Global unemployment will reach 202 million people in 2013, including almost 74 million youth. Rising skills mismatch and persistently high uncertainty in hiring prevents a faster return of employment. Slowing structural change and weak labour productivity growth hampers faster reduction of working poverty in developing countries. The only green spot: Rising middle class employment in emerging countries can help rebalance global growth over the medium run.

1. Global Employment Trends 2013
Recovering from a second jobs dip
Employment Trends Unit
International Labour Organization
Geneva, Switzerland

2. Overview
• Macroeconomic context
• Global and regional labour market trends and prospects
• Thematic chapter: Structural change for decent work
• Recovering from the second jobs dip: Policy directions
Global Employment Trends 2

3. Macroeconomic context
Recession conditions in Europe spilling over globally
• Broad global economic slowdown underway
Source: ILO, Trends Econometric Models, October 2012.
• Key factors:
• Rising global uncertainties
• Sharp slowdown in global trade
• Weak investment and consumption
• Government spending less supportive of growth
Macroeconomic context 3

4. Macroeconomic context
Rising uncertainty and depressed labour markets feed on each other
Source: ILO calculations based on Manpower Employment Outlook Survey, OECD Economic Outlook and Baker et al. (2012).
• Key sources of uncertainty:
• Prolonged and deepening crisis in Euro area
• Unresolved financial sector issues and high levels of public debt
• Fiscal policy uncertainty in the US
• Macro policy incoherence and lack of international coordination
Macroeconomic context 4

5. Macroeconomic context
Incoherence between monetary and fiscal policy
Source: IMF, Fiscal Monitor, Oct 2012; Economist Intelligence Unit, November 2012; ILO calculations.
Macroeconomic context 5

6. Macroeconomic context
The economic outlook remains cloudy
Weak
economies
Heightened
uncertainty
Weak
labour
markets Weak
investments
Macroeconomic context 6

7. Global and regional labour market trends and prospects
Difficulties in the world of work in 2012
Global & regional unemployment Part-time work
Youth unemployment Global jobs gap
Main
concerns
Long-term unemployment Quality of employment
Skills mismatch Poverty reduction
Global and regional labour market trends and prospects 7

8. Global unemployment
Worsening global unemployment outlook in 2012 and 2013
Source: ILO, Trends Econometric Models, October 2012.
Global and regional labour market trends and prospects 8

9. Regional unemployment trends
Divergence between developed and developing economies
Source: ILO, Trends Econometric Models, October 2012.
Global and regional labour market trends and prospects 9

10. Global unemployment
Global labour markets are worsening again
Jobs crisis pushes more • Labour force participation has fallen dramatically, particularly in
women and men out of advanced economies
labour market • 39 million dropped out of labour market between 2007 and 2012
Spillover from developed to • Rise in estimated global unemployment by 4.2 million in 2012
developing economies • Of which ¼ in advanced and ¾ in developing economies
• Developed regions: Unemployment rates remain above historical
Great heterogeneity among levels (8.6 per cent in 2012 vs. 6.9 per cent between 1998 and 2007)
regions of the world • Developing regions: Unemployment rates below average in
comparison with decade preceding crisis
• Developing economies outperformed developed economies during
recovery period in terms of economic growth
Reasons for heterogeneity
• Recession conditions in Europe and limited effectiveness of fiscal and
across regions monetary measures
• Developing countries weaker correlation with macroeconomic changes
Global and regional labour market trends and prospects 10

