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    TENDENCIAS MUNDIALES

    DEL EMPLEO 2014

    .887

    0

    48

    9

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    Hacia una recuperacinsin creacin de empleos?

    R e s u m e n

    e j e c u t i v o

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    4 Tendencias mundiales del empleo 2014 | Hacia una recuperacin sin creacin de empleos?

    aumentando el desempleo de larga duracin en las economas avanzadas,

    En las circunstancias actuales de recuperacin tmida, la duracin media de los perodosdesempleo ha aumentado considerablemente, un signo ms de la debilidad que reviste la ccin de empleo. En muchas economas avanzadas, la duracin del desempleo se ha multcado por dos desde el inicio de la crisis. En pases en crisis de la zona del euro, como Go Espaa, la duracin media del desempleo es de 9 y 8 meses respectivamente, e inclus pases de otras regiones que estn empezando a vislumbrar signos de recuperacin econalentadores, como los Estados Unidos, el desempleo de larga duracin afecta a ms del 40ciento de todas las personas que buscan empleo.

    Estos perodos de desempleo tan largos impiden una recuperacin ms rpida del mcado de trabajo, incluso cuando las previsiones apuntan a una aceleracin de la actividad nmica. En primer lugar, suponen una considerable carga para el erario pblico, obligandlos gobiernos a subir los impuestos o a aplicar recortes para no aumentar el dcit scal. que es ms importante, las personas que llevan largos perodos de tiempo buscando trabempiezan a perder sus competencias a un ritmo acelerado, haciendo ms difcil encontrarempleo en una ocupacin similar o que requiera competencias parecidas.

    e interrumpiendo las mejoras que estaban alcanzndose, en primer lugar,en las tasas de participacin,

    Las tasas de participacin en la fuerza de trabajo no mejoran, mantenindose ms de un pu porcentual por debajo del nivel que registraban antes de la crisis. La cada de las tasas deticipacin ha sido especialmente acusada en Asia Oriental y Asia Meridional, donde mucmujeres han abandonado el mercado de trabajo. Al mismo tiempo, con el mejoramiento nivel educativo en estas regiones, los jvenes se incorporan ms tarde al mercado de trabcon mejores perspectivas profesionales. En cambio, en la regin de las economas desarrollas tasas de participacin han cado, ya que los jvenes en particular no ven posibilidadeincorporarse al mercado de trabajo. Otras regiones, como Europa Central y Oriental, haregistrado un aumento de las tasas de participacin. En los pases de estas regiones, al ique en otros con sistemas de seguridad social menos desarrollados que han sufrido gran prdidas de empleo (formal), muchas personas que estaban econmicamente inactivas se reincorporado al mercado de trabajo, a menudo en empleos informales para compensar la pdida de ingresos familiares.

    ... en segundo lugar, en el empleo vulnerable, que se prev habr alcanzadoel 48 por ciento del total del empleo,...

    El empleo vulnerable, a saber, el empleo por cuenta propia y el desempeado por trabajadfamiliares auxiliares, representa cerca del 48 por ciento del total del empleo. Las personasempleos vulnerables estn ms expuestas que los trabajadores asalariados a encontrarse acceso limitado o sin acceso a la seguridad social o a un ingreso seguro. En 2013, el nde personas con empleos vulnerables registr un aumento de alrededor de un 1 por cientocual representa cinco veces ms que en los aos previos a la crisis.

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    Tendencias mundiales del empleo 2014 | Hacia una recuperacin sin creacin de empleos? 5

    en tercer lugar, en el nmero de trabajadores pobres, 839 millones de trabajadoresviviendo con menos de 2 dlares de los Estados Unidos al da

    El nmero de trabajadores pobres sigue disminuyendo, aunque a un ritmo menor que en pasados decenios. Se calcula que, en 2013, 375 millones de trabajadores (u 11.9 porcdel total de empleados) vivan con menos de 1,25 dlares de los Estados Unidos al da ymillones (o 26.7 del total de empleados) con 2 dlares al da o menos. Se trata de una dnucin considerable desde principios de 2000, cuando los trabajadores pobres que vivanmenos de 1,25 y 2 dlares de los Estados Unidos al da eran ms de 600 millones y m1.100 millones respectivamente. Sin embargo, los progresos en la reduccin del nmero dbajadores pobres parecen haberse estancado. En 2013, el nmero de trabajadores en el mque vivan en condiciones de extrema pobreza disminuy slo un 2,7 por ciento, una dtasas ms bajas del pasado decenio, a excepcin de la registrada el ao en que se inici l

    y, por ltimo, en el empleo informal persistentemente elevado.

    El empleo informal sigue muy generalizado en la mayora de los pases en desarrollo, au

    se observan diferencias considerables de una regin a otra. En Europa Oriental, los pasla CEI y algunas pocas economas avanzadas, el empleo informal an representa ms d porciento del empleo total. En Amrica Latina, algunos pases han hecho grandes progremantener las tasas de informalidad por debajo del 50 por ciento, aunque los pases andinde Amrica Central de bajos ingresos siguen registrando tasas del 70 por ciento o superLas tasas de informalidad considerablemente ms elevadas las encontramos en las econode Asia Meridional y Sudoriental. En algunos pases de estas regiones se sitan hasta e90 por ciento del total del empleo. Aunque los avances logrados en la reduccin de la pohan sido mayores en estas regiones, la escasez de oportunidades de empleo formal puedtaculizar una reduccin sostenible mayor de la pobreza.

    Para abordar las brechas abiertas en el empleo y en la sociedad es preciso aplicar polticasmacroeconmicas favorables a la creacin de empleo...

    El dcit de demanda global impide una recuperacin ms rpida de los mercados de trmundiales. A este respecto, la consolidacin scal adoptada en muchas economas avanzal igual que la debilidad del consumo privado, suponen un freno al crecimiento de la procin. El presente informe muestra que un restablecimiento del equilibrio entre las poltmacroeconmicas y un aumento de los ingresos del trabajo mejoraran considerablemen panorama del empleo. Segn las simulaciones, en los pases del G20 de ingresos altos, tablecimiento del equilibrio tal podra reducir el desempleo en 1,8 puntos porcentuales

    2020, lo que signica la creacin de 6,1 millones de puestos de trabajo. De este modo bin se favorecera el logro de los objetivos scales. De hecho, los resultados de la simusugieren que tal enfoque de polticas resultara en mejoramiento signicativo del escenstatus quo de base.

    La poltica monetaria sigue siendo exible, proporcionando un impulso beneciosla demanda global. Segn las estimaciones de los efectos del rgimen de poltica monactual, el desempleo hubiese sido de 1 a 2 puntos porcentuales superior en las grandes emas avanzadas si las personas encargadas de formular las polticas no hubiesen reacciocon rapidez adoptando medidas de poltica monetaria para hacer frente a la crisis nancNo obstante, las tendencias recientes indican que se est produciendo un movimiento de parte cada vez mayor de la liquidez creada por dicha poltica monetaria hacia los mer

    de activos en lugar de hacia la economa real. Esta situacin puede provocar burbujas e precios de los activos y de los bienes inmuebles, frenando potencialmente el crecimienempleo a largo plazo.

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    6 Tendencias mundiales del empleo 2014 | Hacia una recuperacin sin creacin de empleos?

    La debilidad de la demanda, las fuentes inciertas de la demanda futura, y la abundanliquidez han impulsado la tendencia de las grandes empresas a recomprar acciones y a aumlos pagos de dividendos a los accionistas en lugar de a invertir en la economa real. Algestimaciones muestran que en ciertos pases la incertidumbre en la contratacin puede agre presin a la alza en el desempleo por encima de una dbil demanda agregada, un efecto puede persistir incluso cuando se presenta una recuperacin en la actividad econmica. Eresulta en un obstculo ms para la creacin de empleo.

    y destinar ms recursos a las polticas sociales y del mercado de trabajo.

