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Global Employment Trends 2007

Global Employment Trends 2007

global unemployment remains at historic high despite strong economic growth

Modest gains in reducing working poverty

GENEVA (ILO News) –The number of people unemployed worldwide remained at an historical high in 2006 despite strong global economic growth, the International Labour Office (ILO) said in its annual Global Employment Trends released today

The ILO’s “Global Employment Trends Brief 2007” reported that even though more people are working globally than ever before, the number of unemployed remained at an all time high of 195.2 million in 2006 or at a global rate of 6.3 per cent. This rate was almost unchanged from the previous year.

The ILO also reported only modest gains in lifting some of the world’s 1.37 billion working poor—those working but living on less than the equivalent of US$ 2 per person, per day—out of poverty, stressing that there weren’t enough decent and productive jobs to raise them and their families above the US$ 2 poverty line.

“The strong economic growth of the last half decade has only had a slight impact on the reduction of the number of workers who live with their families in poverty and this was only true in a handful of countries. In addition growth failed to reduce global unemployment,” said ILO Director-General Juan Somavia. “What’s more, even with continued strong global economic growth in 2007 there is serious concern about the prospects for decent job creation and reducing working poverty further.”

The report said that in order to maintain or reduce unemployment rates, the link between growth and jobs must be reinforced. It said creation of decent and productive jobs—not just any jobs—was a prerequisite for reducing unemployment and slashing the number of families working but still living in poverty. This in turn is a precondition for future development and economic growth.

Other findings in the trends report showed that:

  • For the last decade, economic growth has been reflected more in rising levels of productivity and less in growing employment. While world productivity increased by 26 per cent the global number of those in employment rose by only 16.6 per cent.
  • Unemployment hit young people (aged 15 to 24) the hardest, with 86.3 million young people representing 44 per cent of the world's total unemployed in 2006.
  • The employment gap between women and men persists. In 2006, only 48.9 per cent of women aged 15+ were working compared to 49.6 per cent in 1996. The comparable male employment-to-population ratios were 75.7 in 1996 and 74.0 in 2006.
  • In 2006, the share of the service sector in the global employment progressed from 39.5 per cent to 40 per cent and, for the first time, overtook the share of agriculture that decreased from 39.7 per cent to 38.7 per cent. The industry sector represented 21.3 per cent of total employment.

Regional trends

The study said that in most of the regions, unemployment rates did not change markedly between 2005 and 2006. The largest decrease occurred in the region of the Developed Economies and European Union, where the unemployment rate declined by 0.6 percentage points between 2005 and 2006 to 6.2 per cent. East Asia's unemployment rate was 3.6 per cent, thereby remaining the lowest in the world. South Asia's unemployment rate was 5.2 per cent and South-East Asia and the Pacific's was 6.6 per cent.

According to the report, the Middle East and North Africa remained the region with the highest unemployment rate in the world at 12.2 per cent in 2006. Sub-Saharan Africa's rate stood at 9.8 per cent, the second highest in the world. The region also had the highest share in working poverty, with 8 out of 10 women and men living on less than $2 a day with their families. This underscores that tackling the decent work deficit in Africa is a regional and global priority.

The report also specified that employment-to-population ratios - the share of people employed within the working age population - varied between regions. The Middle East and North Africa region had the lowest ratio, at 47.3 per cent in 2006. East Asia had the highest ratio with 71.6 per cent in 2006 but its ratio dropped by 3.5 percentage points over the last 10 years. If caused by an increase in educational participation – as is the case in East Asia - a decrease of the employment-to-population ratio is a good thing. In Latin America the ratio gained 1.8 percentage points up to 60.3 per cent of people employed within its working age population in 2006.

The ILO estimates showed that in all regions, the total number of working poor at the US$1 level declined between 2001 and 2006 except in Sub-Saharan Africa where it increased by another 14 million and in Latin America and the Middle East and North Africa where it stayed more or less unchanged. Over the same period the total number of US$2 a day working poor declined in Central and Eastern Europe (non-EU) and CIS, and most significantly in East Asia by 65 million. On the other hand, it increased in South-East Asia and the Pacific, South Asia, the Middle East and North Africa with the biggest rise, of 26 million, occurring in Sub-Saharan Africa.

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Despite solid economic growth rates recently, labour markets in Central and Eastern Europe (non-EU) and the Commonwealth of Independent States continue to be characterized by the high unemployment that accompanied transition from the Communist system. The unemployment rate for the whole region decreased from 9.7 per cent ten years ago to 9.3 per cent in 2006, slightly down from the previous year. Many of the jobless are young first- time job seekers who, even when they successfully enter the labour market, face rapid labour turnover and much short-term employment. The youth unemployment rate stood at 18.6 per cent in 2006. In the majority of countries, there is greater youth unemployment among women than men.

It is not surprising that the region’s continuously high unemployment rates trigger big emigration flows. Many workers who lost their jobs as a result of restructuring and many young workers who never managed to find work have migrated westwards in search of opportunities in CEE and to Russia in the CIS countries. Kazakhstan is another attractive destination for immigrants from Central Asian countries.

In most Central and Eastern European and CIS countries, economic activity rates have decreased both for men and women, with the decline often larger for men. In addition, the employment-to-population ratio dropped from 54.8 per cent in 1996 to 53.0 per cent in 2006. One positive regional trend is the substantial reduction in working poverty, which stood at 10.5 per cent in 2006 on the US$2 a day level compared with 33 per cent ten years earlier.

The CIS countries experienced a much greater and longer economic decline after the collapse of the Soviet regime than those in Central and Eastern Europe. However, since 1999 the road to recovery has been strong in the entire region, with economic growth rising from 2.4 in 1999 to last year’s level of 6.3 per cent that was again higher than the 3 per cent recorded by the Developed Economies and the European Union.

The main tasks for Central Eastern Europe (non-EU) and CIS countries are to reverse high unemployment and low employment rates so that there is better use of the potential offered by the working age population. This will only be possible if macroeconomic policies are launched that boost investment and job creation and if labour market and social policies contribute to the inclusion, especially of young people, and to poverty reduction.

“Every region has to face major labour market challenges”, says the ILO report, “young people have more difficulties in labour markets than adults; women do not get the same opportunities as men, the lack of decent work is still high; and the potential a population has to offer is not always used because of a lack of human capital development or a mismatch between the supply and the demand side in labour markets.”

“Nowadays the widespread conviction is that decent work is the only sustainable way to reduce poverty, which is why the target of “full, productive and decent employment” will be a new target within the Millennium Development Goals in 2007. Therefore it is now the time for governments as well as the international community to make sure that the favourable economic conditions in most parts of the world will be translated into decent job growth,” concludes the report.

Footnote GET here

Given that this Global Employment Trends Brief analyses the period until 2006 Bulgaria and Romania were kept in this region despite the fact that since January 2007 they are new EU member states.

ILO, Global Employment Trends for Youth, 2006.

See footnote 2.

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