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.