    Habida cuenta de los 23 millones de personas que se calcula han abandonado el mercadotrabajo por desnimo y por llevar mucho tiempo desempleadas, es preciso aplicar con mmeza polticas activas del mercado de trabajo (PAMT) destinadas a abordar la inactividaddesajuste de las competencias. En efecto, con un nmero cada vez mayor de trabajadores animados que permanecen fuera de la fuerza de trabajo, el riesgo de deterioro y obsolescede las competencias va en aumento. Adems, cabe sealar que, en la actualidad, los recu pblicos destinados a promover medidas activas del mercado de trabajo son escasos. Inclu

    los pases de la OCDE que suelen contar con instituciones y prcticas relativamente avanzaen la materia, en 2011 slo se destin una media inferior al 0,6 por ciento del PIB a prom verlas. Segn las estimaciones, si se aumentan los recursos a promover este tipo de mea un 1,2 por ciento del PIB, en la misma lnea de los pases que ms invierten en PAM podran crearse 3,9 millones de empleos en la regin de las economas desarrolladas y la UEuropea. Las regiones que en la actualidad destinan menos recursos a polticas activas delcado de trabajo podran salir an ms beneciadas, ya que su aplicacin ayudara a mejorfuncionamiento de los mercados de trabajo.

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    006.65 0.887987 +1.987523

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    GLOBAL EMPLOYMENT

    TRENDS 2014

    +0.1

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    Risk of a jobless recovery?

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    Global Employment Trends 2014Risk of a jobless recovery?

    IN ERNA IONAL LABOUR OFFICE GENEVA

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    Copyright International Labour Organization 2014First published 2014

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    Global employment trends 2014: Risk o a jobless recovery? / International Labour Office. Geneva: ILO, 2014

    International Labour Office

    employment / unemployment / youth employment / youth unemployment / labour policy / economic recovery /regional development / A rica / Asia / Caribbean / developed countries / Europe / EU countries / Latin America /Middle East / Paci c

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    3

    Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    1. Macroeconomic challenges and global labour market developments . . . . 15Some positive signs in advanced economies amidst decelerationin emerging economies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unemployment edges higher in 2013 and is expected to remainat elevated levels or many years to come . . . . . . . . . . . . . . . . . . . . . . . . . . .Labour market situation o youth worsens urther . . . . . . . . . . . . . . . . . . . . . Where are the decent jobs? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . High rates o in ormality hamper sustainable progress in poverty reduction . . . . . 2Unemployment is becoming more persistent . . . . . . . . . . . . . . . . . . . . . . . . Economic uncertainty remains high, with negative effects on hiring . . . . . . . . . 2

    How is the growth slowdown in emerging economies shaping labour markets? . . . 2Te working middle class continues to grow in the developing world . . . . . . . . . 30Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Appendix 1. Te ILO hiring uncertainty indicator . . . . . . . . . . . . . . . . . . . . 33

    2. Regional economic and labour market developments . . . . . . . . . . . . . . 35Developed Economies and European Union . . . . . . . . . . . . . . . . . . . . . . . .

    A recovery in activity, not in jobs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Te outlook or jobs remains bleak . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Long-term unemployment is on the rise as skills mismatch increases . . . . . . . . . 37Social developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

    Central and South-Eastern Europe (non-EU) and CIS . . . . . . . . . . . . . . . . . . 43Growth decelerated sharply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Te labour market picture remains bleak . . . . . . . . . . . . . . . . . . . . . . . . . 43Social developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Persistent and emerging challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

    Latin America and the Caribbean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Growth is slowing down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Employment growth continues to outpace labour orce expansion . . . . . . . . . . . 47

    Social developments and emerging challenges . . . . . . . . . . . . . . . . . . . . . . . 51East Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global growth weighs on economic activity in the region . . . . . . . . . . . . . . . . 52

    Contents

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    Te labour market picture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52Social developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Emerging challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

    South-East Asia and the Paci c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55Global spill-overs continue to weigh on growth in the region . . . . . . . . . . . . . . 55Te labour market picture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55Social developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Emerging challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

    South Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59Growth has decelerated in South Asia due to both domestic and external actors . . 59 Labour market situation is mixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60Gender gaps in the labour markets o South Asia . . . . . . . . . . . . . . . . . . . . 61Slow progress in structural trans ormation in South Asia . . . . . . . . . . . . . . . 61Outlook in South Asia remains uncertain . . . . . . . . . . . . . . . . . . . . . . . . . 62

    Middle East and North A rica . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

    Social unrest has affected the region and threatens its long-term perspective . . . . . 62Stress in labour markets remains high in the region . . . . . . . . . . . . . . . . . . . 63 Making oreign direct investment benecial or job creation . . . . . . . . . . . . . . 66

    Sub-Saharan A rica . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Economic growth has remained solid . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

    3. Policies for a stronger labour market and more inclusive growth . . . . . . 73Persistent weakness in labour markets and economic growthnecessitates a policy re-think . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73Monetary stimulus has prevented worse outcomes but has limitations

    and potentially adverse consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731. Address weak aggregate demand through improved labour incomes

    and less scal consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 752. Address high hiring uncertainty through better policy coordination . . . . . . . 793. Address inactivity and skills mismatch through active labour market policies . . . 80Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

    References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

    Annexes

    Annex 1. Global and regional tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89Annex 2. Unemployment projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103Annex 3. Global and regional gures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111Annex 4. Note on global and regional estimates . . . . . . . . . . . . . . . . . . . . . . 121Annex 5. Note on global and regional projections . . . . . . . . . . . . . . . . . . . . 123Annex 6. Regional groupings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

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    Contents 5

    Tables1. Global, regional and country-speci c estimates and projections

    o the total unemployment rate, 200716 . . . . . . . . . . . . . . . . . . . . . . . 2. Te global wage employment gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Labour market situation and outlook in Developed Economies

    and European Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    4. Labour market situation and outlook in the Central and South-EasternEurope (non-EU) and CIS region . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45. Labour market situation and outlook in Latin America and the Caribbean . . 486. Labour market situation and outlook in East Asia . . . . . . . . . . . . . . . . . . 57. Labour market situation and outlook in South-East Asia and the Paci c . . . . 568. Average annual growth rate o labour orce, ASEAN Member Countries . . . 59. Labour market situation and outlook in South Asia . . . . . . . . . . . . . . . . . 6010. Labour market situation and outlook in MENA countries . . . . . . . . . . . . 6411. Jobs gap and contribution to GDP per capita in MENA countries . . . . . . . . 6612. Labour market situation and outlook in Sub-Saharan A rica . . . . . . . . . . . 6

    Boxes1. What explains differences in unemployment projections? . . . . . . . . . . . . . 22. MDG employment indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Are house price cycles responsible or the slow jobs recovery? . . . . . . . . . . . 4. Labour ows in Mexico: Formal versus in ormal ows o workers . . . . . . . . 5. Education and youth unemployment in Viet Nam . . . . . . . . . . . . . . . . . . 576. Spill-overs rom the Arab Spring: Te case o Lebanon . . . . . . . . . . . . . . . 7. Fiscal consolidation versus employment- riendly policies Simulation results 7

    8. Te potential o active labour market policies to boost growth and employment 80

    Figures1. Global and regional GDP growth estimates and projections, 201115 . . . . . 152. Evolution o global GDP growth estimates and projections,

    2013 and 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Te crisis-related global jobs gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Global unemployment trends and projections, 200318 . . . . . . . . . . . . . . 175. Annual change in global unemployment and GDP growth, 200018,

    baseline and downside scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    6. Average annual change in the youth unemployment rate,selected time periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. Young people that are neither in employment, nor in education

    or training (NEE ) as the share o the population aged 1529(2007 and most recent year) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    8. Annual output growth per worker, world and regions, selected periods . . . . . . 239. Estimated in ormal employment shares, 2011 . . . . . . . . . . . . . . . . . . . . . 10. Average unemployment duration in selected economies . . . . . . . . . . . . . . . 211. Macroeconomic uncertainty in selected economies . . . . . . . . . . . . . . . . . 212. Contribution o hiring uncertainty to the increase in the unemployment rate

    since 2007 in the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. GDP growth rates in BRICS countries . . . . . . . . . . . . . . . . . . . . . . . . . 214. Sectoral employment shares and economic development . . . . . . . . . . . . . . 2

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    6 Global Employment Trends 2014 | Risk of a jobless recovery?

