In the Addis Agenda, governments committed to generate full and productive employment and decent work for all and promote micro, small and medium-sized enterprises (MSMEs) to enable people to benefit from growth.
Despite strong economic growth, global real wage growth grew by only 1.8 per cent in 2017—the lowest since 2008 and far below growth rates seen prior to the global financial crisis. The labour share of income has been falling, while the profit share has been rising.
In high-income countries, wage growth has lagged labour productivity growth between 1999 and 2017, resulting in declining labour income shares in many countries.
Differences in labour productivity levels (measured as output per worker) across regions are persistent, the most striking being between the developed economies region and the rest of the world, as shown in the figure below. Indeed, in 2015, the average worker in a developed economy produced 20 times the annual output of an average worker in the developing region with the lowest labour productivity, Sub-Saharan Africa, and 2.5 times that of an average worker in the developed region with the highest labour productivity, Western Asia (based on productivity figures in constant 2005 United States dollars). In this context, manufacturing offers an opportunity not only to rebalance the economy towards higher value-added sectors but also to provide a relatively wide employment base with higher labour productivity. As countries develop, differences in wage levels among manufacturing industries tend to narrow, due to the rise in labour productivity in low-wage jobs.
Nevertheless, in terms of labour productivity growth, developing regions are in the lead, as observed in the below figure. Labour productivity has grown particularly fast in Asia and Oceania in the past several years. Between 2011 and 2015, productivity grew by 0.9 per cent per year on average in developed regions, while it rose 6.7 per cent per year on average in Eastern Asia, the region with the fastest productivity growth. This trend is favourable insofar as it could contribute to reducing productivity gaps between regions.
The global unemployment rate stood at 5.8 per cent in 2015, only slightly lower than in 2005 when the rate stood at 6.1 per cent, and in 2010 when it stood at 6 per cent. At the regional level, only Eastern Asia, Oceania and Sub-Saharan Africa had higher unemployment rates in 2015 than 2005. In the figure below, the detrimental effect of the global crisis on unemployment rates for developed countries is evident. However, in the developed region, unemployment rates declined the most in the few years before 2015, whereas they have risen or declined only moderately in all developing regions.
Unemployment affects population groups differently, with women and youth (defined as persons aged 15 to 24) having a higher risk of being unemployed at the global level than men and adults (defined as persons aged 25 and over), respectively. The ILO estimates that the global youth unemployment rate is expected to reach 13.1 per cent in 2016 and remain at that level through to 2017 (up from 12.9 per cent in 2015). This is very close to its historic peak in 2013 (at 13.2 per cent). As a result, after falling by some 3 million between 2012 and 2015, the number of unemployed youth globally will rise by half a million in 2016 to reach 71 million and will remain at this level in 2017.
As seen in the figure below, in 2015, only in South-eastern Asia, Eastern Asia and developed regions was the female unemployment rate lower than the male unemployment rate, and youth unemployment rates were significantly higher than the corresponding rates among adults in all regions.
The High Level Commission on Health Employment and Economic Growth (the Commission), chaired by the Presidents of France and South Africa, with the heads of ILO, OECD, and WHO as vice-chairs, submitted its report to the UN Secretary-General on September 20, 2016. The Commission report points to the health sector as a leading labour and economic sector, particularly so for women. For example, across a sample of 123 countries, women constitute 67 per cent of employment in the health and social sector. Women’s participation in the informal health care economy is substantial, though largely unquantified.
The Commission report makes 10 recommendations that speak to the opportunity to invest in and transform the global health workforce, as a means to concretely drive towards the goals of full and productive employment for all and gender equality (the Commission report explicitly cites Sustainable Development Goal targets 5.1, 5.4, and 8.5). The recommendations include a call for investments in creating decent health sector jobs, particularly for women; maximizing women’s economic empowerment through addressing inequities in education and the health labour market, including better recognizing and rewarding women’s unpaid care; scaling up education, training and skills, particularly for women and girls, with a focus on socially accountable and technical, vocational, education and training; and to harmonize data and methodology in order strengthen evidence, accountability, action, including a strong gender focus. As immediate next steps, the Commission calls for the development of a five-year action plan, harmonization and strengthening of health labour market data and analyses, as well as for the international community to support the scale up of professional, technical and vocational education and training that is required in 15-20 low-income countries.
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The unemployment rate is calculated as the number of unemployed persons expressed as a percentage of the labour force, where unemployed persons are those persons who, during the short reference period, did not work, were available to work and sought work.
Youth not in education, employment or training (NEET)
Finding reliable and comparable data on youth not in education, employment or training (also known as the NEET) is somewhat difficult since information is needed on both the educational enrolment and labour market status of the individuals. For the 38 countries for which time series are available, there was no clear trend in the past 10-15 years, as shown in the figure below. However, the countries in which the NEET rate increased the most are all developed economies that were badly hit by the global economic crisis, indicating that youth were disproportionately affected by the crisis, being more prone to becoming unemployed but without the means to continue their education or training.
