Chief, Employment Trends International Labour Organisation Global and Regional Labour Market Information & Employment Trends and Issues Lawrence Jeff Johnson Chief, Employment Trends International Labour Organisation Geneva Switzerland

Global employment trends Globally, employment is higher than ever before. Currently there are 2.8 billion employed worldwide and the figure is rising. Employment-pop ratios have decreased slightly over the past decade.

Global Unemployment trends Globally, employment is higher than ever before. Currently there are 2.8 billion employed worldwide and the figure is rising. Employment-pop ratios have decreased slightly over the past decade.

Unemployment Rates: by region, 2005

The share of working poor in total employment, 1995-2005 The share of working poor in total employment has fallen- particularly with respect to workers living on less than $1 per day. However, in 2003 still about half the world’s workers were living on less than $2 per day.

US$1 working poverty around the world (global estimate 520 million in 2005) South Asia now accounts for the largest share of the world’s $1 working poor.

2 dollar pie

Share of US$1 working poor, 1990-2015 East Asia, South East Asia and South Asia are all on track to reduce the share of $1 working poor by half by 2015. These regions have experienced the most rapid growth in labour productivity and, despite some increase in unemployment rates over the past decade, they still have the lowest unemployment rates in the world. In contrast, sub-Saharan Africa, with high unemployment and negative labour productivity growth, has seen no improvement in working poverty. Latin America & the Caribbean has witnessed some declines in working poverty, but the regions low productivity growth and growing unemployment is hindering the region’s progress toward poverty reduction. The world as a whole is on track to reduce the share of $1 working poor by half by 2015. This is, however, the result of the strong Asian performers. $2 working poverty remains persistent and we estimate that over 40% of the world’s workers will still be living on less than $2 per day in 2015.

Share of US$2 working poor, 1990-2015 East Asia, South East Asia and South Asia are all on track to reduce the share of $1 working poor by half by 2015. These regions have experienced the most rapid growth in labour productivity and, despite some increase in unemployment rates over the past decade, they still have the lowest unemployment rates in the world. In contrast, sub-Saharan Africa, with high unemployment and negative labour productivity growth, has seen no improvement in working poverty. Latin America & the Caribbean has witnessed some declines in working poverty, but the regions low productivity growth and growing unemployment is hindering the region’s progress toward poverty reduction. The world as a whole is on track to reduce the share of $1 working poor by half by 2015. This is, however, the result of the strong Asian performers. $2 working poverty remains persistent and we estimate that over 40% of the world’s workers will still be living on less than $2 per day in 2015.

430 million new entrants into the global labour force (2005-2015)

Starting Point The promotion of decent and productive work should be the central aim of economic development In today’s world of widening inequality, differences in productivity emerge as an important policy factor towards creating the conditions for decent work and poverty reduction. This has been brought out in…. World Commission Report: Employment as a central objective of macroeconomic and social policies, based on observation that increasing globalisation has neither been inclusive nor uniformly beneficial. MDG: Reducing poverty by half by the year 2015 through employment creation. For a variety of reasons the 1990s saw a slowdown in the rate of poverty reduction. ILO: The above reinforces the need for policies to focus on “working out of poverty”, a theme broadly explored in the ILC in 2003. The Report takes as its starting point the stark observation that, in today’s world of widening inequality, differences in productivity performance emerge as an important policy factor to which attention needs to be devoted, particularly towards the goal of creating the conditions for decent work and poverty reduction.

Policy Issues How to ensure that we get the right balance between productivity growth and job creation for each country? What are the most important rural development policies for improving productivity, generating decent employment and reducing poverty? How to balance flexibility and security in the labour market to promote economy-wide productivity and growth? How to overcome the “productivity divide” between large and small scale business activities? Four issues are of particular relevance if the ultimate aim is not just employment creation but decent work and poverty reduction: Trade-offs: balancing productivity growth with employment creation Sectoral focus: improving productivity in sectors a) where majority of people are employed and b) that have rapid growth Renovating labour market institutions: balancing labour mobility with employment stability Addressing the productivity divide in SMEs: in developing economies this is where the majority of people are employed, thus improving productivity is important for improving conditions of work.

Virtuous Spiral Sustainable & Expanding Growth Poverty Alleviation Increased Demand & Well-Being Increased Technological Change Sustainable & Expanding Growth Poverty Alleviation Increased Demand, Increased Output Decent Work & Employment Growth Increased Real Earnings & Social Benefits Technological Improvements Productivity & Output Growth Increased Investments & Demand Poverty Alleviation Increased Well-Being & Diminished Inequality Increased Real Wages Increased Earnings Increased Productivity

Indicators of the Labour Market K I L M Key Indicators of the Labour Market 2 0 0 5

Questions: What types of economic activities are people engaged in? What is the size and composition of the labour force? How many hours do people work and how much do they earn for this work? How many people are without work and looking for work? What types of inequalities exist, for example in terms of earnings and employment situation? Are earnings keeping pace with the cost of living? How are youth and women faring in the labour market? Timely and focused information on the world’s labour markets is essential – information that can help to answer such questions as: What types of economic activities are countries and people engaged in? Who is doing the work? How many hours do people work and how much do they earn for this work? How many people are without work and looking for work? What types of inequalities exist in terms of work? Are earnings keeping pace with the cost of living? How are women and younger people faring? Answering these questions requires detailed analysis of a large volume of information At the national level statistical information is generally developed and analysed by statistical services and labour ministries. The ILO plays a vital role in assembling, analysing and disseminating information through projects such as the Key Indicators of the Labour Market (KILM).

