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ILO says global unemployment set to rise at 6.1% this year

ILO says global unemployment set to rise at 6.1% this year
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First Published: Wed, Jan 23 2008. 11 21 PM IST

Updated: Wed, Jan 23 2008. 11 21 PM IST
The world will not just have to cope with a recession in the US in 2008. It will also have to deal with rising unemployment.
A study by the International Labour Organization, or ILO, says that global unemployment will rise in the current year.
According to the study titled “Global Employment Trends,” global economic turbulence stemming from turmoil in the US housing credit market and the continuing threat of high oil prices will raise the unemployment rate to 6.1% in 2008, adding at least five million to the total number of jobless people.
The total unemployment rate has been constant at 6% for the past two years, after dropping in 2004 and 2005.
The ILO study also said that more jobs would be lost in the so-called “vulnerable employment” categories, comprising those people who are temporarily employed and do not enjoy regular wages, fundamental labour rights and job security. This segment is the most vulnerable in an economic downturn.
The expected job loss in developed countries, including the European Union which is expected to see the maximum job losses, is projected at 240,000; this could grow depending on how the crisis panned out.
“This year’s global jobs picture is one of contrasts and uncertainty,” ILO director general Juan Somavia said while releasing the study. “Unemployment remains unacceptably high and may go to levels not seen before this year. Though more people are in work than ever before, this doesn’t mean these jobs are decent jobs.”
Shukti Dasgupta, economist at the local ILO office here, agreed the US housing market crisis “could not only raise the job loss figures in the developed economies, but also reduce the chances of a repeat of Asian economic growth compensating for it (the US) in 2007.”
According to preliminary ILO estimates, even though South Asia, dominated by India, contributed the most, or 28%, to the creation of 45 million jobs on 2006-07, it also reported the highest vulnerability rate of 77.2% among regions. Seven out of 10 people in the region are still working on their own or for the family, while eight out of 10 workers continue to be poor.
Data from the latest round of the National Sample Survey in India shows a high job growth of 2.89% a year between 1999-00 and 2004-05, compared to the population growth rate of around 1.7%. But the data also points out that the growth happened mainly on account of informal sectors and people getting into ­business.
“Construction and financial and allied sectors, including business services, led the growth curve,” said Shashank Bhide, senior research counsellor at think tank National Council for Applied Economic Research. These sectors have also created the maximum number of “vulnerable jobs”, or those that are most threatened by a global economic downturn.
Holding out a more optimistic view on the future of jobs in India, Pronab Sen, chief statistician of India, said: “I do not agree that employment is growing very rapidly in India. The 1999-2000 survey figures (by NSSO) are not dependable. Leaving that out, jobs have grown at around 2% a year, which is slightly less than the labour force growth rate. I am not yet sure about the full impact of the US recession, other than on the financial sector, but I think the demand for workers will continue to be strong in the subcontinent.”
The ILO report also found that “surprisingly, given the large amount of attention paid to outsourced service sector jobs to India, it was the industrial sector that saw the biggest increase in its job share, from 15.3% in 1997 to 21.7% in 2007, the largest among all regions.”
This was accompanied by a similar decrease in jobs in agriculture, again the largest in the world, from 59.4% to 48% in the same period, the report said. In both sectors, the share of women in jobs went up more than that of men.
Despite the expansion in employment opportunities, the report said, Indian workers continued to remain poor due to consistently low productivity in the region, second only to that in sub-Saharan Africa, prohibiting a shift to higher wages. Dasgupta said that India still has a long way to go before reaching the productivity levels in China. Over 1997-2007, while labour productivity, or the output per person employed, doubled in East Asia, it went up only a little more than 40% in South Asia.
She added that the significant gains in productivity achieved due to high growth have neither been consistent across sectors, nor have they been shared well among the workers. “The polarization among high-skill and low-skill workers is very high in services,” she said.
The report asked South Asia to “create more inclusive formal labour markets” by investing in education and other forms of human capital, while preparing for “an economic situation less favourable than today’s by putting social protection mechanisms in place.”
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First Published: Wed, Jan 23 2008. 11 21 PM IST