The
Global Employment Trends (GET) 2004, published by
the International Labour Organization (ILO), does
not hold much promise for the workers and job seekers
in the world in the current year. GET 2004 starts
on a dismal note saying that despite a recovery in
economic growth in 2003 following a slowdown during
the previous two years, there was no improvement in
the global employment situation in 2003. Total unemployment
grew from 2.5 per cent in 2002 to 3.0 per cent in
2003. Youth unemployment rates have been growing much
faster than the growth in the overall unemployment
rates. In other words, the young and those fresh in
the job market are finding it more difficult to get
jobs compared to those who are already experienced.
Another worrying aspect outlined in the GET 2004 is
the increasing size of the informal economy in developing
countries, particularly those having low rates of
GDP growth. Informalization of the economy tends to
increase the number of working poor, those who do
not earn enough to raise their families above poverty
levels. The ILO report points out to a slow recovery
of the industrialized nations and the outbreak of
the Severe Acute Respiratory Syndrome (SARS) in several
countries as the prime factors behind the rise in
the numbers of unemployed and underemployed people
worldwide. Travel and tourism, a sector the growth
of which leads to a rise in employment, was also hit
hard as a consequence of the SARS scare and because
of the war in Iraq.
Even in industrialized countries like the United States,
which has witnessed a recovery in the second half
of 2003 in terms of growth, job creation was sluggish
and unemployment rates remained at high levels of
around 6 per cent. The European Union and Japan however
witnessed some decline in the unemployment rates.
The phenomenon of a recovery in economic growth not
accompanied by any significant recovery in employment
growth during the last year has been almost universal.
Only South-East Asia show some decline in unemployment
in 2003. Despite having growth rates of over 7 per
cent, East Asia witnessed an increase in unemployment.
In South Asia there was hardly any change in the unemployment
rate despite the region having a 5.1 per cent growth
in GDP. Unemployment increased in the Middle East
as well as in North Africa. The region has the highest
incidence of unemployment in the world, experiencing
an unemployment rate of 12.2 per cent. While the GDP
in Latin America grew at 1.6 per cent, employment
rose by only 1 per cent. Youth unemployment remains
a major challenge for the region with the unemployment
rate for young people (16.6 per cent) in 2003 being
twice as high as that of the total labour force. Also
even as the region has made some progress in universalization
of primary education, a decline in public social expenditure
has resulted in growing gaps in educational status
of people from different income groups at the secondary
level and higher. Sub-Saharan Africa has failed to
reduce the unemployment rates and has also failed
to improve its high incidence of poverty. In addition
the HIV-AIDS pandemic has further hindered human resource
development in the region. The transition economies
however witnessed some improvement in the employment
scenario.
This said the GET 2004 does not proceed beyond mentioning
what can be seen and what is pretty obvious. Everybody
with a basic knowledge of economics knows that if
an economy grows faster both in terms of GDP and employment
creation poverty and unemployment would be reduced.
What one would have expected from an ILO report is
a suggestion as to what poor economies need to do
in order to reach the desired levels of growth. But
nowhere in the GET 2004 can one find such policy prescriptions.
In one section of the report the GET 2004 states:
South-East Asia has the potential
not only to reduce unemployment further but also to
reduce working poverty – if those economies
with the highest poverty incidence manage to reach
GDP and employment paths similar to those achieved
in the past few years by wealthier economies in the
region.[1]
This sentence is akin to saying that if you have more
and more money you will be getting richer and richer.
Also the report fails to overcome the neoclassical
fetish for looking at foreign investment as a panacea
for economies which want to develop.
The GET 2004 does not offer any analysis of the situation,
nor does in offer any solution to the problem of low
employment generation. All that the report does is
to state that a jobless growth will not help in reaching
the Millennium Development Goals (MDG) target of halving
world poverty by 2015. The GET 2004 merely says that
jobless growth today will threaten future growth and
that pro-poor policies should be designed to provide
those under the poverty line with decent jobs. But
the report is completely evasive on how this might
be attainable. It talks about the need for allowing
products from developing countries into developed
markets but also harps on the need for international
assistance to help developing countries in fighting
its woes. The report seems to be ignorant of the scores
of historical evidences where such assistance to developing
countries has actually caused greater pains than benefits
and for every dollar worth assistance recipient countries
have found several more going out of these countries,
often directly as a consequence of the acceptance
of assistance from abroad.
Another aspect that one can observe from the GET 2004
is the shift that is taking place in the Caribbean
countries and in some countries in Central America
from being exporters of primary products to being
providers of financial services as well as becoming
tourist destinations. While this is one transition
many would warmly welcome what is worrying is the
fact that the manufacturing sector has remained almost
undeveloped in these economies. The kind of fluctuations
the financial and the tourism sectors undergo, economies
banking on these sectors are bound to experience turmoil
whenever there is some disturbance in these sectors.
On the other hand all developed countries of today
had experienced an industrial revolution of sorts
during which those economies made the transition from
being primarily agricultural to becoming more dependent
on the manufacturing sector for growth. However the
GET 2004 conveniently overlooks this difference and
hails the diversification in the developing economies
which are moving into trading in financial services
and tourism products. For the countries experiencing
such transformation it might be just a case of going
from the frying pan to the fire.
