Global Employment Trends 2013


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Global unemployment will reach 202 million people in 2013, including almost 74 million youth. Rising skills mismatch and persistently high uncertainty in hiring prevents a faster return of employment. Slowing structural change and weak labour productivity growth hampers faster reduction of working poverty in developing countries. The only green spot: Rising middle class employment in emerging countries can help rebalance global growth over the medium run.

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  • Apart from differences in levels, trends appear to go in opposite directions in developed and developing countries. Between 2000 and 2011, mismatch increased in 16 developed countries, and in the whole sample of 26 countries mismatch increased on average by 1.3 percentage pointsIn the sample of developing economies, mismatch decreased by 4.3 percentage points
  • 397 million workers and their families are extremely poor (less than US$1.25 a day)Reduction by 281 million in the decade to 2011868 million workers and their families are moderately poor (less than US$2 a day)661 million workers and their families are near poor (between US$2 and US$4 a day) – 25.2 per cent of the developing world’s workforceIncrease of nearly 401 million middle-class workers (above US$4 and below US$13 a day) Increase of 186 million workers above middle-class (above US$13 a day)Projections show that number of workers in middle-class and above in developing world could grow by 390 million by 2017
  • Global Employment Trends 2013

    1. 1. Global Employment Trends 2013Recovering from a second jobs dipEmployment Trends UnitInternational Labour OrganizationGeneva, Switzerland
    2. 2. Overview• Macroeconomic context• Global and regional labour market trends and prospects• Thematic chapter: Structural change for decent work• Recovering from the second jobs dip: Policy directionsGlobal Employment Trends 2
    3. 3. Macroeconomic contextRecession conditions in Europe spilling over globally• Broad global economic slowdown underway Source: ILO, Trends Econometric Models, October 2012.• Key factors: • Rising global uncertainties • Sharp slowdown in global trade • Weak investment and consumption • Government spending less supportive of growthMacroeconomic context 3
    4. 4. 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).• 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 coordinationMacroeconomic context 4
    5. 5. Macroeconomic contextIncoherence between monetary and fiscal policy Source: IMF, Fiscal Monitor, Oct 2012; Economist Intelligence Unit, November 2012; ILO calculations.Macroeconomic context 5
    6. 6. Macroeconomic contextThe economic outlook remains cloudy Weak economies Heightened uncertainty Weak labour markets Weak investmentsMacroeconomic context 6
    7. 7. Global and regional labour market trends and prospectsDifficulties in the world of work in 2012 Global & regional unemployment Part-time work Youth unemployment Global jobs gap Main concerns Long-term unemployment Quality of employment Skills mismatch Poverty reductionGlobal and regional labour market trends and prospects 7
    8. 8. Global unemploymentWorsening global unemployment outlook in 2012 and 2013 Source: ILO, Trends Econometric Models, October 2012.Global and regional labour market trends and prospects 8
    9. 9. Regional unemployment trendsDivergence between developed and developing economies Source: ILO, Trends Econometric Models, October 2012.Global and regional labour market trends and prospects 9
    10. 10. Global unemploymentGlobal labour markets are worsening againJobs crisis pushes more • Labour force participation has fallen dramatically, particularly inwomen and men out of advanced economieslabour market • 39 million dropped out of labour market between 2007 and 2012Spillover from developed to • Rise in estimated global unemployment by 4.2 million in 2012developing economies • Of which ¼ in advanced and ¾ in developing economies • Developed regions: Unemployment rates remain above historicalGreat heterogeneity among levels (8.6 per cent in 2012 vs. 6.9 per cent between 1998 and 2007)regions of the world • Developing regions: Unemployment rates below average in comparison with decade preceding crisis • Developing economies outperformed developed economies during recovery period in terms of economic growthReasons for heterogeneity • Recession conditions in Europe and limited effectiveness of fiscal andacross regions monetary measures • Developing countries weaker correlation with macroeconomic changesGlobal and regional labour market trends and prospects 10
