CRISIS WATCH

ILO’s Global Employment Trends Report 2009

[Released in January 2009 during the ongoing downturn, the Global Employment Trends Report 2009 as well as the Global Employment Trends for Women Report 2009 (released on the eve of 8 March 2009) reveal disturbing patterns and trends of global (un)employment and the impact of the recession. Below are excerpts from GET 2009 (excerpts from the GE Trends for Women report will appear in the next issue). Not all the captions are quoted from the report – some are chosen by us. Ed/-]

After four consecutive years of decreases, the global unemployment rate increased from 5.7 per cent in 2007 to 6.0 per cent in 2008, rising for men to 5.8 per cent and for women to 6.3 per cent. The ranks of the unemployed increased by 10.7 million people between 2007 and 2008, which is the largest year-on-year increase since 1998. The global number of unemployed in 2008 is estimated at 190 million, out of which 109 million are men and 81 million are women.
Youth hit severely
...The global number of unemployed youth increased to 76 million, and the youth unemployment rate has increased by 0.4 percentage points in 2008.... Given the current economic downturn, the youth labour market situation is all the more worrisome in view of the lack of progress in addressing youth labour market issues during more prosperous years. As analysed in a recent report based on labour market data up to 2007, global trends suggest that little progress has been made in improving the position of youth in labour markets, and young people still suffer disproportionately from a deficit of decent work opportunities...
... The distribution of employment creation by region in Figure 3 shows that the three Asian regions account for the lion’s share of global employment creation....
Employment in agriculture goes down 
In 2008, the service sector further increased its share in employment, while the share of employment in agriculture declined. The service sector now accounts for 43.3 per cent of all employment in the world, whereas agriculture accounts for only 33.5 per cent. Ten years ago, the share of employment in agriculture was 40.8 per cent. Employment in the industrial sector, which saw declines in the second half of the 1990s and the early 2000s, continues its upward trend of more recent years. In 2008, 23.2 per cent of all jobs were found in this sector....
They have work – but only in jobs that violate their rights and dignity 
On the basis of the new poverty estimates, the share of working poor (USD [US Dollar – Ed.] 1.25 a day) in total employment is estimated at 20.6 per cent in 2007, a decrease of 12.1 percentage points over 1997. Sub-Saharan Africa and South Asia stand out as regions with extremely harsh labour market conditions, while levels of working poverty are also considerable in South-East Asia and the Pacific, and East Asia. In the Middle East, North Africa and in Latin-America and the Caribbean the share of the extreme working poor in total employment has fallen below 10 per cent in recent years. Taking a broader measure of working poverty (USD 2 a day), ...around four fifths of the employed are classified as working poor in Sub-Saharan Africa and South Asia in 2007.
In all these regions the majority of workers do not enjoy the possible security that wage and salary jobs could provide. Taking into account that a wage and salary job in poor regions may still not ensure all the components of a decent job, it becomes understandable that only a minority of working people have a job that is well paid, respects their fundamental rights and ensures some security in case of job loss, personal or family illnesses, or other difficulties.
... ... many of the poor cannot survive without working. Unemployment is “unaffordable” for them given that they often have no savings and cannot fall back on social security. A large proportion of workers in developing economies can only react in one way when economic situation deteriorates and the cost of living rises: they have to work even more and/or they have to pick up any work available, independent of the conditions of this work….people who lose their wage and salaried employment will join the ranks of the vulnerably employed, having to work as own-account workers and unpaid contributing family workers; new entrants into labour markets will have fewer chances to find decent and productive work in wage and salaried jobs and will also join the ranks of the vulnerably employed.
The first scenario projects trends in working poverty up to 2007 forward to 2008 and 2009, based on the revised economic outlook published by the IMF in November 2008. This scenario is likely to be overly optimistic, as it does not sufficiently take poverty and labour market developments in 2008 into account, and global growth in 2009 may well fall short of the November 2008 forecast. The second and third scenarios aim to quantify less favourable possibilities. In the second scenario, working poverty in 2008 is projected on the assumption that individuals who are at the fringe, i.e. just above the poverty line (by 5 per cent), will fall back into extreme poverty. This assumption is extended to those who are 10 per cent above the poverty line for 2009. In the third scenario, the assumption is made that individuals who are up to 10 percent above the poverty line will fall back into extreme poverty in 2008, and up to 20 per cent in 2009.