    15. rajectory o annual GDP per capita be ore and afer the yeara country reaches US$ 3000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

    16. Changes in employment by economic class, selected time periods and regions 3117. Job losses by age group Selected OECD economies (2012 vs. 2007) . . . . . . 3718. Skills mismatch: 2005 vs. 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3819. Increase in unemployment driven by longer unemployment duration . . . . . . 38

    20. Changes in trend unemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3921. GDP and employment recoveries around recession turning points(G7 countries) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

    22. Annual growth in Latin America, 19912018 . . . . . . . . . . . . . . . . . . . . 4723. In ormal employment structure, 200912 . . . . . . . . . . . . . . . . . . . . . . . 4924. Labour productivity index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4925. Share o wage and salaried workers in total employment and male emale

    gap in wage employment rates, East Asia, 19912013 p . . . . . . . . . . . . . . . 5426. Share o medium- and high-skill and technology-intensive manu acturing

    in total manu acturing exports, selected economies in East Asia, 19952012 . . 54

    27. wo views o the drivers o growth in India: Services and consumption . . . . 5928. Gender disparities in labor orce participation rates in South Asia, various years (200912) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

    29. Skills mismatch, overeducation and undereducation in selected economies . . . 6530. Public investment in education in MENA countries . . . . . . . . . . . . . . . . 6531. Female participation and unemployment rates in MENA countries . . . . . . . 6632. FDI in ows in the MENA region by sector, 200310 . . . . . . . . . . . . . . . 6733. Economic growth and vulnerable employment, by region, 200112 . . . . . . . 6934. Paid employment and employment in industry across regions, 2012 . . . . . . . 7035. Government debt to GDP ratio in selected countries and country groups . . . 7536. Current GDP vs. growth at pre-crisis trends in selected countries . . . . . . . . 7837. Policy determinants o hiring uncertainty . . . . . . . . . . . . . . . . . . . . . . . 79

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    7

    Acknowledgements

    Te Global Employment rends 2014 report was prepared by the ILOs Employment rendsUnit in the Research Department. Te team is headed by Ekkehard Ernst, who coordinatedthe production o the report together with Christian Viegelahn and Steven Kapsos. Tereport was supervised by Moazam Mahmood, Director, and Raymond orres, Director othe Research Department.

    Te ollowing authors contributed to the report:Executive summary: Raymond orres, Ekkehard Ernst and Steven KapsosChapter 1: Christian Viegelahn, Steven Kapsos, Teodoor Sparreboom

    and Valia BourmpoulaChapter 2: Developed Economies and European Union: Ekkehard Ernst,

    Faten Saliba and Damien RoacheCentral & South Eastern Europe (non-EU) and CIS:Damien Roache and Alena NesporovaLatin America and the Caribbean: Jorge Davalosand Brenda SamaniegoEast Asia: Phu HuynhSouth-East Asia and the Paci c: Makiko Matsumotoand Kee Beom KimSouth Asia: Sher VerikMiddle East and North A rica: Faten Saliba and Ekkehard ErnstSub-Saharan A rica: Teo Sparreboom and Michael Mwasikakata

    Chapter 3: Steven Kapsos, Matthieu Charpe, Ste an Khn and Ekkehard Ernst.

    Speci c mention should be given to Valia Bourmpoula or preparing the global and regionestimates on the basis o the Global Employment rends (GE ) econometric models and help ul research assistance. Te publication would not have been possible without the contributions o other members o the ILOs Employment rends Unit Philippe Blet, Anne

    Drougard and Alan Wittrup.Te team wishes to acknowledge the comments and suggestions on the draf provided by various ILO regional and country offices, and by Sandra Polaski, Deputy Director-Genera

    or Policy; James Howard, Director-Generals Office; Aurelio Parisotto, Senior Economist the Research Department and Juan Chacaltana, Senior Employment Specialist in ILO Lima

    Te analysis provided in theGlobal Employment rends series is only as good as the avail-able input data. We take this opportunity to thank all institutions involved in the collectionand dissemination o labour market in ormation, including national statistical agencies anthe ILO Department o Statistics. We encourage additional collection and dissemination ocountry-level data in order to improve the analysis o employment trends provided in utuupdates o this report.

    We would like to express our thanks to colleagues in the ILO Department o Commu-nication and Public In ormation or their continued collaboration and support in bringingthe Global Employment rends to the medias attention worldwide.

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    9

    Preface

    Te global labour market situation remains uneven and ragile. rue, there are encouragingsigns o economic recovery in those advanced economies most affected by the global nancrisis which erupted in 2008. Also, a number o emerging and developing countries includirecently in Sub-Saharan A rica are enjoying relatively robust economic growth. Te worleconomy may thus be growing somewhat aster than over the past three years.

    However, the report nds that those economic improvements will not be sufficient toabsorb the major labour market imbalances that built up in recent years. First, over the or

    seeable uture, the world economy will probably grow less than was the case be ore the glcrisis. Tis complicates the task o generating the over 42 million jobs that are needed ever year in order to meet the growing number o new entrants in the labour market.

    Second, and more undamentally, the root causes o the global crisis have not been proerly tackled. Te nancial system remains the Achilles heel o the world economy. Te state omany banks is such that many sustainable enterprises, notably small ones, have limited acceto credit, thereby affecting productive investment and job creation. Signi cant nancial bubbles have re-appeared in a number o advanced and emerging economies, adding new uncetainties and affecting hiring decisions. Also, global labour incomes continue to increase at slower pace than justi ed by observed productivity gains, thus affecting aggregate demand

    Tird and this is an important new nding in view o the post-2015 developmentdebate little progress is being made in reducing working poverty and vulnerable ormo employment such as in ormal jobs and undeclared work. I con rmed, this trend wouunambiguously delay the achievement o development goals.

    o ensure lasting job recovery, the report highlights the role o a strategy that combineshort-term measures (job- riendly macroeconomic and labour market policies) with urtheaction to tackle long-standing imbalances. Such a strategy would strengthen the economirecovery and pave the way or more and better jobs.

    R Director o the ILO Research Department

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    11

    Executive Summary

    Global unemployment increased by 5 million people in 2013

    Te uneven economic recovery and successive downward revisions in economic growth pro jections have had an impact on the global employment situation. Almost 202 million peopl were unemployed in 2013 around the world, an increase o almost 5 million compared withe year be ore. Tis re ects the act that employment is not expanding sufficiently ast keep up with the growing labour orce.

    Te bulk o the increase in global unemployment is in the East Asia and South Asiaregions, which together represent more than 45 per cent o additional jobseekers, ollowed

    Sub-Saharan A rica and Europe. By contrast, Latin America added ewer than 50,000 aditional unemployed to the global number or around 1 per cent o the total increase in un-employment in 2013.

