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Unending pangs of unemployment

By Collins Olayinka, Abuja
02 February 2016   |   1:11 am
DESPITE numerous policies raised by governments around the world to tackle unemployment, it does appear that joblessness may likely to be on the upward swing in the nearest future.

Ryder

DESPITE numerous policies raised by governments around the world to tackle unemployment, it does appear that joblessness may likely to be on the upward swing in the nearest future.

Indeed, surmounting unemployment is likely to pose the most formidable challenge to global leaders especially those in the developing or emerging economies where Africa falls as indicated by the latest findings of the World Employment and Social Outlook (WESO) of the International Labour Organization (ILO).

Beginning from home – Nigeria – the findings of the report on the country is a cause to worry as it states that unemployment rate which stood at 5.8% in 2015 would record upward swing to 6.3 in 2016 and further push forward to 6.6% in 2017.

It also shows that unemployment rate is expected to record marginally in Sub-Saharan Africa from the 2015 figure of 7.4 to 7.5 percent for 2016 and 2017.

On the overall, the report projects that the of unemployment that is expected to rise above 200 million in 2017 would largely be driven by large joblessness in the developing countries.

The report, tagged ‘World Employment and Social Outlook – Trends 2016’ (WESO)’, indicates that despite falling unemployment levels in some developed economies, new analysis shows the global job crisis is not likely to end especially in emerging economies.

The report warns that continuing high rates of unemployment worldwide and chronic vulnerable employment in many emerging and developing economies are still deeply affecting the world of work.

The final figure for unemployment in 2015 is estimated to stand at 197.1 million and in 2016 is forecast to rise by about 2.3 million to reach 199.4 million. An additional 1.1 million jobless will likely be added to the global tally in 2017, according to the ILO’s World Employment and Social Outlook – Trends 2016.

In 2015, total global unemployment stood at 197.1 million – 27 million higher than the pre-crisis level of 2007.The unemployment rate for developed economies decreased from 7.1 per cent in 2014 to 6.7 percent in 2015. In most cases, however, these improvements were not sufficient to eliminate the jobs gap that emerged as a result of the global financial crisis.

The report further stresses that progress in terms of employment quality at the lower end of the earnings spectrum has also begun to stall. In 2015, an estimated 327 million employed people were living in extreme poverty (those living on less than $1.90 a day in PPP terms) and 967 million in moderate or near poverty (between $1.90 and US$5 a day in Purchasing Power Parity terms). This represents a significant reduction in extreme poverty compared with the levels in 2000, but the improvements since 2013 have been more limited (especially within the least developed countries).

Furthermore, the number of persons employed in moderate and near poverty has increased since 2000, and evidence from other sources suggests that working poverty is on the rise in Europe.

Moreover, the employment outlook has now weakened in emerging and developing economies, notably in Nigeria, Brazil, China and oil-producing countries.

Chris-Ngige

Ngige

The economic weakening has caused a further increase in global unemployment. In 2015, the number of unemployed people reached 197.1 million – approaching 1 million more than in the previous year and over 27 million higher than pre-crisis levels. This increase in the number of jobseekers in 2015 occurred mainly in emerging and developing countries. The employment outlook in some of these countries, notably those in Latin America, as well as some Asian countries (especially China) and a number of oil exporters in the Arab States region, is expected to have worsened in recent months.

The report notes that vulnerable employment is particularly high in emerging and developing economies, hitting between half and three-quarters of the employed population in those groups of countries, respectively, with peaks in Southern Asia (74 per cent) and sub-Saharan Africa (70 per cent).

Globally, there are over two billion working-age who are not participating in the labour market. Some 26 million people joined these ranks in 2015. Only developing economies are expected to experience stable labour force participation rates, whereas developed and emerging economies are likely to experience further declines in activity rates.

The report notes that the growing unemployment would complicate the tasks of increasing growth and meeting demographic challenges.

“When there is a shortage of decent jobs, more workers may give up looking for work. In 2015, the number of working-age individuals who did not participate in the labour market increased by some 26 million to reach over 2 billion.

Participation rates are expected to stabilize at 62.8 per cent of the global working-age population (aged 15 years and above) but then to follow a moderate down- ward trend, reaching 62.6 per cent in 2020 and falling further in subsequent years. Only developing economies are expected to experience stable labour force participation rates, whereas developed and emerging economies are likely to experience further declines in activity rates. In this regard, migration is an important mechanism for balancing labour market supply and demand across countries.

“The recent surge of refugees into Northern, Southern and Western Europe has led to the need to facilitate the labour market entry of a large number of individuals as quickly and effectively as possible. In the long term, the influx of migrants will help to counter skills shortages in certain areas and mitigate the risks associated with secular stagnation,” it explains.
The current slow growth in the global economy and the prospect of lower long-term growth have many causes, but falls in the working-age population and labour force participation rates as well as rising inequality, vulnerable employment and poor job quality, mentioned above, are prominent factors.
Meanwhile, the report shows that informal employment – as a percentage of non-agricultural employment – exceeds 50 per cent in half of the developing and emerging countries with comparable data. In one-third of these countries, it affects over 65 per cent of workers.

Commenting on the findings of the report, the Director General of the ILO, Guy Ryder said: “The significant slowdown in emerging economies coupled with a sharp decline in commodity prices is having a dramatic effect on the world of work. Many working women and men are having to accept low paid jobs, both in emerging and developing economies and also, increasingly in developed countries. And despite a drop in the number of unemployed in some EU countries and the US, too many people are still jobless.We need to take urgent action to boost the number of decent work opportunities or we risk intensified social tensions.”

The ILO Chief highlighted that the lack of decent jobs leads people to turn to informal employment, which is typically characterized by low productivity, low pay and no social protection, adding, “this needs to change. Responding urgently and vigorously to the scale of the global jobs challenge is key to successful implementation of the United Nations’ newly adopted 2030 Agenda for Sustainable Development.”

On his part, the Director of ILO Research department, Raymond Torres, explained further: “The unstable economic environment associated with volatile capital flows, still dysfunctional financial markets and the shortage of global demand continue to affect enterprises and deter investment and job creation. In addition, policy-makers need to focus more on strengthening employment policies and tackling excessive inequalities. There is much evidence that well-designed labour market and social policies are essential for boosting economic growth and addressing the jobs crisis and almost eight years after the start of the global crisis, a strengthening of that policy approach is urgently needed.”

The authors of the report also document the fact that job quality remains a major challenge. While there has been a decrease in poverty rates, the rate of decline in the number of working poor in developing economies has slowed and vulnerable employment still accounts for over 46 per cent of total employment globally, affecting nearly 1.5 billion people.

Pointing a way forward, the report says there is urgent need for a shift in economic and employment policies.
It calls for the strengthening of labour market institutions and ensure that social protection systems are well designed, in order to prevent further increases in long-term unemployment, underemployment and working poverty.

In particular, it stresses financial reforms that ensure that banks perform their role of channeling resources into the real economy and into investment for sustainable enterprise expansion and job creation.

In the medium to long term, achieving the Sustainable Development Goals (SDGs), particularly decent and productive employment for all will yield significant social dividends while contributing to strengthening and rebalancing the global economy, saying a concerted effort to tackle inequality through more and better jobs will be absolutely crucial in this regard.

The report further notes that making decent work a central pillar of the policy strategy would not only alleviate the jobs crisis and address social gaps, but would also contribute to putting the global economy on a better and more sustainable economic growth path.

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