…In the other two scenarios the extreme working poverty rate would rise in both 2008 and 2009, in the third scenario by 6.1 percentage points in comparison with 2007. According to the latter scenario, South Asia is among the regions with the largest increase in extreme working poverty, more than 13 percentage points over 2007, which translates into 95 million people. This reflects the large number of workers just above the poverty line in this region. Globally, this number would amount to 203 million.
Scenarios for 2009: unemployment
The first set of scenarios is constructed focusing on what may happen with unemployment.
The results are summarized in Figure 5 and in Annex 2 (see Annex 5 for methodological details). The first scenario projects unemployment using the revised economic outlook published by the IMF in November 2008 and based on the relationship between economic growth and unemployment during 1991-2008. According to the IMF, global economic growth will slow down to 2.2 per cent in 2009.
In the Developed Economies and European Union, economic growth is projected to be negative (-0.3 per cent), and all other regions are also expected to slow down considerably. Only in Sub- Saharan Africa is the reduction in economic growth between 2008 and 2009 projected to be less than 0.5 percentage points, while this reduction is 2 points or more in Latin America and Caribbean as well as in Central and South Eastern Europe (non EU) & CIS. Based on current labour market trends, the first scenario would mean that the global unemployment rate may rise to 6.1 per cent in 2009, and 198 million people will be unemployed (see Table S1 and S2 in Annex 2). This is an increase of 18 million over the estimated number of unemployed in 2007.
The IMF announced in December 2008 that it is likely to revise its global forecast for 2009 downward again in January 2009. In other words, global economic growth in 2009 is likely to fall below the 2.2 per cent that was forecast in November 2008, and Scenario 1 can best be seen as an “optimistic” baseline scenario. 
The second scenario is based on the historical relationship between economic growth and unemployment at times of economic crises. In this scenario, the negative impact on unemployment is taken in each country at the time of the largest year-on-year drop in GDP, and this relationship is used to project global and regional unemployment for 2009. This scenario becomes more realistic if the economic outlook would deteriorate beyond what was envisaged in November 2008, it takes more time for financial markets to stabilize, for government interventions to have a positive impact, and for business and consumer confidence to be restored. As shown in Figure 5, according to the second scenario, the global unemployment rate would rise to 6.5 per cent, an increase of 0.8 percentage points over 2007. This would correspond to an increase of the global number of unemployed by 30 million people in comparison with 2007. The largest negative impact on the unemployment rate is seen in the Developed Economies and the European Union, where the unemployment rate would rise to 7.1 per cent. This rate translates into an additional 7 million people in 2009 over 2007 in this group of economies, two million more than in the first scenario.

Finally, in the third scenario, the unemployment rate is projected in each country as the rate in 2008 plus the largest change in unemployment since 1991 in the Developed Economies and the European Union and half of the largest increase in economies in other regions. In other words, the scenario shows what would happen if the worst impact on the unemployment rate would repeat itself simultaneously in all developed economies. The rationale for taking half of the worst impact in economies in other regions is that in developing economies the main impact of the current crisis is not necessarily reflected in the unemployment rate. The impact as captured in the vulnerable employment rate and changes in working poverty may be equally important.
According to the third scenario, the global unemployment rate would rise to 7.1 per cent, an increase by 1.4 percentage points over 2007. In the Developed Economies and the European Union, the unemployment would rise to 7.9 per cent. This would correspond to an increase in the global number of unemployed of 51 million people in comparison with 2007. It should be noted that in this region unemployment rates exceeding 8 per cent occurred in the early 1990s, but in some of the developing economies the unemployment rate would reach unprecedented levels in the third scenario.