    Overall, the crisis-related global jobs gap that has opened up since the beginning o thnancial crisis in 2008, over and above an already large number o jobseekers, continues

    widen. In 2013, this gap reached 62 million jobs, including 32 million additional jobseeker23 million people that became discouraged and no longer look or jobs and 7 million economically inactive people that pre er not to participate in the labour market.

    and, on current trends, it would rise by a further 13 million people by 2018

    I current trends continue, global unemployment is set to worsen urther, albeit graduallreaching more than 215 million jobseekers by 2018. During this period, around 40 million nenew jobs would be created every year, which is less than the 42.6 million people that are expecto enter the labour market every year. Te global unemployment rate would remain broadlyconstant during the next ve years, at hal a percentage point higher than be ore the cris

    affecting young people disproportionately

    Young people continue to be particularly affected by the weak and uneven recovery. It is esmated that some 74.5 million young people aged 1524 were unemployed in 2013; tha

    is almost 1 million more than in the year be ore. Te global youth unemployment rate hasreached 13.1 per cent, which is almost three times as high as the adult unemployment rateIndeed, the youth-to-adult unemployment ratio has reached a historical peak. It is particu-larly high in the Middle East and North A rica, as well as in parts o Latin America and tCaribbean and Southern Europe.

    Importantly, in the countries or which in ormation exists, the proportion o young people neither in employment, nor in education or training (NEE ) has continued the steepupward trend recorded since the start o the crisis. In certain countries, almost one-quarteo young people aged 15 to 29 are now NEE .

    intensifying long-term unemployment in advanced economies

    As the recovery remains weak, the average length o unemployment spells has increased csiderably, a urther sign o eeble job creation. In many advanced economies, the duration

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    12 Global Employment Trends 2014 | Risk of a jobless recovery?

    unemployment has doubled in comparison with the pre-crisis situation. In the crisis coun-tries in the euro area, or instance, the average duration o unemployment has reached up to9 months in Greece and 8 months in Spain. Even in countries where encouraging signs o aneconomic recovery have appeared, such as the United States, long-term unemployment affectmore than 40 per cent o all jobseekers.

    Such long unemployment spells are detrimental to the speed o labour market recoveryeven when economic activity is set to accelerate. First, they constitute a considerable burden

    or the public purse, requiring governments to raise taxes or cut spending elsewhere i thedo not want to or cannot increase the scal de cit. More importantly, jobseekers who havebeen out o employment or long periods lose their skills at an accelerating pace, making more difficult or them to nd alternative employment at a similar occupation or skill level

    and interrupting earlier progress in terms of, first, participation rates

    Labour orce participation rates are not improving and remain more than 1 percentage pointbelow their pre-crisis level. Te drop in participation rates has been particularly pronouncedin East and South Asia, where many women have lef the labour market. At the same time,

    as educational attainment improves, young people enter the labour market at a higher age inthese regions, strengthening their uture labour market prospects. In the Developed Econ-omies region, on the other hand, participation rates have dropped as young workers in par-ticular do not see opportunities in the labour market. Other regions, such as Central andEastern Europe, experienced an increase in participation rates. Tere, and in other coun-tries with less well developed social security systems and which suffered rom large losses( ormal) employment, many previously economically inactive people returned to the labourmarket, ofen to take up in ormal employment in order to make up or loss in householdincome.

    second, vulnerable employment, expected to have reached 48 per cent of total employment

    Vulnerable employment that is, either sel -employment or work by contributing amily workers accounts or almost 48 per cent o total employment. Persons in vulnerableemployment are more likely than wage and salaried workers to have limited or no access tosocial security or secure income. Te number o people in vulnerable employment expanded byaround 1 per cent in 2013, which is ve times higher than during the years prior to the crisis

    third, working poverty, with 839 million workers living on less than US$2 a day

    Te number o working poor continues to decline globally, albeit at a slower rate than during

    previous decades. In 2013, 375 million workers (or 11.9 per cent o total employment) are estmated to live on less than US$1.25 per day and 839 million workers (or 26.7 per cent o totaemployment) have to cope with US$2 a day or less. Tis is a substantial reduction in compar-ison with the early 2000s when the corresponding numbers o working poor below US$1.25and US$2 were more than 600 million and more than 1.1 billion, respectively. However, the progress in reducing working poverty has stalled. In 2013, the number o workers in extrem poverty declined by only 2.7 per cent globally, one o the lowest rates o reduction over t past decade, with the exception o the immediate crisis year.

    and finally, stubbornly high informal employment.

    In ormal employment remains widespread in most developing countries, although regional variations are sizeable. In Eastern Europe, CIS countries and a ew advanced economiesin ormal employment still accounts or over 20 per cent o total employment. In Latin

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    Executive Summary 13

    America, some countries have made good progress in maintaining in ormality rates belo50 per cent but low-income Andean and Central American countries continue to experiencerates o 70 per cent or more. Signi cantly higher in ormality rates can be ound in economin South and South-East Asia. In some countries in these regions, in ormality rates reacup to 90 per cent o total employment. Even though progress in reducing poverty has beestrongest in these regions, the lack o ormal employment opportunities is likely to constitua barrier to a sustainable urther reduction in poverty.

    Tackling the employment and social gaps requires job-friendly macroeconomic policies

    A aster recovery in global labour markets is held back by a de cit o aggregate demandthis respect, the scal consolidation currently under way in many advanced economies consttutes a drag on aster expansion o output growth, in addition to weak private consumptionTis report shows that a rebalancing o macroeconomic policies and increased labour income would signi cantly improve the employment outlook. Simulation results suggest that in highincome G20 countries, such a rebalancing could reduce unemployment by 1.8 percentag points by 2020, which corresponds to 6.1 million additional jobs. Tese achievements would

    also support scal goals. Indeed, simulation results suggest such a policy approach wouresult in a signi cant improvement over the baseline status quo scenario.Monetary policy continues to be accommodative, providing a bene cial stimulus to

    aggregate demand. Estimates o the impact o the current monetary policy regime show thunemployment would have been 12 percentage points higher in large advanced economiei policy-makers had not undertaken swif monetary action in the ace o the nancial crisRecent trends, however, indicate that an increasing share o the additional liquidity generateby such accommodative monetary policy is owing into asset markets rather than into thereal economy. Tis is generating the risk o uture stock and housing price bubbles, potential weighing on sustainable job recovery.

    Given weak demand, uncertain sources o uture demand and ample liquidity, large rmhave tended to buy back shares and increase dividend payments to shareholders, rather thaninvesting in the real economy. Estimates show that in certain countries hiring uncertaintycan exercise upward pressure on unemployment over and above weak aggregate demand, effect that can persist even when the recovery in economic activity is taking up. Te result ia urther constraint on employment creation.

    and greater attention to labour market and social policies

    With 23 million people estimated to have dropped out o the labour market due to discouragement and rising long-term unemployment, active labour market policies (ALMP) need

    to be implemented more orce ully to address inactivity and skills mismatch. Indeed, wmore and more potential workers becoming discouraged and remaining out o the labouorce, the risk o skills degradation and obsolescence is increasing. However, currently o

    small amounts o public spending go into active labour market measures. Even in OECDcountries, which tend to have relatively advanced institutions and practices in this respectan average o less than 0.6 per cent o GDP was spent on such measures in 2011. Estimashow that by bringing spending up to 1.2 per cent o GDP, similar to those countries thatspend the most on ALMP, an additional 3.9 million jobs could be created in the DevelopedEconomies and European Union region. Regions that currently spend the least on activelabour market policies are likely to bene t the most in terms o an improved unctioning their labour markets.

