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International Labour Office (ILO)

Global Employment Trends Brief

International Labour Office (ILO)

January 2006

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Global employment situation

Despite robust GDP growth in 2005, labour market performance worldwide was mixed, with more people in work than in 2004 but at the same time more unemployed people than the year before. Overall the global unemployment rate remained unchanged at 6.3 per cent after 2 successive years of decline.

At the end of 2005, 2.85 billion people aged 15 and older were in work1, up 1.5 per cent over the previous year, and up 16.5 per cent since 1995.2 How many of the new jobs created in 2005 were decent jobs is difficult to estimate at this point but given the experience of the last years it is not likely that it is the majority.

The last decade has witnessed a marginal decline in the global employment-to-population ratio, which is the share of the world’s working-age population (aged 15 years and older) that is in work. It stood at 61.4 in 2005, which is 1.4 percentage points lower than ten years ago (see figure 1 and table 3). The decrease was stronger among young people (aged 15 to 24). Within this group the global employment-to-population ratio decreased from 51.7 in 1995 to 46.7 in 2005. Part of this is explained by the increasing proportion of young people in education. Among adults (aged 25 years and older) the global employment-to-population ratio declined from 66.8 to 66.3 between 1995 and 2005. Examining the adult age range by sex reveals different trends between women and men: while the share of employed adult males fell by 1.3 percentage points to 80.8 per cent, the share of the adult female population that was in work grew. In 2005, 52.2 per cent of adult women were employed, compared with 51.7 per cent in 1995. The gap in the employment-to-population ratio between women and men thus has narrowed but remains wide.

Global employment and unemployment trends, 1995-2005

According to the latest IMF estimate3 global output continued to grow at a robust pace of 4.3 per cent during 2005. This was less than the 5.1 per cent increase in 2004. Global labour productivity (measured as output per worker) rose by 2.6 per cent in 2005, down from 3.0 per cent in 2004. Since 1995, global labour productivity has grown at an average annual rate of 2 per cent, while GDP has grown at an average annual rate of 3.8 per cent. As GDP growth is the sum of productivity growth and employment growth (or in simple words the additional output that is produced because people work more efficiently and because more people work) it becomes clear that over the last ten years growth was caused more because of a rise in productivity than because of a rise in employment. Such a trend is not necessarily threatening for workers if higher productivity growth leads to increasing wages, but as discussed below this is not always the case.

The world’s unemployment rate stood at 6.3 per cent, unchanged from the previous year and 0.3 percentage points higher than a decade earlier. In total, nearly 191.8 million people were unemployed around the world in 2005, an increase of 2.2 million since 2004 and 34.4 million since 1995 (see figure 1 and tables 1 and 3). Almost half of the unemployed people in the world are young people, a troublesome figure given that youth make up only 25 per cent of the working-age population. Young people are more than three times as likely as adults to be unemployed.

The largest increase in unemployment occurred in Latin America and the Caribbean, where the number of unemployed rose by nearly 1.3 million and the unemployment rate increased by 0.3 percentage points between 2004 and 2005 to 7.7 per cent. The Central and Eastern Europe (non-EU) and CIS region also witnessed a year-over-year increase in its unemployment rate, which stood at 9.7 per cent, up from 9.5 per cent in 2004. In all Asian region’s unemployment rates stayed almost unchanged in 2005: East Asia’s unemployment rate stood at 3.8 per cent, it thereby remains the lowest in the world; South Asia’s unemployment rate stayed at 4.7 per cent and South-East Asia and the Pacific’s unemployment rate was 6.1 per cent. At 13.2 per cent the Middle East and North Africa region remains the region with the highest unemployment rate in the world. Sub-Saharan Africa’s rate stood at 9.7 per cent. The only considerable decrease was observable in the Developed Economies and EU where it declined from 7.1 in 2004 to 6.7 in 2005 (see table 3).

