[R-G] World unemployment reaches record high

Tue Jan 28 11:23:49 MST 2003

New ILO Report on Global Employment Trends 2003

World unemployment rate continues to rise, reaching a
new high of 180 Million

Friday 24 January 2003 ( ILO/03/01 )

http://www.ilo.org/public/english/bureau/inf/pr/2003/1.htm

GENEVA (ILO News) - Two years of economic slowdown has
pushed the number of unemployed to new heights
worldwide, with little prospect of any improvement in
the global employment situation this year, according to
a new report entitled Global Employment Trends 1 issued
here today by the International Labour Office (ILO).

"The world employment situation is deteriorating
dramatically," says Mr. Juan Somavia, Director-General
of the ILO. "While tens of millions of people join the
ranks of the unemployed or the working poor, uncertain
prospects for a global economic recovery make a
reversal of this trend unlikely in 2003."

In the new study, the ILO estimates that the number of
unemployed worldwide grew by 20 million since the year
2000 to reach a total of 180 million at the end of last
year. In addition, the report says the weakness of
labour markets has reversed recent reductions in
"working poverty" achieved in the late 1990s.

Particularly hard hit have been women and youth, who
often have jobs that are particularly vulnerable to
economic shocks, the report says. What's more,
unemployed workers pushed into informal jobs in search
of work faced even more uncertainty due to the sector's
near total lack of unemployment or social security
coverage.

"This deteriorating world employment picture and the
prospect of a weak or delayed recovery is very
disturbing," Mr. Somavia said. "A continuation of these
trends will dramatically increase the number of
unemployed and working poor. A full-scale global
recession could have grave consequences for the social
and political stability of large parts of the world."

Among the major findings in the report:

* At the end of 2002, the number of working poor, or
workers living on $1 or less a day, resumed its upward
trend, returning to the level of 550 million recorded
in 1998; * While the global economic slowdown and post
September 11 developments increased unemployment
worldwide, Latin America and the Caribbean were hit
hardest, with recorded joblessness rising to nearly 10
per cent; * To absorb new entrants into the labour
market and reduce working poverty and unemployment, at
least one billion new jobs are needed during the coming
decade to get on track for the UN goal of halving
extreme poverty by 2015.

"Our measures of unemployment largely record the
jobless who have some form of social protection," Mr.
Somavia said. "The record numbers on the dole worldwide
is worrying enough, but even more disturbing is the
evidence of worsening conditions in the informal
economy of the developing world where the struggle to
survive on poverty wages is getting even tougher."

Economic prospects and regional trends

Unemployment began to grow soon after the information
and communication technology (ICT) bubble burst in
spring 2001, sparking an economic slowdown. The
aftermath of the September 11 attacks in New York and
Washington, D.C. brought further shocks and amplified
the economic downturn. This slower growth in
industrialized nations meant job losses in the
export-oriented industries of developing countries.
Worst hit were labour-intensive, export-oriented
sectors, such as the garment industry which largely
employ women.

In addition, weakening confidence among investors
brutally exposed the financial fragility of countries
in several regions, with the ensuing crises putting
many people out of work. In Argentina, for example,
unemployment jumped above 20 per cent in 2002, with
knock-on effects in neighbouring countries. Armed
conflicts and violence also contributed to higher
unemployment and poverty in countries as far apart as
Colombia and Nepal. In the Middle East, joblessness
spiralled in the West Bank and Gaza Strip, while the
recession in Israel continued.

Employment growth in industrialized countries decreased
between the years 2000 and 2002, with the exception of
Italy and New Zealand, where employment growth
continued in 2001 but at the cost of falling
productivity. Overall, unemployment has been rising
steadily in the industrialized countries, from 6.1 per
cent in 2000 to 6.9 per cent in 2002. In the European
Union, unemployment decreased between 2000 and 2001,
from 7.8 per cent to 7.4 per cent, but began rising
again in 2002 to 7.6 per cent. Meanwhile, in North
America, unemployment increased rapidly in 2001 and
2002, from 4.8 per cent to 5.6 per cent in the United
States and from 7.2 per cent to 7.6 per cent over the
same period in Canada 2.

In Latin America and the Caribbean, the 2001 global
economic slowdown sent the unemployment rate
skyrocketing in many countries. Falling economic growth
increased joblessness in almost all of Latin America
and the Caribbean between 2001 and 2002, bringing the
unemployment rate to nearly 10 per cent despite fewer
people entering the work force. Youth unemployment in
the region hit 16 per cent in 2001, up from 12 per cent
in 1997, with nearly all new jobs for young people
emerging in the informal economy.

Asia suffered most severely from the bursting ICT
bubble, which cut exports to the industrialized
countries. Child labour and human trafficking remain
major issues for the Asian region as a whole.
South-East Asia faced the 2001 downturn just as it was
beginning to recover from the 1997-98 financial crisis,
posting a rise in unemployed from 6 per cent in 2000 to
6.8 per cent in 2001, with a slight fall to 6.5 per
cent projected for 2002. Individual South-East Asian
countries varied considerably. Indonesia, Malaysia,
Philippines, Singapore and Thailand, which depend
heavily on trade, suffered from exposure to global
economic trends. In contrast, Cambodia, Lao PDR and
Viet Nam sustained high growth rates, due to improved
access to markets in industrial economies or improved
performance in the agriculture sector.