11. Youth unemployment
Labour market situation particularly bleak for world’s youth
• 73.8 million youth unemployed globally in 2012
• 23 million fewer employed youth in 2012 than in 2007
• Globally, youth 3 times as likely as adults to be unemployed
• Spain & Greece: youth unemployment rates in excess of 50 per cent
• Rising numbers of youth neither in education, employment or training (NEET)
2007 2008 2009 2010 2011 2012* 2013* 2014* 2015* 2016* 2017*
Region
Rate (%)
World 11.6 11.8 12.8 12.6 12.4 12.6 12.7 12.8 12.8 12.8 12.9
Developed Economies and European
12.5 13.3 17.4 18.1 17.6 17.9 17.7 17.3 16.8 16.3 15.9
Union
Central and South-Eastern Europe
17.4 17.0 20.4 19.2 17.7 17.1 17.3 17.3 17.3 17.4 17.4
(non-EU) and CIS
East Asia 7.9 9.1 9.2 8.9 9.2 9.5 9.8 10.0 10.2 10.3 10.5
South-East Asia and the Pacific 14.9 14.1 14.0 13.4 12.7 13.0 13.4 13.7 13.9 14.0 14.2
South Asia 9.3 9.0 9.7 10.2 9.7 9.8 10.0 10.1 10.2 10.2 10.3
Latin America and the Caribbean 14.2 13.6 15.7 14.1 13.4 13.5 13.6 13.7 13.7 13.8 13.8
Middle East 24.6 25.4 25.5 27.5 27.6 28.1 28.7 28.9 29.2 29.3 29.4
North Africa 20.8 20.3 20.4 20.1 23.3 23.8 23.9 23.8 23.5 23.3 23.2
Sub-Saharan Africa 11.8 11.9 12.0 11.9 11.9 11.9 11.9 11.8 11.8 11.8 11.8
Risk from being unemployed or out of the labour market to becoming unemployable
Global and regional labour market trends and prospects 11

12. Long-term unemployment
An increasing share of job-seekers is long-term unemployed
• Increasing proportion of long-term unemployed reflect structural problems in labour
market
• Risk that workers become less attached to labour markets and suffer from skills erosion
and reduced employability
• Adverse effects on the broader economy
• Short run: Sapping aggregate demand through reduced consumption
• Long run: Reducing trend growth
• Sharp increase in long-term unemployment is sign of severe labour market distress
characterized by
• Weak job creation
• Increase in persons receiving unemployment benefits
• Increased risks that unemployed slip through cracks of the underlying social protection systems
• Risk of long-term structural damage in labour market due to growing skills mismatches
Global and regional labour market trends and prospects 12

13. Skills mismatch
Continuing nature of crisis worsened labour market mismatches
• Mismatch between supply of skills available in stock of unemployed and demand of
skills
• Skills mismatch hampers
reallocation of labour and
puts upward pressure on
unemployment rates
• Index of dissimilarity captures
differences in shares of
educational attainment of
employed in comparison
with unemployed
Source: ILO calculations based on Key Indicators of the Labour Market, 7th edition.
Global and regional labour market trends and prospects 13

14. Part-time work
Part-time work signalling both challenges and some scope for optimism
Many employed have seen hours of work decline leading to increased involuntary
part-time employment
Part-time employment can mark the first step in a rise in more permanent, full-time
jobs
However, a long-term rise in part-time employment, particularly as has been
witnessed in European countries, may also be consequence of heightened
uncertainties under which firms operate
Global and regional labour market trends and prospects 14

15. Global jobs gap
Understanding the scope and nature of the global jobs gap
• Average annual decline of employment-to-population ratio (EPR) during global economic crisis
more than 3 times the average decline over past 16 years
• Adverse trends for youth and female employment have contributed disproportionately to overall global
decline in EPRs due to falling participation and rising unemployment
• Global jobs gap of 67 million
• 67 million fewer
employed people
around the
world in 2012
than expected
based on pre-
crisis trends
Source: ILO, Trends Econometric Models, October 2012.
Global and regional labour market trends and prospects 15

16. Quality of employment
Slowing labour productivity growth limits wage gains and investment
• Labour productivity growth slowed sharply in nearly every region in 2012
• Slowdown in productive structural change
• 1.49 billion workers in developing countries (56 per cent) in vulnerable employment in
2012
Source: ILO, Trends Econometric Models, October 2012; World Bank, World Development Indicators; IMF, World Economic Outlook, October 2012.
Global and regional labour market trends and prospects 16

