The ILO reported that even though more people are working globally than ever before, the number of unemployed remained at an all-time high of 195.2 million in 2006, or at a global rate of 6.3%. This rate was almost unchanged from the previous year.
The ILO also reported only modest gains in lifting some of the world's 1.37 billion working poor - those working but living on less than the equivalent of US$2 per person, per day - out of poverty. It stressed that there weren't enough decent and productive jobs to raise them and their families above the $2 poverty line.
"The strong economic growth of the last half decade has only had a slight impact on the reduction of the number of workers who live with their families in poverty and this was only true in a handful of countries. In addition, growth failed to reduce global unemployment", said ILO Director-General Juan Somavia.
"What's more, even with continued strong global economic growth in 2007, there is serious concern about the prospects for decent job creation and reducing working poverty further."
The report said that to make long-term inroads into unemployment and working poverty, it is essential that periods of high growth be better used to generate more decent and productive jobs. Reducing unemployment and working poverty through creation of such jobs should be viewed as a precondition for sustained economic growth.
On what policymakers would have to do to increase the job content of growth, Jose Salazar Xirinachs, ILO’s Executive Director of the Employment Sector, said at a media briefing, that an integrated approach was needed.
In sectorial policy, there was a need to get a balance between high-productivity sector growth and Labor-intensive growth. As to macro-economic policy, it was important to be mindful of not over-doing stabilisation in terms of fiscal and monetary policy, he said.
Another area of importance, he added, was trade policy.
It was important in this period of trade negotiations and bilateral agreements to pay attention to sectorial sequencing of trade liberalisation, the ILO official said. There is need to pay attention to gradualism and to have an orderly adjustment. There is also a need to take into account the employment effects of trade agreements.
Xirinachs also pointed to the need to pay attention to the role of small and medium sized enterprises (SMEs). It is crucial to have policies to promote the SME sector, as in many countries it is the SME segment that is more dynamic in job creation.
He also highlighted institutional and Labor market interventions as another important area, in terms of finding the right balance between flexibility in Labor market regulations and protection for workers.
According to the ILO report, at the end of 2006, 2.9 billion people aged 15 and older were in work, up 1.6% from the previous year, and 16.6% since 1996.
How many of the new jobs created in 2006 were decent jobs is difficult to estimate, but given that the share of working poor in total employment decreased from 54.8% in 1996 to 47.4% in 2006, it is likely that at least some of the jobs were productive enough to help people work themselves and their families out of poverty, the ILO said.
Among main findings of the report is that for the last decade, economic growth has been reflected more in rising levels of productivity and less in growing employment. While world productivity increased by 26%, the global number of those in employment rose by only 16.6%.
The last decade has also witnessed a decline in the share of the world's working-age population (aged 15 years and older) that is in employment. This employment-to-population ratio stood at 61.4% in 2006. This was 1.2 percentage points lower than ten years earlier. The decrease was larger among young people (aged 15 to 24). Within this group, the ratio decreased from 51% in 1996 to 46.8% in 2006.
The increasing proportion of young people in education may in part explain this reduction, said the ILO.
Unemployment hit young people (aged 15 to 24) the hardest, with 86.3 million young people accounting for 44% of the world's total unemployed in 2006.
The gap between men and women continued, with 48.9% of women employed in 2006, compared with 49.6% in 1996. The comparable figures for men were 75.7% in 1996 and 74.0% in 2006.
The gender gap in Labor force participation is another indication of the limited chances for women to take part in the world of work, said the ILO. In 2006, 52.4% of all women of working age were either looking for work or working.
In 2006, the employment share of the service sector in total global employment progressed from 39.5% to 40% and, for the first time, overtook the share of agriculture that decreased from 39.7% to 38.7%. The industry sector represented 21.3% of total employment.
The report said that in most of the regions, unemployment rates did not change markedly between 2005 and 2006.
East Asia's unemployment rate was 3.6%, thereby remaining the lowest in the world. South Asia's unemployment rate was 5.2% and that of South-East Asia and the Pacific's was 6.6%.
For the fifth consecutive year, East Asian economies have had GDP growth of over 8%. This was underpinned by China's growth rate of more than 10%. Despite such solid economic expansion, the total number of unemployed increased in 2006 by more than the previous year. The change was small enough, however, for the unemployment rate to rise by only 0.1 percentage points to 3.6%.
Current estimates suggest that the number of people in East Asia working but still living with their families on below $2 a day fell to 347 million (or 44.2% of those in work) in 2006.
Low and stable unemployment rates, moderate population growth and positive growth prospects in the near-term make it likely that Labor markets will remain stable in 2007. However, as East Asia is on its way to becoming a middle-income region, new challenges will arise - especially regarding management of the region's new wealth, the report said.
Slightly positive Labor market trends in recent years in Latin America and the Caribbean are partly the result of three successive years of economic growth of over 4%. The unemployment rate decreased fractionally from 8.1% to 8% in 2006, which was about the same level as ten years earlier.
Positive Labor market trends are also reflected in a decrease in working poverty. The total numbers as well as the share of those working but still living in poverty with their families have decreased both at the $1 and $2 a day poverty levels ever since reaching a high in 2003. Still, in 2006 almost one-third of those employed lived in households where each family member had to live on less than $2 a day.
Although more recently regional economic growth has been accompanied by some improvement in key Labor market indicators, there remains a substantial decent work deficit. To tackle this, integrated economic and social policies are needed. Balancing the need for competitiveness and efficiency with that of social protection will be key to being successful, the ILO said.
According to the report, the Middle East and North Africa remained the region with the highest unemployment rate in the world at 12.2% in 2006. Sub-Saharan Africa's rate stood at 9.8%, the second highest in the world. The region also had the highest share in working poverty, with 8 out of 10 women and men living on less than $2 a day with their families. This underscores that tackling the decent work deficit in Africa is a regional and global priority.
The ILO estimates showed that in all regions, the total number of working poor at the $1 level declined between 2001 and 2006; however, in Sub-Saharan Africa it increased by another 14 million and in Latin America and the Middle East and North Africa, it stayed more or less unchanged.
Over the same period, the total number of $2 a day working poor declined in Central and Eastern Europe (non-EU) and Commonwealth of Independent States, and most significantly in East Asia by 65 million. On the other hand, it increased in South-East Asia and the Pacific, South Asia, the Middle East and North Africa with the biggest rise, of 26 million, occurring in Sub-Saharan Africa.
"Nowadays, the widespread conviction is that decent work is the only sustainable way to reduce poverty, which is why the target of 'full, productive and decent employment' will be a new target within the Millennium Development Goals in 2007. Therefore, it is now the time for governments as well as the international community to make sure that the favorable economic conditions in most parts of the world will be translated into decent job growth", the report concluded. (Third World Network Features)
Kanaga Raja is a researcher with Third World Network based in Geneva, Switzerland. This article is an edited version of an article published in the South-North Development Monitor (SUNS) # 6177, January 26, 2007.
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