Looking at the situation in East Asia the GET 2004
comments that unemployment is a relatively new phenomenon
in the region and the unemployment rate has gone up
to only 3.3 per cent in 2003 from 2.4 per cent a decade
ago. While the report acknowledges that among those
who are working over 18 per cent are working poor,
it tends to ignore the rising unemployment as a matter
of no great concern as the rate in 2003 is still very
low. However, if one calculates the change in the
rate of unemployment in the region, it is found that
there has been a 37.5 per cent rise in the unemployment
rate during the decade under consideration.
In the section discussing employment trends in South
Asia the report mentions the dismal situation in the
region with the labour force growing strongly, female
labourers continuing to get much less and have higher
unemployment rates than their male counterparts, a
growing number of working poor who now constitute
40 per cent of all employed people, a virtually stagnant
unemployment rate, youth unemployment rates, though
lower than they were in 1995, still almost thrice
the total unemployment rate sin the region. Again
here the GET 2004 wants more labour absorption in
the so-called high-productivity sectors, which is
an impossibility since the way sectors become 'highly
productive' today is by retrenching labour.
The kind of investment the developing world is witnessing
today is mostly using contractual labour and has resulted
in an almost complete informalization of these economies.
Despite this being an easily observable fact, the
GET 2004 says that the policy challenge ahead of developing
economies is 'to move from job creation in the informal
economy to creating productive jobs in the formal
economy'.[2] But as has
already been mentioned, the report also highlights
the need for developing countries to attract foreign
assistance. How the two can be simultaneously attainable
is anybody's guess.
In the section on the Middle East and North Africa
the report wishes that the region realizes its significant
export potential for non-oil exports. Another thing
on the GET 2004 wishlist for the region is that economic
and social barriers towards women should be dismantled
to allow women to participate more widely in economic
life and thus boost economic growth and productivity
in the region. Again the report is totally silent
on how this can be achieved. While most of the foreign
assistance that come into developing countries are
full of conditionalities on withdrawal of the state,
weakened labor norms, and so on there are nothing
written in the loans to ensure that progressive trends
are enforced.
The remedies for the ills of countries in Sub-Saharan
Africa according to the GET 2004, besides peace among
the warring factions in several countries in the region,
are debt relief and aid from the developed world.
But as has earlier been mentioned aid to developing
countries has never been given for the uplift of nations
in trouble but have been fraught with imperialist
designs, aimed at gaining control over the resources
of such nations.
The employment outlook for Sub-Saharan Africa is no
different from that for several other regions. It
says that there would be no improvement in the employment
scenario in the region 'unless progress is made in
terms of creating productive employment opportunities
for the unemployed, the underemployed and for new
entrants to the labour markets'.[3]
Now, who did not know that?
The adjustment to the market economy process has strongly
affected the transition economies. A large number
of workers are being excluded from the formal economy
and many are withdrawing from the labour market after
getting frustrated by the failure to get jobs after
a long search. While the average unemployment rate
in the region has fallen marginally from 9.4 per cent
in 2002 to 9.2 per cent in the next year, high rates
of youth unemployment continues to plague transition
economies. Countries in Central and Eastern Europe
have the highest youth unemployment rates in Europe.
The major impediments to boosting employment in the
region are lack of aggregate demand and infrastructural
bottlenecks. To remove these the only solution is
public investment. Private sector investment has never
catered to these areas. However with the waning of
the state, something which the GET 2004 has nowhere
been critical of, such bottlenecks might never get
removed.
Even industrialized countries that have diverse labour
market characteristics witnessed growing youth-unemployment-to-population
ratio. Total unemployment in major European nations
in 2003 was 7.9 per cent, almost the same as it was
a year before. In other major OECD economies the unemployment
rate rose from 5.8 per cent in 2002 to 5.9 per cent
in 2003.
The section on industrialized economies, which is
the last section of the report, ends with the following
lines:
In the major non-European economies,
where the average age of the population is lower and
fertility rates are higher than in Europe, the challenge
is to create employment opportunities for the growing
population and to match the strong growth in output
with job creation. In the United States, where on
average 2 million people have entered the labour force
each year since 1999, job growth must be stronger
than recent figures indicate. The aim is therefore
not only to fill positions made redundant in the downturn,
but also to innovate and expand into new markets in
order
to create additional employment opportunities.[4]
Thus in a way the report shows a consistency throughout
its entire length in merely offering an advice that
employment rates need to be jacked up for the poor
to be brought over the poverty line but consistently
fighting shy off suggesting policy prescriptions as
that would require vouching for the role of demand-side
economics, something that is anathema to orthodox
mainstream economic theory that has control over the
resources in today's world.
March 8, 2004.
[1] Global Employment Trends, January
2004, Page 3
[2] Global Employment Trends, January
2004, Page 17
[3] Global Employment Trends, January
2004, Page 23
[4] Global Employment Trends, January
2004, Page 29
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