Global Employment Trends 2004: Record joblessness, but relief may be on the way
Despite a second-half economic recovery in 2003, global unemployment continued its relentless climb, hitting a new record of 185.9 million for men and women, rising especially sharply for young people. Meanwhile, the number of "working poor" remained at an all-time high of 550 million. A hopeless scenario? Not quite, says a new ILO report.
GENEVA - On the face of it, the ILO annual jobs report, released in January, makes grim reading; more people out of work, looking for work or living in poverty than ever before, especially if they are young.
Yet, all is not doom and gloom. Cautiously optimistic, the report, Global Employment Trends 2004 ( Note 1), also says the economic recovery which took hold in the second half of 2003, if continued through 2004, could bring some relief. Add to that a paradigm shift in employment policies, and the jobs picture may just begin to brighten this year.
Said Juan Somavia, Director-General of the ILO, "Our greatest concern is that if the recovery falters and our hopes for more and better jobs are further delayed, many countries will fail to cut poverty by half as targeted by the Millennium Development Goal (MDG) for 2015. But we can reverse this trend and reduce poverty if policymakers stop treating employment as an afterthought and place decent work at the heart of macroeconomic and social policies."
This year's report cites the following developments:
- The number of people out of work and looking for work in 2003, reached 185.9 million, or about 6.2 per cent of the total labour force, the highest unemployment figure ever recorded by the ILO. However, this was a marginal increase over the number for 2002, which the ILO puts at 185.4 million ( Note 2)
- Among the world's unemployed, some 108.1 million were men, up 600,000 from the year 2002. Among women, there was a slight decline, from 77.9 million in 2002, to 77.8 million in 2003
- Hardest hit were some 88.2 million young people aged 15 to 24 who faced a crushing unemployment rate of 14.4 per cent
- Although the so-called "informal economy" continued to increase in countries with low GDP growth rates, the number of "working poor" - or persons living on the equivalent of US$1 per day or less - held steady in 2003, at an estimated 550 million
Unemployment and underemployment continued to rise in the first half of 2003, because of a slow upturn in the industrialized world's economic situation, the impact of SARS on employment in Asia, and the effects of armed conflicts. Here is a region-by-region breakdown of the unemployment statistics and what lies ahead:
Industrialized regions saw a recovery from the economic slowdown over the past two years, especially in the second half of 2003. They are expected to see declines in unemployment rates in the event that GDP growth in the United States leads to job creation, and employment as a share of working-age population continues to rise within Europe.
Latin America and the Caribbean were most affected by the global economic slowdown in 2001, in terms of output growth as well as employment losses, but saw some recovery in growth in 2003. Although the recovery has been slow, the regional unemployment rate saw a decline, which may be due to the recovery in Argentina and the decrease in labour force growth.
Despite solid GDP growth rates of over 7 per cent, East Asia saw an increase in unemployment. In South-East Asia, unemployment declined significantly in 2003, at the same time as labour force participation rates increased. In South Asia, the unemployment rate remained stable despite 5.1 per cent GDP growth. Consequently, South Asia saw no decline in working poverty, in addition to growing informal employment. East Asia will see a slight increase in unemployment, resulting from the high number of entrants into the labour markets (over 6 million people a year until 2015). South-East Asia has the potential not only to reduce unemployment further but also to reduce working poverty - if those economies with the highest poverty incidence manage to reach GDP and employment growth paths similar to those achieved in the past few years by wealthier economies in the region.
The Middle East and North Africa also experienced increasing unemployment, with an unemployment rate of 12.2 per cent - the highest incidence of unemployment in the world. This resulted from a major restructuring of employment in the public sector, and high labour force growth rates. An additional cause of increasing unemployment in sending countries is the effort of a number of Gulf economies to replace foreign workers with nationals. However, the report says prospects for both subregions are still clouded. Dependence on oil prices, high labour force growth rates which some economies are unable to absorb, deficits in the quality of public institutions, and the high incidence of poverty in some economies, are all threats for real improvements in the labour markets.
Sub-Saharan Africa has neither reduced its unemployment rate nor its high incidence of working poverty. In addition, the impact of HIV/AIDS on labour markets and the continuing "brain drain" deprived the region of much-needed human capital, making it unlikely to reach the MDG. In sub-Saharan Africa, a high incidence of working poverty - compounded by the HIV/AIDS pandemic - is the biggest obstacle to growth and development.
After years of increases in unemployment resulting from economic changes, the transition economies seem finally to have reversed this trend, with unemployment decreasing in 2003. The labour market situation in the transition economies is expected to improve somewhat as a consequence of the foreign investment they have attracted. Strong domestic demand, trade growth and overcoming the problems associated with the transition process, are encouraging signs. Once again, HIV/AIDS poses a growing threat for further development in some economies in the region.
