Global Employment Trends 2013

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.


• 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 contextIncoherence between monetary and fiscal policy

Source: IMF, Fiscal Monitor, Oct 2012; Economist Intelligence Unit, November 2012; ILO calculations.


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 unemploymentWorsening global unemployment outlook in 2012 and 2013


9Global and regional labour market trends and prospects

Regional unemployment trendsDivergence between developed and developing economies



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


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


Skills mismatchContinuing nature of crisis worsened labour market mismatches

Source: ILO calculations based on Key Indicators of the Labour Market, 7th edition.


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

15


• 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 jobs gapUnderstanding the scope and nature of the global jobs gap


• 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


Poverty reductionA new consumer class is emerging

Source: Kapsos and Bourmpoula (forthcoming).


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

Global Employment Trends 2013

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