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    1. Macroeconomic challenges and globallabour market developments

    Some positive signs in advanced economiesamidst deceleration in emerging economies

    In 2013, global economic growth slowed down to 2.9 per cent, its lowest rate since 2009 anmore than 1 percentage point below the average annual growth rate over the pre-crisis decad( gure 1). Economic growth in emerging economies slowed down signi cantly whereas modest pick-up in activity was recorded in advanced economies towards the end o the ye

    However, downside risks continue to predominate at the global level as aggregate demand weak and macroeconomic uncertainty remains elevated. Weaker economic growth in emerging and developing countries re ects both low aggre

    gate demand, particularly or their exports, and global nancial instability associated wimacroeconomic policy conditions in advanced economies. Recent out ows o capital roemerging markets in expectation o a less accomodative monetary policy stance in the UnitStates have highlighted their vulnerability to volatile capital ows and external policy devopments. Te slowdown in emerging and developing countries is also a result o adjustmen problems that have clouded the medium-term economic horizon. Afer a rapid catch-up, somelarge emerging and developing countries are acing signi cant bottlenecks, notably in termsin rastructure and human capital, which are likely to weigh on growth in the coming years

    In 2013, the Developed Economies and European Union region grew at a meagre rateo 1.0 per cent, 0.4 percentage points lower than in the year be ore. Annual output growtin the United States decelerated rom 2.8 per cent in 2012 to 1.6 per cent in 2013, while th

    In act, according to some accounts, around one third o the effect o quantitative easing on the long-term interestin the United States was undone merely through expectations o a less accommodative monetary policy, raised by tU.S. Federal Reserve in May (World Bank, a).

    15

    Notes: * 2013 are preliminary estimates; 201415 are projections.

    Source: IMF, World Economic Outlook , October 2013.

    Figure 1. Global and regional GDP growth estimates and projections, 201115 (per cent)

    1

    6

    3

    9

    Central andSouth-Eastern

    Europe(non-EU)and CIS

    DevelopedEconomies

    and EuropeanUnion

    East Asia Latin Americaand the

    Caribbean

    Middle East North AfricaSouth-EastAsia and

    the Pacic

    South Asia Sub-SaharanAfrica

    WORLD

    2011 2012 2013* 2014 p 2015 p

    0

    A n n u a l

    G D P g r o w

    t h ( % )

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    1. Macroeconomic challenges and global labour market developments 17

    South-Eastern Europe and CIS, Latin America and the Caribbean and South-East Asia andthe Paci c. As a consequence, the crisis-related global jobs gap, measuring the number jobs lost in comparison to pre-crisis trends, widened urther to 62 million workers in 201( gure 3). Te jobs gap includes not only the increase in unemployment, but also those people who have remained outside or dropped out o the labour orce afer having been discouragby long spells o unemployment and/or perceived low prospects o nding new job opportuities. At the global level, the ILO estimates a total o 23 million people are currently in thsituation, so called discouraged workers. As unemployment continues to persist, by 2018 tglobal gap is projected to rise to 81 million; this includes some 30 million discouraged worke who might never come back to the labour market.

    Te global unemployment rate remained at 6.0 per cent o the global labour orce,unchanged rom 2012. Te number o unemployed around the world is estimated to havereached 201.8 million in 2013, an increase o 4.9 million rom a revised 196.9 million in previous year. Tere were 31.8 million more unemployed persons around the world in 2013than in 2007, prior to the onset o the global economic crisis ( gure 4). On the basis o curremacroeconomic projections, the ILO expects little improvement in the global labour markein 2014, with the global unemployment rate ticking up to 6.1 per cent and the number o unemployed rising by a urther 4.2 million.

    Figure 3. The crisis-related global jobs gap

    2550

    2850

    3000

    3150

    3300

    2700

    3450

    Notes: * 2013 are preliminary estimates; 201418 are projections. The graph shows the global jobs gap, i.e. the differencebetween the actual or projected evolution of total employment on the one hand and employment as implied by the pre-crisistrend on the other hand.

    Source: ILO, Trends Econometric Models , October 2013.

    1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* 2014p 2015p 2016p 2017p 2018p

    Pre-crisis trend62 mil

    81 mil

    Estimated/Projected

    Upper and lower boundof the condence interval

    around the baseline forecast

    E m p

    l o y m

    e n

    t ( m i l l i o n s )

    Figure 4. Global unemployment trends and projections, 200318

    140

    160

    170

    180

    190

    200

    210

    150

    220

    4.8

    5.2

    5.4

    5.6

    5.8

    6.0

    6.2

    6.4

    5.0

    6.6

    Note: * 2013 are preliminary estimates; 201418 are projections. The graph displays past trends and projections for globalunemployment.

    Source: ILO, Trends Econometric Models , October 2013.

    2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* 2014p 2015p 2016p 2017p 2018p

    Totalunemployment

    Unemployment rate

    U n e m p

    l o y m e n

    t ( m i l l i o n s ) U

    n e m pl o y m

    e n t r a t e

    ( % )

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    1. Macroeconomic challenges and global labour market developments 19

    employment-to-population ratio stood at 72.2 per cent and the emale ratio at 47.1 per centboth essentially unchanged rom the previous year. Te global male unemployment rate edge

    up to 5.8 per cent in 2013 rom 5.7 per cent in 2012, while the rate or women remaineunchanged at 6.4 per cent. Te employment-to-population ratio and unemployment rate indi-cators paint a picture not o a sharp or abrupt deterioration in the global labour market in2013, but rather o a continued, gradual weakening, which is a result o the combination persistently elevated unemployment rates combined with a gradual decline in the growth rato the worlds working-age population.

    Table 1. Global, regional and country-specific estimates and projectionsof the total unemployment rate, 200716 (percentage points)

    Country/region 2007 2012 2013* 2014 p 2015 p 2016 p

    World 5.5 6.0 6.0 6.1 6.1 6.1G20 Economies 5.1 5.7 5.8 5.8 5.8 5.8G20 Advanced Economies 5.7 8.4 8.4 8.4 8.3 8.1G20 Emerging Economies 4.9 4.9 5.0 5.1 5.1 5.1

    Developed Economies and the European Union 5.8 8.6 8.6 8.6 8.4 8.2Australia 4.4 5.2 5.6 5.7 5.7 5.8Canada 6.0 7.2 7.1 7.0 7.0 6.9Japan 3.9 4.3 4.1 4.0 4.0 4.0United States 4.7 8.2 7.5 7.2 6.8 6.4European Union 7.2 10.5 11.0 11.1 11.1 10.9

    France 8.0 9.9 10.5 10.9 10.8 10.7Germany 8.6 5.4 5.3 5.3 5.4 5.4Italy 6.1 10.7 12.2 12.6 12.7 12.7United Kingdom 5.4 8.0 7.5 7.3 7.2 7.1

    Central and South-Eastern Europe (non-EU) and CIS 8.2 8.0 8.2 8.3 8.2 8.2Russian Federation 6.0 5.5 5.8 5.8 5.8 5.8

    Turkey 10.3 9.2 9.9 10.0 9.7 9.6Middle East 10.2 10.9 10.9 11.0 10.9 10.8

    North Africa 11.1 12.1 12.2 12.2 12.1 12.1

    Sub-Saharan Africa 7.5 7.6 7.6 7.6 7.5 7.5

    South Africa 22.3 25.0 25.3 25.2 25.1 25.1

    Latin America and the Caribbean 6.9 6.6 6.5 6.5 6.5 6.5Argentina 8.5 7.2 7.3 7.4 7.4 7.3Brazil 8.1 6.9 6.7 6.6 6.5 6.5Mexico 3.4 4.9 5.0 4.9 4.8 4.7

    East Asia 3.8 4.4 4.5 4.7 4.8 4.9Republic of Korea 3.2 3.2 3.2 3.3 3.3 3.4

    South-East Asia and the Pacific 5.5 4.1 4.2 4.3 4.3 4.3Indonesia 9.1 6.1 6.0 6.0 6.0 6.0

    South Asia 4.1 3.9 4.0 4.0 4.1 4.1

    Notes: * 2013 are preliminary estimates; 201418 are projections. Estimates and projections for individual G20 countries are shownonly when they are based on a minimum number of actual data points. Figures might differ f rom national estimates or those publishedin the Panorama Laboral (ILO, 2013a), mainly as a result of differences in geographical coverage.

    Source: ILO, Trends Econometric Models , October 2013.

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    20 Global Employment Trends 2014 | Risk of a jobless recovery?

    Box 1. What explains differences in unemployment projections?