    11. 11. 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) 2007 2008 2009 2010 2011 2012* 2013* 2014* 2015* 2016* 2017* Region Rate (%) World 11.6 11.8 12.8 12.6 12.4 12.6 12.7 12.8 12.8 12.8 12.9 Developed Economies and European 12.5 13.3 17.4 18.1 17.6 17.9 17.7 17.3 16.8 16.3 15.9 Union Central and South-Eastern Europe 17.4 17.0 20.4 19.2 17.7 17.1 17.3 17.3 17.3 17.4 17.4 (non-EU) and CIS East Asia 7.9 9.1 9.2 8.9 9.2 9.5 9.8 10.0 10.2 10.3 10.5 South-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 14.2 South Asia 9.3 9.0 9.7 10.2 9.7 9.8 10.0 10.1 10.2 10.2 10.3 Latin America and the Caribbean 14.2 13.6 15.7 14.1 13.4 13.5 13.6 13.7 13.7 13.8 13.8 Middle East 24.6 25.4 25.5 27.5 27.6 28.1 28.7 28.9 29.2 29.3 29.4 North Africa 20.8 20.3 20.4 20.1 23.3 23.8 23.9 23.8 23.5 23.3 23.2 Sub-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 unemployableGlobal and regional labour market trends and prospects 11
    12. 12. Long-term unemploymentAn increasing share of job-seekers is long-term unemployed• 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 mismatchesGlobal and regional labour market trends and prospects 12
    13. 13. Skills mismatchContinuing nature of crisis worsened labour market mismatches• 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 captures differences in shares of educational attainment of employed in comparison with unemployed Source: ILO calculations based on Key Indicators of the Labour Market, 7th edition.Global and regional labour market trends and prospects 13
    14. 14. 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 Part-time employment can mark the first step in a rise in more permanent, full-time jobs 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 operateGlobal and regional labour market trends and prospects 14
    15. 15. Global jobs gapUnderstanding the scope and nature of the global jobs gap• 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 the world in 2012 than expected based on pre- crisis trends Source: ILO, Trends Econometric Models, October 2012.Global and regional labour market trends and prospects 15
    16. 16. Quality of employmentSlowing labour productivity growth limits wage gains and investment• 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 Source: ILO, Trends Econometric Models, October 2012; World Bank, World Development Indicators; IMF, World Economic Outlook, October 2012.Global and regional labour market trends and prospects 16
    17. 17. Poverty reductionA new consumer class is emerging• 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 Source: Kapsos and Bourmpoula (forthcoming).Global and regional labour market trends and prospects 17
    18. 18. Global outlook for labour marketsRenewed focus on the world of work is essential Closing global employment gapSlowdown in global economic requires decisive action by policy-growth in 2012 had widespread makers to restore confidence andnegative impact on world of work promote investment and job creation New cohort of middle-class workers in developing countries provides hopeGlobal unemployment rising with that new global economic engine willparticularly negative implications emerge through higher consumptionfor world’s youth Global outlook and investment for labourGrowth in numbers of long-term markets Renewed focus on world of work isunemployed and increased labour essential by focusing policy action onmarket detachment is raising risk of employment generation, promotionemergence of structural labour of investment and productivitymarket problems growthGlobal and regional labour market trends and prospects 18
    19. 19. Structural change for decent workStructural change slowed down as global investment plummeted• 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 labourStructural change for decent work 19
    20. 20. Structural change for decent workLabour markets benefit from structural change• General lessons from regional comparisons concerning structural change: Gains in labour productivity within sectors are main drivers of growth particularly in industry and service sector 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• Value added per capita growth is projected to be largely driven by improved labour productivity in the services sector for most regions through 2017Structural change for decent work 20
    21. 21. Policy implications Policy-makers need to take action to prevent a further deterioration 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 stancePolicy implications 21
    22. 22. Policy implications Policy-makers need to take action to prevent a further deterioration 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 guaranteesPolicy implications 22
    23. 23. Global Employment Trends 2013Recovering from a second jobs dipEmployment Trends UnitInternational Labour OrganizationGeneva, Switzerland