ILO Warns Weak Jobs Recovery to Continue Through 2011

With global unemployment, as officially measured, at record highs for the third straight year since the start of the economic crisis, the International Labour Office (ILO) warns in its annual employment trends survey that weak recovery in jobs is likely to continue in 2011, especially in developed economies.


Global Employment Trends 2011: The Challenge of a Jobs Recovery, points to a highly differentiated recovery in labour markets, with persistently high levels of unemployment as well as growing discouragement in developed countries, and with employment growth and continued high levels of vulnerable employment and working poverty in developing regions. These trends stand in stark contrast to the recovery seen in several key macroeconomic indicators: global GDP, private consumption, investment, and international trade and equity markets have all recovered in 2010, surpassing pre-crisis levels.


“In spite of a highly differentiated recovery in labour markets across the world the tremendous human costs of the recession are still with us,” says ILO Director-General Juan Somavia. As the World Economic Forum gets underway in Davos, Somavia highlights: “There is one common challenge: we need to rethink our standard macroeconomic policy mixes and make quality job creation and decent work a central target of macroeconomic policies, alongside high growth, low inflation and balanced public budgets. We must not forget that for people the quality of work defines the quality of a society.”


Despite a sharp rebound in economic growth for many countries, official global unemployment stood at 205 million in 2010, essentially unchanged from 2009, and 27.6 million more than on the eve of the global economic crisis in 2007. The ILO projects a global unemployment rate of 6.1 percent, equivalent to 203.3 million unemployed, through 2011.


The report shows that 55 percent of the increase in global unemployment between 2007 and 2010 occurred in the Developed Economies and European Union (EU) region, while the region only accounts for 15 percent of the world’s labour force. In several economies in the developing world, such as Brazil, Kazakhstan, Sri Lanka, Thailand and Uruguay, unemployment rates have actually fallen below their pre-crisis levels.


The report notes that globally, an estimated 1.53 billion workers were in vulnerable employment in 2009, corresponding to a vulnerable employment rate of 50.1 percent. The incidence of vulnerable employment has remained broadly unchanged since 2008, in sharp contrast to the steady and significant average decline in the years preceding the crisis.


The report also finds there were 630 million workers (20.7 percent of all workers in the world) living with their families at the extreme US$ 1.25 a day level in 2009. This corresponds to an additional 40 million working poor, 1.6 percentage points higher than projected on the basis of pre-crisis trends.


Worldwide, 78 million young people were unemployed in 2010, well above the pre-crisis level of 73.5 million in 2007, but down from 80 million in 2009. The unemployment rate among youth aged 15-24 stood at 12.6 percent in 2010, 2.6 times the adult rate of unemployment. However, the ILO also warned that among 56 countries with available data, there were 1.7 million fewer youth in the labour market than expected based on pre-crisis trends, and that such discouraged workers are not counted among the unemployed because they are not actively seeking work.


“Youth employment is a world priority,” states Somavia. “The weak recovery in decent work reinforces a persistent inability of the world economy to secure a future for all youth. This undermines families, social cohesion and the credibility of policies,” he adds.


The study points out that the delayed labour market recovery is seen not only in the lag between output growth and employment growth, but also in productivity gains poorly reflected in real wage growth in many countries. “This can threaten future recovery prospects, as there are strong linkages between growth in real wages, consumption and future investments,” the report says.


In South-East Asia and the Pacific, unemployment rates did not increase on average during the crisis, however the number of workers in vulnerable employment rose to 173.7 million in 2009, a 5.4 million increase since 2007. South Asia has the highest rate of vulnerable employment in the world, at 78.5 percent of total employment in 2009. In East Asia youth unemployment remains a major challenge at 8.3 percent in 2010, 2.5 times the adult rate.