    As in previous editions of Global Employment Trends , globaland regional unemployment levels and rates have beenrevised to take into account new information as it becomesavailable and revisions in economic growth projections.This box provides an overview of the revisions since thelatest projection update in July 2013 (table B1.1). A distinc-tion is made between revisions due to differences in thevarious input data used in Trends Econometrics Models (TEM) including national unemployment rates, changes inGDP growth rate estimates and projections and changesin labour force and population estimates.

    New data on unemployment rates. Revisions in the histor-ical unemployment data come either from revisions madeby the original sources or from the fact that sometimes datareleases from national labour force surveys contain a sub-stantial time lag, which can be up to 1 or 2 years or evenmore in some rare cases.

    Overall, there were 37 new observations in TEM October2013 as compared to the TEM July 2013; 17 of these newdata points refer to the period 200011, and 20 refer to2012. For example, there were six more observations forAzerbaijan (200005), five more observations for Kuwait(200608, 201011), two more observations for Qatar(2006 and 2008) and one more observation for Tajikistan(2009).

    In addition, the unemployment rate for India (2012) wasrevised upwards as the results of the all-India householdsurvey (68th round survey programme during the periodJuly 2011 to June 2012, conducted by the National SampleSurvey Office) became available. This survey is the inter-nationally comparable and utilized source for the historicalseries for the Indian unemployment rate.

    Moreover, prior to 2012 there were some substantiverevisions on some of the unemployment rate input data.For example, the unemployment rate was revised upwards

    by more than 1 percentage point for Colombia (200206) and Tunisia (2005), and the unemployment rate forArmenia (2008) was revised downwards by about 12 per -centage points.

    In both TEM July and October 2013, unemploymentestimates were preliminary for 52 countries for which onlysome quarters were available at the end of 2013. In the

    most recent model run (TEM October 2013), the mostrecent quarter available was the third quarter, whereas inthe previous model run, the most recent quarter availablewas the second. However, even with the additional informa-tion, the point estimate for these countries did not changesignificantly.

    GDP growth rates. Taken from the IMFs World EconomicOutlook (WEO) database, GDP growth estimates and fore-casts change from one version of the WEO to another. Forexample, between the WEO October 2013 and the WEOJuly 2013 update, the GDP growth rate for Botswana wasrevised, specifically, for 2009 it was revised downwards by3.1 percentage points. For 2012, the global GDP growthrate was revised upwards by 0.1 percentage points. For2013, the global GDP growth rate was revised down-wards by 0.2 percentage points. Such revisions of GDPand unemployment input data can also lead to revisionsin the estimated relationship between the unemploymentrate and the GDP growth rate, resulting in further revi-sions to global and regional estimates of key labour marketindicators.

    The baseline estimate of the global unemployment ratein 2012 and 2013 has been revised upwards respectivelyby 0.04 and 0.01 percentage points. In 2012 and 2013,respectively, 36 and 46 per cent of the revision was causedby GDP growth rate revisions, and 64 and 54 per cent wascaused by changes in the unemployment input data. How-ever, the current estimates remain within the confidenceinterval that accompanied the previous forecasts.

    Labour force estimates. The newest version of the ILOEconomically Active Population Estimates and Projections (EAPEP) database (2013 edition) provided a new labourforce benchmark for the GET estimates. In the meantime,the all-India household survey referring to 2012 became

    available. At the global level, this revision reduced thelabour force estimate for 2012 by 12.4 million, which trans -lated into a reduction in the estimated global participationrate of 0.2 percentage points. Overall, the impact of thelabour force revision on the global unemployment rate wasnegligible compared with the revisions of GDP growth ratesand unemployment input data.

    Table B1.1. Comparison of unemployment estimates/projections from July and October 2013

    2007 2008 2009 2010 2011 2012 2013* 2014 p 2015 p 2016 p 2017 p 2018 p

    Unemployment (millions)

    TEM, October 2013 170.0 177.0 197.9 195.2 193.9 196.9 201.8 206.0 208.8 211.0 213.1 215.2TEM, July 2013 169.9 178.3 197.8 195.0 193.2 196.3 202.2 205.9 208.5 210.6 212.7 214.8

    Unemployment rate (per cent)TEM, October 2013 5.5 5.6 6.2 6.1 6.0 6.0 6.0 6.1 6.1 6.1 6.1 6.0TEM, July 2013 5.5 5.7 6.2 6.1 5.9 5.9 6.0 6.0 6.0 6.0 6.0 6.0

    * 2013 are preliminary estimates; 201418 are projections.

    Source: ILO, Trends Econometric Models , July and October 2013.

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    1. Macroeconomic challenges and global labour market developments 21

    Labour market situation of youth worsens further

    Te labour market outlook or young people worsened in nearly every region o the world. Teglobal youth unemployment rate rose to 13.1 per cent in 2013, rom 12.9 per cent in 2012 an11.6 per cent in 2007. Te largest increase occurred in the Middle East region. Tis region hasone o the highest youth unemployment rates in the world, with 27.2 per cent o young peopin the labour orce without work in 2013, versus 26.6 per cent in 2012. Central and SouthEastern Europe and CIS, East Asia, South-East Asia and the Paci c and North A rica all sa substantial increase in youth unemployment rates ( gure 6). In the Developed Economieand European Union, the region that registered the largest increase in youth unemploymentrates over the period 200712, unemployment among young people rose urther to 18.3 pecent o the youth labour orce.

    In total, 74.5 million young people aged 1524 were unemployed in 2013, an increaseo more than 700,000 over the previous year. Tere were 37.1 million ewer young peopin employment in 2013 than in 2007, while the global youth population declined by only8.1 million over the same period. Te global youth labour orce participation rate, at 47.4 pecent in 2013, remains more than 2 percentage points below the pre-crisis level, as more youn

    people, rustrated with their employment prospects, continue to drop out o the laboumarket. Te global youth unemployment rate is expected to edge up to 13.2 per cent in 2014, with increases projected in the three Asian regions and in the Middle East, partially offset ba projected decline in the Developed Economies and European Union region.

    Te share o young people (aged 1529) that are neither in employment, nor in educationor training (NEE ) has risen in 30 out o the 40 countries or which data are available or 20and 201112 (see gure 7). In Ireland and Spain, the NEE rate rose by more than 9.4 and8.7 percentage points respectively since 2007. In both countries, the NEE rate is over 20 pecent. Te largest declines in NEE rates occurred in urkey and Macedonia, but in both coun-tries, the NEE rate remains very high, at 34.6 per cent in urkey in 2011 and 32.1 per cent iMacedonia in 2012. NEE rates are also high in Brazil where they stood at 18.4 per cent in 200 with considerable heterogeneity among labour market groups; only 12.1 per cent o Brazilimales were NEE but it affected 21.1 per cent emales and even rose to 28.2 per cent amoA ro-Brazilian emale youth, a particularly high-risk group. High and/or rising NEE rates aa major concern or policymakers, as this group is neither engaged in employment, nor investin skills development. Young people that are among the NEE s may be less engaged and modissatis ed with their societies than their peers who are employed or in the educational system

    Note: * 201213 are preliminary estimates.

    Source: ILO, Trends Econometric Models , October 2013.

    C h a n g e

    i n u n e m p

    l o y m e n

    t r a

    t e

    ( p e r c e n

    t a g e p o

    i n t s )

    Figure 6. Average annual change in the youth unemployment rate, selected time periods (percentage points)

    0.50

    0.25

    0.50

    0.75

    1.00

    0.25

    1.25

    Central andSouth-Eastern

    Europe (non-EU)and CIS

    DevelopedEconomies

    and EuropeanUnion

    East Asia Latin Americaand the

    Caribbean

    Middle East North AfricaSouth-EastAsia and

    the Pacic

    South Asia Sub-SaharanAfrica

    WORLD

    200712 201213*

    0

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    22 Global Employment Trends 2014 | Risk of a jobless recovery?

    Where are the decent jobs?

