Unemployment on the rise over next five years as inequality persists: ILO

ILO report says sluggish jobs recovery and social instability are the result of greater inequality

Unemployment will continue to rise in the coming years, as the global economy has entered a new period combining slower growth, widening inequalities and turbulence, warns a new report of the International Labour Organization (ILO).

By 2019, more than 212 million people will be out of work, up from the current 201 million, according to the World Employment and Social Outlook - Trends 2015 (WESO).

"More than 61 million jobs have been lost since the start of the global crisis in 2008 and our projections show that unemployment will continue to rise until the end of the decade. This means the jobs crisis is far from over so there is no place for complacency," ILO Director-General Guy Ryder said.

The employment situation has improved in the United States and Japan, but remains difficult in a number of advanced economies, particularly in Europe.

Vulnerable employment

Two regions, South Asia and Sub-Saharan Africa, accounted for three quarters of the world's vulnerable employment. East Asia is among the regions that are likely to make the biggest dent in vulnerable employment, which is expected to be reduced in the region from 50.2% in 2007 to 38.9% in 2019.

The employment situation has not improved much in Sub-Saharan Africa, despite better economic growth performance. And in the Arab region and parts of Latin America and the Caribbean the employment outlook has deteriorated.

The steep decline in oil and gas prices, if sustained, may improve the employment outlook somewhat in many advanced economies and several Asian countries according to some forecasts. By contrast, it will hit labour markets hard in major oil and gas producing countries, notably in Latin America, Africa and the Arab region.

Young workers aged 15-24 are particularly hit by the crisis, with a global youth unemployment rate of almost 13% in 2014 and a further increase expected in coming years. By contrast, older workers have fared relatively well since the start of the global financial crisis in 2008.

Middle classes in developing countries on the rise

In developing countries, the middle class now makes up more than 34% of total employment. The biggest progress has been in emerging and low-income countries.

"The good news is that the number of workers in vulnerable jobs and working poverty has fallen around the globe. However, it is still not acceptable that almost half of the world's workers lack access to basic necessities and decent work," Ryder said. "The situation is even worse for women."

Income inequality, unemployment and social unrest

Growing and persistent inequality and uncertain prospects for enterprise investment, the report explains, has made it difficult for countries to rebound from the crisis.

"If low wages lead people to consume less, and investment remains subdued, this obviously has a negative impact on growth. Income inequality in some advanced economies now approach levels observed among emerging economies. By contrast, the emerging economies made some progress in reducing their high levels of inequality," said the ILO head.

The report says income inequality will continue to widen, with the richest 10% earning 30 to 40% of total income while the poorest 10% will earn between 2 and 7% of total income.

These trends have undermined trust in governments and kept the risk of social unrest high, the report warns. Social unrest is particularly acute in countries and regions where youth unemployment is high or rising rapidly.

In line with the global unemployment rate, social unrest shot up since the beginning of the crisis in 2008, and has now reached levels almost 10% higher than before the crisis.

Only developed economies and countries in South-East Asia and the Pacific region have seen a reduction in social unrest - after peaks before or around the global crisis. But even there, levels of social unrest are significantly above historical averages.

Challenges ahead

Structural factors shaping the world of work, such as a declining labour supply - due in part to an aging population in many parts of the world - have subdued global economic growth, according to the report.

Other factors include major shifts in demand for skills. At the global level, the share of both low-skilled, non-routine jobs, such as security personnel and some personal care workers, and high-skilled non-routine cognitive jobs, such as lawyers and software engineers, has increased. By contrast, routine middle-skilled jobs - like book-keepers and clerical workers - are declining.

"The trends we see are worrying but we can improve the overall economic picture if we tackle underlying weaknesses, in particular the continued lack of aggregate demand, stagnation in the Eurozone, uncertain prospects for productive investment, especially among small enterprises, and mounting inequality," said Ryder.

Powered by Capital Market - Live News