The European Training Foundation (ETF) compared the NEET rate in 18 ETF partner countries for different age groups and concluded that the risk of becoming a NEET increases significantly with age. Compared to the age range 15–19, a substantial increase is observed in those aged 20–24, which is when young people have completed upper secondary and/or tertiary education. NEETs become even more numerous between the ages of 25 and 29.
The Global Initiative on Decent Jobs for Youth was endorsed by the UN Chief Executives Board for Coordination in November 2015 and launched at the ECOSOC Youth Forum in February 2016. The Initiative was prepared under the leadership of the International Labour Organization and brings together 21 UN entities in an effort to expand country-level action on decent jobs for youth through multi-stakeholder partnerships, the dissemination of evidence-based policies and the scaling up of effective and innovative interventions. The Initiative aims to support Member States in achieving youth employment related Sustainable Development Goals and targets.
Poor quality jobs for youth
Unemployment figures understate the true extent of youth labour market challenges since large numbers of young people are working, but do not earn enough to lift themselves out of poverty. In fact, roughly 156 million youth in emerging and developing countries live in extreme poverty (i.e. on less than US$1.90 per capita per day) or in moderate poverty (i.e. on between US$1.90 and US$3.10) despite being in employment. Moreover, youth exhibit a higher incidence of working poverty than adults: 37.7 per cent of working youth are living in extreme or moderate poverty in 2016, compared to 26 per cent of working adults.
In addition to low pay, young people frequently work involuntarily in informal, part-time or temporary jobs. For example, in the EU-28, among youth employed in part-time or temporary positions in 2014, approximately 29 per cent and 37 per cent, respectively, are doing so involuntarily.
The number of children in child labour globally declined by one third in the period 2000-2012, from 246 million to 168 million. More than half of child labourers in 2012 – 85 million – were in hazardous work (down from 171 million in 2000). The Asia and the Pacific region had the largest number of child labourers (almost 78 million or 9.3 per cent of child population in 2012), but the highest incidence of child labour (59 million – over 21 per cent) was in the Sub-Saharan Africa region. In Latin America, 13 million children were in child labour in 2012 (8.8 per cent of all children in the region), with 9.2 million (8.4 per cent) in the Middle East and North Africa.
Agriculture was by far the most important sector where child labourers are to be found (98 million, or 59 per cent of all child labourers). The numbers were relatively lower – though not negligible – in services (54 million) and industry (12 million) – mostly in the informal economy. The 2012 estimates show that child labour among girls declined by 40 per cent compared with a decline of 25 per cent among boys in the 2000-2012 period.
Several UN agencies, Funds and Programmes and special mandate holders of the Secretary General launched in September 2016 a new global multi-stakeholder initiative “Alliance 8.7” aimed at achieving Target 8.7 of the United Nation’s SDGs to eradicate forced labour, end modern slavery and human trafficking and eliminate child labour. Alliance 8.7 aims to promote efficiency and reduce duplication of efforts by connecting participating members to each other and facilitating peer-learning via knowledge platform.
Data availability remains a key challenge for assessing trends in informal employment around the world, particularly in terms of comprehensive and comparable statistics that cover the whole country (urban and rural areas), and all economic activities (agricultural and non-agricultural). Looking at the evolution of the proportion of informal employment in non-agricultural employment in the 5-year span from 2009 to 2014, no significant changes are observed for most of the 21 countries for which time series are available from a consistent source. There are very few striking cases, such as Uganda and the Dominican Republic, where there share of informal employment in non-agricultural activities increased by more than 20 percentage points, and Thailand and Turkey, where it decreased by 32 and 12 percentage points, respectively. It is worth noting that this indicator is extremely sensitive to changes in the design of the survey used to produce the data, particularly in terms of geographical coverage and the definition of employment used (whether a number of specific groups are included or not).
In 57 per cent of the countries with reliable statistics, more than half of non-agricultural workers are employed in the informal economy in 2014 (or the latest year available). The prominence of the informal economy is observed to a greater extent in Latin America and the Caribbean, where in 69 per cent of countries, more than half of persons employed in non-agricultural activities are in the informal economy. Economic theory does not support public intervention to formalize the informal sector, but rather suggests that tolerating the informal sector, especially in manufacturing, will improve overall macroeconomic performance as measured by output and employment.
More than half of the world’s workforce is estimated to be trapped in the informal economy, which is marked by the denial of rights at work, the absence of sufficient opportunities for quality employment, inadequate social protection, a lack of social dialogue and low productivity, all of which constitutes a significant obstacle to the development of sustainable enterprises. The International Labour Organization adopted in 2015 a new international labour standard to tackle the informal economy. The adopted Recommendation 204 provides strategies and practical guidance on policies and measures that can facilitate the transition from the informal to the formal economy. The Recommendation is of great significance for all those who are concerned with inclusive development, poverty eradication, reducing inequalities and who are looking forward to a strong focus on the goal of decent work for all in the context of the new post-2015 development agenda.
While within country inequality has been trending upward in many countries, global inequality, measured as a global Gini coefficient, has actually trended downward over the last several decades, a change from the upward trend since the beginning of the nineteenth century.