    In addition to the slowdown in employment and increase in unemployment, the last yearhas also seen a notable deceleration in wage employment growth, which expanded by only28.1 million in 2013, down sharply rom the annual growth o more than 35 million over the previous two years. Central and South-Eastern Europe and CIS, East and South Asia saw thelargest deceleration in wage employment growth as compared with 2012. Wage employmentgrowth was also down in comparison with pre-crisis trends. I the pre-crisis trend in the wageemployment share since 2000 had continued, there would now be almost 22 million more workers in wage employment as opposed to vulnerable employment (table 2). Tis gap com- pared with pre-crisis trends is expected to increase to more than 60 million by 2018. In contrastto wage employment trends, vulnerable employment around the world increased by 13.4 mil-lion in 2013 compared with an increase o only 5.3 million in 2012 and 3.3 million in 2011.

    Vulnerable employment comprises own-account workers and contributing amily workers, two employment groups onaverage characterised by higher poverty rates and limited social protection.

    Source: ILO, Key Indicators of the Labour Market , 8th edition, table 10c.

    NEET rate (%)

    Figure 7. Young people that are neither in employment, nor in education or training (NEET) as the share of the population aged 1529 (2007 and most recent year)

    0 5 10 15 20 25 30 35 40 45

    2007Most recent year

    NetherlandsLuxembourg

    IcelandNorway

    SwedenSwitzerland

    AustriaSlovenia

    DenmarkGermanyAustralia

    FinlandMalta

    Czech RepublicCanada

    BelgiumLithuania

    New ZealandFranceEstonia

    PortugalUnited Kingdom

    PolandUnited States

    LatviaCyprus

    HungaryCroatia

    Korea, Rep. of Romania

    BrazilIrelandGreece

    ItalySpain

    BulgariaMexico

    IsraelMacedonia, FYR

    Turkey

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    1. Macroeconomic challenges and global labour market developments 23

    By sector, services accounted or more than hal o total global employment growth2013, while agricultural employment accounted or around one quarter. Overall, just below32 per cent o the worlds work orce was employed in the agricultural sector in 2013, a deco 11.7 percentage points over the previous two decades. Te services sector employed 45.1 pcent o the worlds workers in 2013 and the share o services workers increased by 10.1 pcentage points over the same period. Industrial employment now accounts or around 23 pe

    cent o all global employment, an increase o only 1.6 percentage points over the past tdecades. In 2013, employment in industry grew by 9.7 million, compared with an average more than 21 million new industrial jobs annually between 2010 and 2012.

    Labour productivity growth trends provide urther insights related to these observedglobal labour market dynamics. Global productivity growth (measured as growth in outpu per worker) declined rom 1.6 per cent in 2012 to 1.4 per cent in 2013, reaching its seconlowest value at any time over the past decade ( gure 8). In this light, the output o rms aneconomies is growing slowly both because labour input has not increased substantially an productivity is growing more slowly compared with past years.

    Slower productivity and employment growth have coincided with a strong recovery incorporate pro ts and global equity markets. Te F SE global all cap index, which tracks7,200 publicly traded stocks across 47 countries, gained more than 18 per cent in the year tmid-December 2013 and had risen more than 158 per cent since the low reached in March2009. Te year 2013 saw a urther widening between trends in global pro t growth and equity prices on the one hand and the global labour market on the other. Modest relative global waggrowth in recent years, coupled with a long-term decline in labour shares o national incomin many countries, provides urther evidence to this effect (ILO, 2013b).

    Table 2. The global wage employment gap (millions)

    2007 2012 2013* 2014 p 2015 p 2016 p 2017 p 2018 p

    Global wage employment actual/projected

    1394 1542 1570 1596 1622 1650 1676 1702

    Global wage employment continuation of pre-crisis trends

    1394 1557 1592 1626 1661 1695 1729 1763

    Global wage employment gap 0.0 15.4 21.6 30.2 38.3 45.2 52.9 60.6

    Notes: * 2013 are preliminary estimates; 201418 are projections.The table shows the global wage employment gap, i.e. the dif ferencebetween actual or projected wage employment on the one hand and wage employment as implied by the pre-crisis trend (200008)of the wage employment share on the other.

    Source: ILO, Trends Econometric Models , October 2013.

    Note: * 2013 are preliminary estimates.

    Source: ILO, Trends Econometric Models , October 2013; World Bank, World Development Indicators , 2013; IMF, World Economic Outlook , October 2013.

    Figure 8. Annual output growth per worker, world and regions, selected periods (per cent)

    1

    6

    4

    2

    8

    Central andSouth-Eastern

    Europe (non-EU)and CIS

    DevelopedEconomies

    and EuropeanUnion

    East Asia Latin Americaand the

    Caribbean

    Middle East North AfricaSouth-EastAsia and

    the Pacic

    South Asia Sub-SaharanAfrica

    WORLD

    19912007 200711 2012 2013*

    0 A n n u a l o u

    t p u

    t g r o w

    t h p e r w o r k e r

    ( % )

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    24 Global Employment Trends 2014 | Risk of a jobless recovery?

    Moreover, it is important to note that the large increases in global asset prices are occur-ring as interest rates set by central banks across much o the developed world remain at ornear the zero bound, with several large central banks still engaged in large-scale quantitativeeasing programmes. Te success ul efforts by central banks to keep interest rates low, whilegenerally being supportive o economic recovery, may have unintended consequences in termso rms incentives and the overall risk appetites o market participants. In many economies,share buybacks and dividends are at or near record levels, while hiring remains muted, as

    urther discussed in chapter 3.Te strong rise in asset prices in some countries that has accompanied the extraordi-

    nary monetary policy efforts raises concerns about potential bubbles, which could once againthreaten economic growth and labour market prospects. Moreover, strong increases in house prices in some countries may also have adverse knock-on effects on job creation through anegative impact on competitiveness, as will be argued in chapter 2 (box 3).

    High rates of informality hamper sustainable

    progress in poverty reductionIn developing countries, many workers are sel -employed in precarious conditions or areemployed on a casual basis without a contract and access to social security. Such orms oemployment are considered to be in ormal. Ofen, employment is in ormal out o necessity orthose not able to nd ormal jobs and in the absence o privately or publicly provided social protection. Sometimes, in ormal employment is a tactic to avoid taxation and regulation. Inmost cases, in ormal employment procures lower, more volatile pay and worse working con-ditions than employment in ormal arrangements. Women continue to ace a higher risk oin ormal employment than men, as they ofen have less legal and social protection. Being young in the labour market also increases the risk o in ormality. Finally, sel -employed people

    ace much higher risk o in ormality in developing countries, in part because the legal rame- work is weak in many such countries and due to their engagement in low-productivity activ-ities (e.g. street vending).

    New estimates o the share o workers in in ormal employment or 2011 show thatin ormal employment is particularly widespread in the Asian regions and in Latin Americaand the Caribbean, with a cross-country average o around 50 per cent ( gure 9). In ormalemployment also covers a large share o workers in A rica, at an average o 40 per cent. Esti-mates or Central and South-Eastern Europe and CIS and the Middle East are relativelylower, but still hover around or above 20 per cent on average. Bringing more workers out o

    Figure 9. Estimated informal employment shares, 2011 (per cent)

    0

    40

    60

    20

    80

    Africa Asiaand the Pacic

    Central andSouth-Eastern Europe

    Middle East Latin Americaand the Caribbean

    I n f o r m a l e m p

    l o y m e n

    t a s a s h a r e

    o f t o t a l e m p

    l o y m e n

    t ( % )

    Note: Mean, maximum, andminimum calculations are based on asample of 49 countries (8 countriesin Africa, 11 countries in Asia and thePacic, 11 countries in Central andSouth-Eastern Europe, 16 countriesin Latin America and the Caribbeanand 3 countries in the Middle East).

    Source: Davalos and Ernst,forthcoming; ILO staff calculations.