17. Poverty reduction
A new consumer class is emerging
• Working poverty continued to decrease but at slower pace than before crisis
• 58.4 per cent of developing world’s workforce remained poor or near poor in 2011
• Working middle-class surpassed 40 per cent of developing world’s workforce
• Further progress in reducing working poverty and vulnerable employment requires
• Higher productivity growth
• Faster structural change
• Expansion of social
protection systems
Source: Kapsos and Bourmpoula (forthcoming).
Global and regional labour market trends and prospects 17

18. Global outlook for labour markets
Renewed focus on the world of work is essential
Closing global employment gap
Slowdown in global economic requires decisive action by policy-
growth in 2012 had widespread makers to restore confidence and
negative impact on world of work promote investment and job creation
New cohort of middle-class workers in
developing countries provides hope
Global unemployment rising with that new global economic engine will
particularly negative implications emerge through higher consumption
for world’s youth Global outlook and investment
for labour
Growth in numbers of long-term markets
Renewed focus on world of work is
unemployed and increased labour essential by focusing policy action on
market detachment is raising risk of employment generation, promotion
emergence of structural labour of investment and productivity
market problems growth
Global and regional labour market trends and prospects 18

19. Structural change for decent work
Structural change slowed down as global investment plummeted
• Within-sector productivity gains and structural change have considerable effects on
labour markets
• Reallocation from low to high productivity sectors contributes to
• Increased living standards
• Improved labour market outcomes – lower vulnerable employment and less working poverty
• Structural change slowed during crisis due to global decline in investment
• Employment moved out of low-productivity agriculture into industry and service sectors
at slower pace than before crisis, particularly in Central and South-Eastern Europe; Latin
America and the Caribbean; South Asia; Sub-Saharan Africa; and Middle East
• Asia and Sub-Saharan Africa more likely to return to pre-crisis path of structural change than Latin America
and the Caribbean and Central and South-Eastern Europe
• Middle East and North African economies expected to remain among least dynamic economies in terms of
sectoral reallocation of labour
Structural change for decent work 19

20. Structural change for decent work
Labour markets benefit from structural change
• General lessons from regional comparisons concerning structural change:
Gains in labour productivity within sectors are main drivers of growth particularly in industry
and service sector
Productive structural change plays considerable role for growth in many regions
Labour market and demographic components of value added per capita growth less
important drivers of growth, but can become important at times
• Value added per capita growth is projected to be largely driven by improved labour
productivity in the services sector for most regions through 2017
Structural change for decent work 20

21. Policy implications
Policy-makers need to take action to prevent a further deterioration
1. Tackle uncertainty to increase investment and job creation by
• Implementing financial reform measures quickly to restore confidence
• Targeting credit provision to sectors with impaired access to funds that contribute strongly to
employment growth
• Providing more consistent and transparent policies
2. Coordinate stimulus for global demand and employment creation by
• Internationally coordinating efforts to support global demand more broadly
• Stabilizing economic activity around the world through strengthening domestic economies
rather than relying strongly on export-driven growth
• Coordinating stimulus through accommodative monetary policy and continuation of reflationary
stance
Policy implications 21

22. Policy implications
Policy-makers need to take action to prevent a further deterioration
3. Address labour market mismatch and promote structural change by
• Facilitating workers’ mobility across sectors to promote productive transformation
• Accelerating within sector productivity growth in developing countries, especially in agriculture
to enable structural change out of agriculture and into higher value-added sectors
• Targeting educational and vocational training policies to prevent skill and occupational
mismatches
• Implementing active labour market policies to provide right mix of training and incentives that
help workers quickly move to new opportunities
4. Increase efforts to promote youth employment by
• Encouraging youth entrepreneurship
• Introducing youth employment guarantees
Policy implications 22

23. Global Employment Trends 2013
Recovering from a second jobs dip
Employment Trends Unit
International Labour Organization
Geneva, Switzerland