What prospects for the future?
"The overall challenge is to absorb the 514 million new entrants to world labour markets and to reduce working poverty by 2015", the report says. "How well GDP growth will translate into productive and decent employment growth in 2004 and beyond, depends on the efforts of policymakers to prioritize the importance of employment policies, and to put them on equal footing with macroeconomic policies."
What can be done? Policy points for job creation
- Adopt "pro-poor" policies. Poverty, hand-in-hand with growing unemployment and underemployment, inhibits employment growth. Because of a lack of education, health and often empowerment, poor people cannot use their own potential to lift themselves and their families out of poverty. Pro-poor policies should be designed to provide this possibility by means of a decent job. This implies creating employment opportunities to help women and men secure productive and remunerative work, in conditions of freedom, security and human dignity
- Promote growth and job creation. If jobless growth continues, it will threaten future growth. No country can sustain growing unemployment rates in the long run, because diminishing demand will, at some point, limit economic growth. In addition, continued high rates of unemployment are a waste of human capital. The creation of decent work implies not only decreases in poverty but, at the same time, provides the essential precondition for future growth
- Think about young people. Reducing youth unemployment rates and utilizing the high potential of young people avoids the creation of a huge cadre of frustrated, uneducated or unemployable young people, which could have a devastating impact on long-term development prospects
- Seek development solutions. Increased international assistance aimed at improving access to developed-country markets, and reducing external debts and debt servicing, can free up resources for reform programmes targeted at improved governance, job creation and poverty reduction - the absence of which will prevent most of the developing world from participating in growing world demand
Latin American focus: The challenge of unemployment
With 19 million urban unemployed, Latin America's recovery from its unemployment crisis will require strong measures, including a reorientation of economic priorities and a more equitable globalization process.
Rampant unemployment, coupled with poor quality jobs, falling real wages and losses in productivity, pose a challenge to Latin America in making the creation of decent work the central pillar of development.
In the 2003 edition of Panorama Laboral (Note 3), the annual labour market review for the region, the ILO says that despite a modest economic recovery over the past year, most Latin American labour markets showed little job growth, while the unemployment rate remained stagnant. ILO Director-General Juan Somavia called unemployment, "the main political problem of our time", during the presentation of the report in Santiago, Chile.
According to Panorama Laboral, 19 million urban workers were unable to find work in 2003, despite regional economic growth of 1.5 per cent of GDP. The report said labour market performance was weak during the past year, with urban unemployment reaching 10.7 per cent (Note 4) - virtually unchanged from the 2002 figure of 10.8 per cent. What is more, the report also said that even an accelerated estimated growth rate of 3.5 per cent in 2004, would fail to reduce unemployment significantly.
Four out of ten Latin Americans had insufficient income to satisfy basic needs, while seven out of ten new jobs have been created in the informal sector since 1990. Women and youth were particularly affected by the lack of jobs, with women experiencing greater job losses than men as unemployment rose, and one out of three youths is out of work on average in the region.
"These figures indicate that the current model of globalization actually devalues work," said Mr. Somavia. "We have to work for a different, more just and equitable form of globalization."
Panorama Laboral proposes a series of political measures designed to promote the ILO decent work agenda, saying that the creation of more and better jobs requires the active involvement of political and social actors. The report highlights the need for "sustainable macroeconomics".
To reach consensus on these issues, the report insists on the essential role of social dialogue between governments, employers and workers, and the need to strengthen it.
"Obviously no strategy can overcome the poverty of 220 million people in Latin America and the Caribbean if it is not based on the creation of quality jobs and more and better enterprises capable of generating employment," said the ILO Director-General.
Note 1: Global Employment Trends, International Labour Office, Geneva 2004, ISBN 92-2-115107-7, available online at www.ilo.org/public/english/employment/strat/global.htm.
Note 2: Global Employment Trends 2003, originally reported 180 million unemployed at the end of 2002, a figure which has since been revised to reflect more recently available information.
Note 3: Panorama Laboral 2003, América Latina y el Caribe, ILO, 2003. To view the report and press release (in Spanish) please visit www.oit.org.pe/portal/despliegue_seccion_panorama.php?secCodigo=22, and for more information see www.ilo.org/public/english/bureau/inf/features/04/latin_unemp.htm.
Note 4: Weighted estimates of regional labour force figures published in Panorama Laboral, are benchmarked to urban labour force estimates. In contrast, estimates in the Global Employment Trends 2004, presented by the ILO in February, are benchmarked to national labour force figures.