    J

    J

    J J

    J

    B

    B

    B

    B

    B

    H

    H

    H

    H

    H

    Mean

    Maximum

    Minimum

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    1. Macroeconomic challenges and global labour market developments 25

    in ormality remains crucial in order to reduce working poverty, improve working conditionand generate tax revenues that governments need to strengthen social wel are systems. However, in the past decade, the share o workers in in ormal employment declined in only 26 o 49 countries or which estimates are available.

    Unemployment is becoming more persistent

    Te average duration o unemployment has gone up in many economies ( gure 10). In theUnited States, the average unemployed worker ound a job afer 34 months o job searc prior to the crisis, but the average duration increased to around 6 months in 2012. In Spainunemployment duration increased rom around 5 months in 2008 to 8 months in 2012. InGreece, where the average unemployment duration has always been high, the unemployenow wait on average more than 9 months be ore getting back into the work orce, more tha1 month longer than in 2009. Other developed countries experienced similar increases inunemployment duration. In several developing and emerging countries, in contrast, the

    average unemployment duration has trended downwards and the global economic crisis hadonly a slight impact on unemployment duration. Only in South A rica did the average unemployment duration increase, rising by 0.5 months to more than 9 months over the period

    rom 2008 to 2011.Longer spells o unemployment can have persistent effects. As unemployment spel

    lengthen, labour market attachment tends to diminish and skills to depreciate. Te observedincrease in the average unemployment duration in some countries can make job searches hardand unemployment more persistent (e.g. Shimer, 2008). Tis change in the composition o theunemployment pool has likely been another actor inhibiting a labour market recovery.

    Unemployment comes with considerable personal and social costs, such as decreased lisatis action and stigmatization. Further, the scal cost o unemployment is ofen underestmated, both or the short term and or the medium to long term. Te most obvious short-term

    scal cost o an increase in unemployment is the immediate cost o higher unemploymebene ts and wel are payments. Spain, or example, has seen an increase in scal expendion unemployment bene ts and early retirement plans rom 1.5 per cent o GDP in 2007 t2.9 per cent in 2011, contributing to the increase in public debt in the country. For Ireland,

    Figure 10. Average unemployment duration in selected economies (months)

    3

    4

    6

    5

    7

    8

    9

    10

    Note: To calculate the average, unemployment is assumed to be distributed equally within the different durationcategories, e.g. the average unemployment duration of those unemployed for more than 3 and less than 6 months isassumed to be 4.5 months. The average unemployment duration of those unemployed for at least 12 months isassumed to be exactly 12 months.

    Source: ILO, Key Indicators of the Labour Market , 8th edition.

    2004 20052003 2006 2007 2008 2009 2010 2011 2012

    Spain

    Greece

    United Kingdom

    Canada

    United States

    Japan

    Turkey

    Brazil

    South Africa

    U n e m p

    l o y m e n

    t d u r a

    t i o n

    ( m o n t h s )

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    26 Global Employment Trends 2014 | Risk of a jobless recovery?

    this expenditure category has grown even aster, rom 0.9 per cent o GDP in 2007 to 2.6 percent o GDP in 2011. In addition to direct outlays, elevated unemployment levels indicatethat an economy is producing below potential, which, in turn, has a negative impact oneconomic growth and on associated tax revenues, orcing governments to either cut on theexpenditure side or increase their debt holdings.

    Unemployment can also have adverse scal effects in the medium- and long-term. Aslonger unemployment spells lower workers earnings throughout their careers, more tax rev-enues are oregone. Further, at least partly due to lower income, the unemployed tend tobecome less healthy on average than the employed, which increases the need or public healthexpenditures. Tese are costs that public budgets will have to address in the years to come.

    Economic uncertainty remains high, with negative effects on hiring

    One o the actors weighing on labour markets is hiring uncertainty that increased at theonset o the crisis in 2007 ( gure 11). Given the persistence o weak aggregate demand and the

    uncertainty about the strength and speed o uture recovery, rms may choose to wait or newin ormation and urther developments be ore investing and hiring (see also ILO, 2013c). In2013, uncertainty continued to be uelled in some countries by the lack o policy coordination

    Tese numbers were calculated on the basis o data rom Eurostat.

    Figure 11. Macroeconomic uncertainty in selected economies

    A. United States

    0

    20

    60

    40

    80

    100

    Note: Uncertainty indicators are shown on a scale from 0 to 100 for 200413.Source: Ernst and Viegelahn, forthcoming; Baker, Bloom and Davis, 2013.

    20052004 2006 2007 2008 2009 2010 2011 2012 2013

    Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3

    B. United Kingdom

    0

    20

    60

    40

    80

    100

    20052004 2006 2007 2008 2009 2010 2011 2012 2013

    Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3

    C. Italy

    0

    20

    60

    40

    80

    100

    20052004 2006 2007 2008 2009 2010 2011 2012 2013

    Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3

    D. France

    0

    20

    60

    40

    80

    100

    20052004 2006 2007 2008 2009 2010 2011 2012 2013

    Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3

    Policy Uncertainty Hiring Uncertainty

    Policy Uncertainty Hiring Uncertainty

    Policy Uncertainty Hiring Uncertainty

    Policy Uncertainty Hiring Uncertainty

    I n d i c a

    t o r v a

    l u e ( n o r m a

    l i s e

    d )

    I n d i c a

    t o r v a

    l u e

    ( n o r m a

    l i s e

    d )

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    1. Macroeconomic challenges and global labour market developments 27

    and the continued delaying o critical decisions. Tis elevated level o uncertainty is particlarly harm ul towards employment in economies with salary schemes that tie signi can

    components o managers salaries directly or indirectly to the short-term pro tability o co panies. Since investments require an up ront cost and generate a return only in the mediumor long term, there is little incentive or managers to invest (Smithers, 2013), and they ma

    nd it more attractive to buy back company shares or increase dividends (see chapter 3). Ithe uncertainty surrounding returns to productive investment is elevated, these incentives aredecreased urther. Business investment and hiring rates, as a consequence, decrease.

    Hiring uncertainty is a measure or the uncertainty that weighs on employers when theymake decisions about hiring new workers. In contrast, policy uncertainty intends to measurthe uncertainty that surrounds economic policy decisions o governments. Both hiring uncertainty and policy uncertainty are at elevated levels in most o the G7 economies when com pared with pre-crisis years ( gure 11). For all countries, both indicators o uncertainty ahighly correlated, which indicates that much o the uncertainty that is relevant or hirinmanagers is also related to decisions by policy-makers. Te hesitation o companies to inveis there ore unlikely to be driven merely by economic undamentals.

    Uncertainty may be a signi cant actor affecting unemployment in some countriesmaking it more persistent. For the United States, or instance, estimates indicate that thetrend in unemployment since 2007 can be largely associated with movements in outputgrowth. Te lack o aggregate demand has been the most important actor in the increaseo unemployment rates during the crisis. Uncertainty rather had a level-impact, shifing unemployment rates up by an additional 1.5 percentage points ( gure 12).

    How is the growth slowdown in emerging economiesshaping labour markets?

    Between 2011 and 2013, growth in emerging economies slowed markedly, another major trenshaping global labour markets ( gure 13). In the previous decade, China grew at 10.5 per ceannually, but growth decelerated to 7.6 per cent in 2013 and is expected to slow urther to aaverage o 7.0 per cent in the period rom 2014 to 2018. India grew at a rate o only 3.2cent in 2012. Even though growth reaccelerated to 3.8 per cent in 2013, this gure is still below the 7.6 per cent observed on average between 2001 and 2010. Brazil has also seen mo

    growth in 2013 compared with 2012, but growth ell short by more than 1 percentage point o

    See Appendix or a discussion o the ILO hiring uncertainty indicator and its setup.

    Figure 12. Contribution of hiring uncertainty to the increase in the unemployment rate since 2007 in the United States (percenta