Global Employment Trends 2013Recovering from a second jobs dip
Employment Trends UnitInternational Labour OrganizationGeneva, Switzerland
• Macroeconomic context
• Global and regional labour market trends and prospects
• Thematic chapter: Structural change for decent work
• Recovering from the second jobs dip: Policy directions
2
Overview
Global Employment Trends
• Broad global economic slowdown underway
• Key factors:• Rising global uncertainties• Sharp slowdown in global trade• Weak investment and consumption• Government spending less supportive of growth
Macroeconomic context 3
Macroeconomic contextRecession conditions in Europe spilling over globally
Source: ILO, Trends Econometric Models, October 2012.
Macroeconomic context 4
• Key sources of uncertainty:• Prolonged and deepening crisis in Euro area• Unresolved financial sector issues and high levels of public debt• Fiscal policy uncertainty in the US• Macro policy incoherence and lack of international coordination
Macroeconomic contextRising uncertainty and depressed labour markets feed on each other
Source: ILO calculations based on Manpower Employment Outlook Survey, OECD Economic Outlook and Baker et al. (2012).
Macroeconomic context 5
Macroeconomic contextIncoherence between monetary and fiscal policy
Source: IMF, Fiscal Monitor, Oct 2012; Economist Intelligence Unit, November 2012; ILO calculations.
Macroeconomic context 6
Macroeconomic contextThe economic outlook remains cloudy
Weak economies
Heightened uncertainty
Weak investments
Weak labour
markets
Global and regional labour market trends and prospects 7
Global and regional labour market trends and prospectsDifficulties in the world of work in 2012
Part-time workGlobal & regional unemployment
Global jobs gap
Quality of employment
Poverty reductionSkills mismatch
Long-term unemployment
Youth unemployment
Mainconcerns
Global and regional labour market trends and prospects 8
Global unemploymentWorsening global unemployment outlook in 2012 and 2013
Source: ILO, Trends Econometric Models, October 2012.
9Global and regional labour market trends and prospects
Regional unemployment trendsDivergence between developed and developing economies
Source: ILO, Trends Econometric Models, October 2012.
10Global and regional labour market trends and prospects
Global unemploymentGlobal labour markets are worsening again
Jobs crisis pushes more women and men out of labour market
Spillover from developed to developing economies
Great heterogeneity among regions of the world
• Labour force participation has fallen dramatically, particularly in advanced economies
• 39 million dropped out of labour market between 2007 and 2012
• Rise in estimated global unemployment by 4.2 million in 2012• Of which ¼ in advanced and ¾ in developing economies
• Developed regions: Unemployment rates remain above historical levels (8.6 per cent in 2012 vs. 6.9 per cent between 1998 and 2007)
• Developing regions: Unemployment rates below average in comparison with decade preceding crisis
Reasons for heterogeneity across regions
• Developing economies outperformed developed economies during recovery period in terms of economic growth
• Recession conditions in Europe and limited effectiveness of fiscal and monetary measures
• Developing countries weaker correlation with macroeconomic changes
11Global and regional labour market trends and prospects
Youth unemploymentLabour market situation particularly bleak for world’s youth• 73.8 million youth unemployed globally in 2012
• 23 million fewer employed youth in 2012 than in 2007• Globally, youth 3 times as likely as adults to be unemployed
• Spain & Greece: youth unemployment rates in excess of 50 per cent• Rising numbers of youth neither in education, employment or training (NEET)
Region2007 2008 2009 2010 2011 2012* 2013* 2014* 2015* 2016* 2017*
Rate (%)World 11.6 11.8 12.8 12.6 12.4 12.6 12.7 12.8 12.8 12.8 12.9Developed Economies and European Union 12.5 13.3 17.4 18.1 17.6 17.9 17.7 17.3 16.8 16.3 15.9
Central and South-Eastern Europe (non-EU) and CIS 17.4 17.0 20.4 19.2 17.7 17.1 17.3 17.3 17.3 17.4 17.4
East Asia 7.9 9.1 9.2 8.9 9.2 9.5 9.8 10.0 10.2 10.3 10.5South-East Asia and the Pacific 14.9 14.1 14.0 13.4 12.7 13.0 13.4 13.7 13.9 14.0 14.2South Asia 9.3 9.0 9.7 10.2 9.7 9.8 10.0 10.1 10.2 10.2 10.3Latin America and the Caribbean 14.2 13.6 15.7 14.1 13.4 13.5 13.6 13.7 13.7 13.8 13.8Middle East 24.6 25.4 25.5 27.5 27.6 28.1 28.7 28.9 29.2 29.3 29.4North Africa 20.8 20.3 20.4 20.1 23.3 23.8 23.9 23.8 23.5 23.3 23.2Sub-Saharan Africa 11.8 11.9 12.0 11.9 11.9 11.9 11.9 11.8 11.8 11.8 11.8
Risk from being unemployed or out of the labour market to becoming unemployable
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• Increasing proportion of long-term unemployed reflect structural problems in labour market
• Risk that workers become less attached to labour markets and suffer from skills erosion and reduced employability
• Adverse effects on the broader economy• Short run: Sapping aggregate demand through reduced consumption• Long run: Reducing trend growth
• Sharp increase in long-term unemployment is sign of severe labour market distress characterized by• Weak job creation• Increase in persons receiving unemployment benefits• Increased risks that unemployed slip through cracks of the underlying social protection systems • Risk of long-term structural damage in labour market due to growing skills mismatches
Global and regional labour market trends and prospects
Long-term unemploymentAn increasing share of job-seekers is long-term unemployed
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• Mismatch between supply of skills available in stock of unemployed and demand of skills
• Skills mismatch hampers reallocation of labour and puts upward pressure on unemployment rates
• Index of dissimilarity capturesdifferences in shares of educational attainment of employed in comparison with unemployed
Global and regional labour market trends and prospects
Skills mismatchContinuing nature of crisis worsened labour market mismatches
Source: ILO calculations based on Key Indicators of the Labour Market, 7th edition.