A decline in unemployment rates does not in itself indicate a reduction in decent work “deficits”, as reducing unemployment is only the tip of the iceberg when it comes to promoting decent and productive work. In most of the developing world, “employment” and “unemployment” are crude measures of the state of people’s livelihoods and well-being. In developing countries, which often lack effective unemployment protection mechanisms, most people simply cannot afford to be unemployed. The focus in developing economies should therefore not be solely based on unemployment alone, but also on the conditions of work of those who are employed. In 2005, of the over 2.8 billion workers in the world, nearly 1.4 billion still did not earn enough to lift themselves and their families above the US$2 a day poverty line – just as many as ten years ago. Among these working poor, 520 million lived with their families in extreme poverty on less than US$1 a day (see table 4). Even though this is less than ten years ago it still means that nearly every fifth worker in the world has to face the almost impossible situation of surviving with less than US$1 a day for each family member. And this is true despite the fact that most of them work long and difficult hours, often under adverse conditions. Therefore, without a chance to get a decent job and work themselves and their families out of poverty, a large segment of the world’s population has little hope for a better life. This will be a continuous restriction to development.

Between 1995 and 2005 the global labour force (the sum of people employed and unemployed)4 grew by some 438 million workers, or 16.8 per cent. During the same period, the global youth labour force (aged 15 to 24 years) grew by only 4 per cent and the labour force participation rate5 of youth declined by 4.8 percentage points to 54.1 per cent. Again this can partly be explained by the rising share of young people in education. In 2005, women made up approximately 40 per cent of the world’s labour force.

Labour force participation rates 1995-2005

Among women, the overall participation rate decreased over the last ten years due to the decline in labour force participation of young women. This development differed by region: the Middle East and North Africa region witnessed an increase of female participation from very low historical levels. An increase also occurred in Latin America and the Caribbean. Overall, the trend of increasing labour force participation rates among women in the 1980s and early 1990s has come to a halt in regions such as South-East Asia and South Asia and has even reversed in Central and Eastern Europe (non-EU) and CIS, East Asia and sub-Saharan Africa. Male participation rates declined from 80.7 per cent to 78.7 per cent over the last ten years. This declining trend is consistent throughout all regions (see figure 2 and tables 2 and 3).

The labour market outcomes described above are the result of both the long-term evolution of the socio-economic environment in which people work as well as shorter term external shocks that impact on economic growth. The Global Employment Trends (GET) Brief 2006 focuses on the following selected labour market challenges6 that had and will have an impact on labour markets: 1) energy prices; 2) the importance of labour market recovery after natural disasters; 3) the impact of the phasing out of the Multi-Fiber Arrangement (MFA); 4) global wage inequalities; 5) sectoral employment shifts; and 6) labour market challenges as a result of migration.


Footnotes:
  1. The expression “in work” summarizes all people employed according to the ILO definition, which includes self-employed, employed, employers as well as unpaid family members. The words “employed” and “in work” are used as synonyms in this GET Brief.
  2. Country-level labour market information needed for the world and regional estimates is taken from ILO, Key Indicators of the Labour Market (KILM), 4th Edition (Geneva, 2005). For further technical information on the world and regional estimation processes, see www.ilo.org/public/english/employment/strat/wrest.htm.
  3. See IMF, World Economic Outlook, September 2005; available on website: www.imf.org/external/pubs/ft/weo/2005/02/data/index.htm.
  4. People outside the labour force are those who are voluntarily inactive and those that are discouraged to participate in labour markets for whatever reason.
  5. Labour force participation rates (LFPR) express the number of people that are active in the labour market (either employed or looking for work, thereby being considered as unemployed) as a share of the working-age population. Age-specific LFPR take the active people of that specific age group and compare it to the population within this group.
  6. This GET Brief discusses only a selection of pressing issues. Other important topics which impact the world of work – high youth unemployment rates all over the world, discrimination against women on labour markets, HIV/AIDS, outsourcing and the informal economy, for example – have been dealt with in greater detail in other Global Employment Trends reports as well as in the ILO’s recent Key Indicators of the Labour Market. All previous GET reports are available on website: http://www.ilo.org/trends.


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