East Asia also recorded significantly lower output
growth and deteriorating employment during the two-year
period with joblessness rising from 3.2 per cent in
2000 to 3.6 per cent in 2001 and 4 per cent in 2002.
While the official figure covering the unemployment
rate in urban areas of China was 3.6 per cent in 2001,
recent estimates suggest that it might be as high as
7.5 per cent today as a result of high underemployment
in the agricultural sector and of ending the practice
of keeping redundant workers in the public enterprises'
employment roles, often known as labour hoarding.

South Asian economies proved resilient in the face of
the global economic difficulties during 2001-2002.
Nevertheless, security concerns, poor weather
conditions, a slowdown in exports and declining tourism
revenues caused the employment situation to worsen.
Poverty increased, as did the number of working poor.
The region's unemployment rate rose from 2.9 per cent
in 1995 to 3.4 per cent in 2002, with unemployment
rates in Pakistan, for example, climbing in recent
years to nearly 8 per cent. The unfavourable employment
situation in 2001 and 2002 also points to an increase
in the number of people with low incomes and poor
working conditions in the informal economy, rather than
sharp increases in unemployment rates.

Sub-Saharan Africa managed to sustain a fairly constant
economic growth rate, though in per capita terms it is
often below 1 per cent. The open unemployment rate
increased from 13.7 per cent in 2000 to 14.4 per cent
in 2002, though estimates for 2002 may be revised due
to a growing food crisis. In addition to child labour
and job loss due to conflicts, an issue of growing
importance for the region is the "brain drain"
syphoning off much-needed human capital. The health
situation, especially HIV/AIDS, is also having a severe
impact on human capital. In Tanzania, for example, a
recent study showed the HIV/AIDS epidemic was forcing
more and more children and juveniles aged 10-19 into
the labour force as the number of adults aged 20 to 35
fell ill or died.

Middle East and North Africa experienced a dramatic
decline in overall economic conditions over the past
two years with GDP growth falling from more than 6 per
cent in 2000 to 1.5 per cent in 2001. Dismissals and
redundancies resulting from reductions in the size of
the public sector pushed up unemployment, which reached
double-digit levels in some countries. Youth
unemployment was distressingly high in some countries,
including Syria, Algeria, Bahrain and Morocco.
Moreover, the Gulf countries are increasingly adopting
policies to replace migrant workers with their own
nationals, a move that could have significant
consequences for employment as well as remittances to
countries supplying labour.

Unemployment in transition economies is on the increase
again after falling from 13.5 per cent in 2000 to 12.6
per cent in 2001. Despite the economic recovery and
high growth rates these countries experienced during
2000 and 2001, unemployment returned to the 13.5 level
in 2002 due largely to the continuing trend of
enterprises seeking to become more competitive by
phasing out labour-intensive technologies and ending
labour hoarding. At the same time, governments are
cutting employment in the public sector. Accelerating
structural change in anticipation of accession to the
EU has also pushed up unemployment in the candidate
countries.

Employment prospects are uncertain

Nearly 60 per cent of the world's labour force will be
in Asia by 2010, with China alone making up one-quarter
of the global labour force. The other developing
regions (Sub-Saharan Africa, the Middle East and North
Africa, and Latin America and the Caribbean) will also
account for an increased portion of the world labour
force by 2010. Meanwhile, the share of industrialized
countries and transition economies in the world labour
force will decrease to about one-fifth by 2010. Thus,
the bulk of the jobs that need to be created by 2010
must come in Asia (60 per cent) and Sub-Saharan Africa
(15 per cent).

"If these jobs are to contribute to alleviating
poverty, they must be productive and offer decent
conditions," Mr. Somavia said. "Both faster economic
growth and policies to promote the creation of decent
and productive work opportunities are needed."

Greater unemployment and poverty will place severe
pressure on governments' budgetary targets, given the
fragile financial position of many countries, the
report says. Policy makers should focus on measures to
secure and spread the recovery and ensure that faster
growth yields the maximum number of decent work
opportunities, reduces unemployment and poverty and
restarts employment growth.

First, a "pro-jobs" policy involving fiscal and other
measures to "jump-start" growth and stimulate
employment-intensive investment is essential. This must
be accompanied by an incentive structure for the
private sector that favours the choice of employment
creation.

Second, policy makers need to focus on reducing the
vulnerability of developing countries and the poorest
members of society to external shocks. Active labour
market policies, including social safety nets, are
needed to reduce economic insecurity in a globalized
world. In addition, development strategies should
include diversification of the output base to spread
and dilute risks of vulnerability, a cut in industrial
country tariff barriers to manufactured goods, reducing
exposure to swings in commodity exports, and reduced
protection of rich countries' agricultural sectors.
Also, needed are stronger transport, energy and
communications infrastructures.

Third, countries should adopt "pro-poor" policies to
help women and men secure productive and decent work in
conditions of freedom, security and human dignity. This
involves supporting the growth of small and
medium-sized enterprises and their integration into the
formal economy as well as investment in education and
health care systems, which improve the ability of the
labour force to work productively. In addition, ending
restrictions on the right to organize, tackling
discrimination and child and forced labour are
essential steps toward the economic, social and
political empowerment of the poor.

"Only through pro-jobs and pro-poor policies can we
address this growing employment crisis and place decent
work at the heart of economic and social policies," Mr.
Somavia says. "Faster economic growth is necessary, but
it is not enough. Failure of policy makers to act now
could have grave consequences for us all." * * * * *

1 Global Employment Trends, International Labour
Office, Geneva, 2003, ISBN 92-2-113360-5. Price: 35
Swiss francs.

2 All figures for 2002 are projections. Updated by CL.
Approved by KMK. Last update: 23 January 2003.

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