14Global and regional labour market trends and prospects
Part-time workPart-time work signalling both challenges and some scope for optimism
Many employed have seen hours of work decline leading to increased involuntary part-time employment
However, a long-term rise in part-time employment, particularly as has been witnessed in European countries, may also be consequence of heightened uncertainties under which firms operate
Part-time employment can mark the first step in a rise in more permanent, full-time jobs
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Source: ILO, Trends Econometric Models, October 2012.
• Average annual decline of employment-to-population ratio (EPR) during global economic crisis more than 3 times the average decline over past 16 years • Adverse trends for youth and female employment have contributed disproportionately to overall global
decline in EPRs due to falling participation and rising unemployment • Global jobs gap of 67 million
• 67 million fewer employed people around theworld in 2012 than expected based on pre-crisis trends
Global and regional labour market trends and prospects
Global jobs gapUnderstanding the scope and nature of the global jobs gap
Global and regional labour market trends and prospects 16
• Labour productivity growth slowed sharply in nearly every region in 2012• Slowdown in productive structural change• 1.49 billion workers in developing countries (56 per cent) in vulnerable employment in
2012
Quality of employmentSlowing labour productivity growth limits wage gains and investment
Source: ILO, Trends Econometric Models, October 2012; World Bank, World Development Indicators; IMF, World Economic Outlook, October 2012.
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• Working poverty continued to decrease but at slower pace than before crisis• 58.4 per cent of developing world’s workforce remained poor or near poor in 2011
• Working middle-class surpassed 40 per cent of developing world’s workforce• Further progress in reducing working poverty and vulnerable employment requires
• Higher productivity growth • Faster structural change• Expansion of social
protection systems
Global and regional labour market trends and prospects
Poverty reductionA new consumer class is emerging
Source: Kapsos and Bourmpoula (forthcoming).
18Global and regional labour market trends and prospects
Global outlook for labour marketsRenewed focus on the world of work is essential
New cohort of middle-class workers in developing countries provides hope that new global economic engine will emerge through higher consumption and investmentGlobal outlook
for labour markets
Renewed focus on world of work is essential by focusing policy action on employment generation, promotion of investment and productivity growth
Closing global employment gap requires decisive action by policy-makers to restore confidence and promote investment and job creation
Global unemployment rising with particularly negative implications for world’s youth
Growth in numbers of long-term unemployed and increased labour market detachment is raising risk of emergence of structural labour market problems
Slowdown in global economic growth in 2012 had widespread negative impact on world of work
Structural change for decent work 19
• Within-sector productivity gains and structural change have considerable effects on labour markets
• Reallocation from low to high productivity sectors contributes to• Increased living standards • Improved labour market outcomes – lower vulnerable employment and less working poverty
• Structural change slowed during crisis due to global decline in investment• Employment moved out of low-productivity agriculture into industry and service sectors
at slower pace than before crisis, particularly in Central and South-Eastern Europe; Latin America and the Caribbean; South Asia; Sub-Saharan Africa; and Middle East• Asia and Sub-Saharan Africa more likely to return to pre-crisis path of structural change than Latin America
and the Caribbean and Central and South-Eastern Europe• Middle East and North African economies expected to remain among least dynamic economies in terms of
sectoral reallocation of labour
Structural change for decent workStructural change slowed down as global investment plummeted
Structural change for decent work 20
• General lessons from regional comparisons concerning structural change:
• Value added per capita growth is projected to be largely driven by improved labour productivity in the services sector for most regions through 2017
Structural change for decent workLabour markets benefit from structural change
Productive structural change plays considerable role for growth in many regions
Labour market and demographic components of value added per capita growth less important drivers of growth, but can become important at times
Gains in labour productivity within sectors are main drivers of growth particularly in industry and service sector
Policy implications 21
1. Tackle uncertainty to increase investment and job creation by• Implementing financial reform measures quickly to restore confidence• Targeting credit provision to sectors with impaired access to funds that contribute strongly to
employment growth• Providing more consistent and transparent policies
2. Coordinate stimulus for global demand and employment creation by• Internationally coordinating efforts to support global demand more broadly• Stabilizing economic activity around the world through strengthening domestic economies
rather than relying strongly on export-driven growth • Coordinating stimulus through accommodative monetary policy and continuation of reflationary
stance
Policy implicationsPolicy-makers need to take action to prevent a further deterioration
Policy implications 22
3. Address labour market mismatch and promote structural change by• Facilitating workers’ mobility across sectors to promote productive transformation• Accelerating within sector productivity growth in developing countries, especially in agriculture
to enable structural change out of agriculture and into higher value-added sectors• Targeting educational and vocational training policies to prevent skill and occupational
mismatches • Implementing active labour market policies to provide right mix of training and incentives that
help workers quickly move to new opportunities
4. Increase efforts to promote youth employment by• Encouraging youth entrepreneurship• Introducing youth employment guarantees
Policy implicationsPolicy-makers need to take action to prevent a further deterioration
Global Employment Trends 2013Recovering from a second jobs dip
Employment Trends UnitInternational Labour OrganizationGeneva, Switzerland
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