Employment gap worsens globally

The International Labor Organization (ILO) has published this Wednesday a new report on the world of work. The document explains how the current crises are disproportionately affecting developing countries, and in turn worsening global employment disparities between high- and low-income countries. This further widens inequality already exacerbated by the COVID-19 pandemic. In other words, crises reinforce each other.

Under the title Global employment gap: low-income countries will fall further behind if action is not taken on jobs and social protection, the publication reveals that global unemployment will decrease to pre-pandemic levels in 2023, reaching 191 million people, which corresponds to a global unemployment rate of 5.3%. However, estimates indicate that low-income countries will continue to lag far behind in the recovery process.

According to the authors, low-income countries in Africa and the Arab region are unlikely to return to pre-pandemic unemployment levels by 2023. By contrast, other regions have managed to bring their rates below pre-crisis levels; In the case of Latin America and the Caribbean, unemployment is expected to be 6.7% compared to 8% in 2019. In the case of Europe, a rate of 6.3% is estimated, a percentage that reached 7.0% in 2019.

Want to work, but have no occupation

For its part, a new indicator developed by the Organization, the employment gap, offers a more specific measure of the unsatisfied demand for work, especially in developing countries. This indicator includes all people who would like to work but do not have an occupation.

Changes in the employment gap point to a global disparity. Low-income countries face a higher rate, at 21%, while in middle-income countries it stands at just over 11%. High-income countries have the lowest rates, at 8.2%. In addition, low-income countries are the only group of countries that have seen a long-term increase in the rate, from 19.1% in 2005 to 21.5% in 2023, the report says.

Debt constrains policy responses

For developing countries, rising debt levels considerably reduce the scope of public policy. Financial and fiscal difficulties hamper responses to complex challenges, including conflicts, natural disasters and economic crises that tend to reinforce each other (polycrises), and exacerbate the employment gap.

According to the report, debt-ridden low-income countries face a much higher employment gapup to 25.7% in 2023, compared to 11% in developing countries with low risk of debt distress.

Expand social protection

Despite the current context, the authors provide new evidence that higher investments in social protection policies would produce benefits economic, social and reduce the global employment gap. However, the document shows that there are significant deficiencies in this area in developing countries.

In this sense, the study analyzes the basic old age pensionsespecially in lower-middle-income and low-income countries, where only 38.6% and 23.2% of the elderly receive a pension, respectively, compared to 77.5% globally.

However, the Organization points out that the introduction of this pension in developing countries would increase its per capita GDP by 14.8% in 10 years and reduce extreme poverty (percentage of people living on less than $2.15 a day) by six percentage points, which would be a drastic decrease from the current rate of 15.5%.

“Financing social protection is difficult, but not impossible,” the report says. For developing countries, the annual cost of old-age pensions at the level of the national poverty lines would be equivalent to 1.6% of their GDP.

© ILO/Abdulhakeem Obadi/Gabreez

Two women workers weave traditional ma’awiz cloth by hand in Yemen.

Global Coalition for Social Justice

According to the Organization, the analysis makes a strong case for global financial support for the job creation and social protection during a period of multiple crises and shockswith the aim of ensuring that recovery and reconstruction leave no one behind and allow for long-term structural transformation.

The report highlights the vital importance of create fiscal space for social investments in low-income countries. This must be urgently considered as part of the current discussion on the reform of the international financial architecture.

“The findings of this report are powerful reminders of growing global inequalities. Investing in people through employment and social protection will contribute to reducing the gap between rich and poor nations and people”, declared the Director General of the Organization.

Gilbert F. Houngbo explained that, in this context, the Organization is promoting the Global Coalition for Social Justice. “This Coalition will bring together a wide diversity of multilateral agencies and stakeholders. It will help position social justice as the cornerstone of a global recovery, and make it a priority for national, regional and global policies and actions,” he added.