recession resulted in a total job loss of 8.1 million (BLS).

Although the US economy has officially emerged from the recession, growth rates have not been enough to sustain a rapid reduction in the unemployment rate. The current rate of 7.4% remains higher than in the pre-crisis months. A more telling depiction of unemployment is 14.4%, which includes discouraged, involuntarily part-time, and marginally-attached workers. Moreover, long-term unemployment remains acute in 2013: 38% of the unemployed report that they have been looking for employment for more than 6 months, while the average duration of an unemployment spell is 35 weeks – indicating an unprecedented rate of long-term unemployment. See more

Concerns over the quality of the newly created jobs have also grown. A majority of all new jobs created were part-time or temporary. In July 2013, part-time employment accounted for 19.6% of total employment.

There are also increasing signals that the recession has exacerbated inequality in the United States. A comparison of incomes at the top 10% of the distribution to the bottom 10% shows that income inequality increased from 46.3 in 2007 to 47.7 in 2011 – the highest among advanced economies. During the first two years of the recovery, the wealth of the top 7% of the population increased as a share of total household wealth, which can be partially explained by the resurgence in the pay of chief executive officers in the top firms. There is also evidence of rising wage polarization, which has led to a shrinking middle class. Causes of this shrinkage include: job polarization, in which employment has increased in the highest-skilled and lowest-skilled occupations, while it has declined in the middle of the skills distribution; a decline in trade union density; a decline in the personal tax rate for top income earners; and low minimum wages. Read more