When developing indicators, one must strike a balance between: Coverage Comparability Maximize scope of coverage, i.e., provide the greatest number of data points for the greatest number of countries Harmonize the indicators across countries and time (same type of sources, sampling procedures, methodologies and definitions) The collection and dissemination of labour market indicators can present an interesting dilemma. How does one balance a desire to provide the greatest degree of geographical coverage for a specified time period with the need of insuring the greatest level of comparability? It is difficult to achieve a harmonious balance between coverage and comparability. The only realistic way of resolving the problem is to provide as much information as possible while making sure to redflag the accompanying methodological information so as to allow the users a chance of making informed decisions regarding the comparability of the data. In producing the KILM, a special effort was made to include text that relates the "limitations to comparability" for each indicator. Notes on methodology and sources are also placed as explicitly as possible in each data table.

Key Indicators of the Labour Market Labour force participation rate Employment-to-population ratio Status in employment Employment by sector Part-time workers Unemployment by educational attainment Hours of work Time-related underemployment Informal sector employment Inactivity rate Unemployment Educational attainment and illiteracy Youth unemployment Real manufacturing wage indices Long-term unemployment Occupational wages rates & earnings Hourly compensation costs Productivity and unit labour cost Labour market flows Poverty and income distribution

Labour force participation rates and GDP per capita at PPP, 1990 Comparing the overall labour force participation rate of countries at different stages of development reveals a particular U-shape relationship. In less-developed countries, economic growth is associated with expanding educational facilities, a shift from rural to urban economic activities, and a rise in earning opportunities, particularly of the prime-age (25 to 54 years of age). These factors together tend to lower the overall labour force participation rate for both men and women, although the effect is weaker for the latter and shows a wider range of variation. At higher levels of development, the trend tends to become reversed; labour force participation rates increase with greater employment opportunities for all and higher demand for income by both men and women. In many industrialized countries, such as the US, this pattern continues to be observed for women, but not so for men (except for young males), an indication that the U-shaped relationship is somewhat distorted at the highest level of development. The results for both males and females depict a similar pattern: labour force participation is generally higher at the early stages of development, possibly reflecting the existence of large, labour-intensive agricultural sectors in these countries. As GDP per capita increases, the labour force participation of both men and women seems initially to decline, reaching a plateau at the middle level of development. After a long stretch of low levels of labour force participation, rates seem to start to increase gradually, reaching a maximum before slightly decreasing at the highest level of development. This “curvy pattern” may reflect the relative increase in economic activity among both men and women at the middle and higher levels of development, whereas at the highest levels of development, the widespread retirement schemes in socially advanced countries drive labour force participation down. Note: The middle curve is a smooth version of the scatter plot, obtained by cubic splines.

Employment by 1-digit sector level (ISIC 3), latest years In most economies of the world, employment has been shifting from the sectors that produce goods to the services-producing sector. A certain polarization has taken place so that the industrial sector is now the dominant one in only a hand-full of economies This shift is most pronounced in the developed (industrialized) economies, where the proportion of total employment within the services sector exceeded 50 per cent. The shift is less dramatic in sub-Saharan Africa and some Asian economies: The transition economies and Asia and the Pacific show a more even distribution both among the three sectors and in terms of which sector has the majority share of employment. This figure shows that men have higher proportions of their employment in industry than do women in all 156 economies with only a few exceptions. In contrast, women’s shares are more likely to exceed men’s in the services sector.   What is more interesting, however, is to look at the distribution by sex within specific industry groups. Employment information by the 1-digit sector allows one to look specifically at, for example, manufacturing and see that, as expected, men outnumber women in employment in manufacturing in all but 30 (of 117) economies, according to latest year information. On the other hand, women have a much stronger presence in the “community, social and personal” services sector, which includes education services and household services such as domestic work. The figures shows the striking difference between male and female employment in various sectors. Females clearly dominate in employment in the education sector whereas males dominate in construction. The distinction is much less clear in services categories such as financial intermediation and real estate, renting and business activities. In these two sectors, particularly in developed (industrialized) economies where access to education is almost universal, the presence of male and female workers is roughly equal.

Annual number of hours worked per person Working long hours is a decreasing phenomenon in many developed (industrialized) economies for both men and women, although, changes have tended to be slight during the last decade. Some of the most interesting exceptions relate to economies where the share of women working long hours is increasing, while that of men decreases (Iceland, Sweden and the United Kingdom. In contrast, working long hours has become more common for both men and women in almost all developing (industrialized) economies. The estimated average number of hours actually worked per worker during a full year ranges from over 2,400 hours (Republic of Korea) to less than 1,400 hours (the Netherlands and Norway). Generally, economies in the developed (industrialized) grouping have the lowest annual hours of work (generally clustered between 1,500 and 1,900 hours), while developing economies in Asia have the highest (mostly between 2,000 and 2,300 hours). Annual hours in Latin America and the Caribbean range between 1,800 and 2,100 hours. Time series from 1990 onwards show that in the developed (industrialized) grouping annual hours of work have decreased in many economies, with some exceptions (Finland, Iceland, Portugal, Spain, Sweden, New Zealand and the United States). Elsewhere in the world, annual hours have generally increased, but never by more than 100 hours, with Mexico being the extreme case. Similarly, when annual hours have decreased, they have never done so by more than 70 hours, with the exception of Japan, where annual hours have decreased by almost 200 hours since 1990.  

Growth in value added per worker, total economy (1993-latest year)

Employment Trends Research WER KILM Global Employment Trends Special Reports for Youth & Women

Labor Market Information & Employment Trends Lawrence Jeff Johnson Chief, Employment Trends International Labour Organisation Geneva Switzerland