Global unemployment remains at record levels in 2003 but annual ILO jobs report sees signs of recovery

GENEVA - Overall global unemployment rose in 2003 to 185.9 million, remaining at record levels for men and women and escalating more sharply among young people despite a pickup in economic growth after a two-year slump, the International Labour Office (ILO) said in its annual jobs report released today.

However, in a cautiously optimistic analysis, the ILO's Global Employment Trends 2004 (1) also said the economic recovery that took hold in the second half of 2003 appeared to be slowing the deterioration of the global employment situation and, if sustained, could continue to do so through 2004.

"It's too early to say the worst is over", said Juan Somavia, Director-General of the ILO. "However, if current estimates of global growth and domestic demand hold steady or improve over the coming year, the global employment picture may brighten somewhat in 2004."

"Our greatest concern is that if the recovery falters and our hopes for more and better jobs are further delayed, many countries will fail to cut poverty by half as targeted by the Millennium Development Goal for 2015", Mr. Somavia said. "But we can reverse this trend and reduce poverty if policy-makers stop treating employment as an afterthought and place decent work at the heart of macroeconomic and social policies."

In this year's report, the ILO cited the following developments:

- The number of people out of work and looking for work in 2003 reached 185.9 million, or about 6.2 per cent of the total labour force, the highest unemployment figure ever recorded by the ILO. However, this was a marginal increase over the number for 2002, which the ILO put at 185.4 million (2);

- Among the world's unemployed, some 108.1 million were men, up 600,000 from the year 2002. Among women, there was a slight decline, from 77.9 million in 2002 to 77.8 million in 2003;

- Hardest hit were some 88.2 million young people aged 15-24 who faced a crushing unemployment rate of 14.4 per cent;

- Although the so-called "informal economy" involving persons without fixed employment continued to increase in countries with low GDP growth rates, the number of "working poor" - or persons living on the equivalent of US$ 1 per day or less - held steady in 2003, at an estimated 550 million.


Regional overview

The ILO report said rising unemployment and underemployment during the first half of 2003 was due to a slow upturn in the industrialized world's economic situation, the impact of SARS on employment in Asia and the effects of armed conflicts, the latter largely on travel and tourism employment. With the curtailment of SARS and solid GDP growth in the second half of 2003, employment growth picked up somewhat. In terms of global economic growth in 2004, the ILO report was cautiously optimistic that growing demand in the industrialized world, increased trade and a parallel growth in domestic demand could brighten the employment picture.

"Predicted growth rates in Latin America and the Caribbean, Middle East and North Africa and the transition economies (over 4 per cent), in all subregions in Asia (7.1 per cent in East Asia, 4.5 per cent in South-East Asia and 5.8 per cent in South Asia) and in sub-Saharan Africa (just below 5 per cent) should be high enough to enable these regions to create new employment possibilities", the ILO report says.

The industrialized regions saw a recovery from the economic slowdown over the past two years, especially in the second half of 2003. Despite a pick up in GDP growth in the United States, job creation remained sluggish and unemployment rates at around 6 per cent. The European Union (EU), however, witnessed positive developments in the labour markets in some countries, despite a low GDP growth rate of 1.5 per cent. Japan seems to have picked up from its long-lasting crisis, but may take some time to reach the low unemployment levels of the early 1990s of below 3 per cent. The industrialized economies are expected to see declines in unemployment rates in the event that GDP growth in the United States leads to job creation, and employment as a share of working-age population continues to rise within Europe, the report said.

Latin America and the Caribbean were most affected by the global economic slowdown in 2001 in terms of output growth as well as employment losses, but saw some recovery in growth in 2003 (1.6 per cent, after a decrease of -0.1 per cent in 2002). To date, the recovery in employment has been very slow. The regional unemployment rate dropped by one percentage point, which may be attributed to the recovery in Argentina and the decrease in labour force growth.

Despite solid GDP growth rates of over 7 per cent, East Asia saw an increase in unemployment. In South-East Asia, unemployment declined significantly in 2003, at the same time as labour force participation rates increased. In South Asia, the unemployment rate remained stable despite 5.1 per cent of GDP growth. Consequently, South Asia saw no decline in working poverty, in addition to growing informal employment. East Asia will see a slight increase in unemployment, resulting from the high number of entrants into the labour markets (over 6 million people a year until 2015). South-East Asia has the potential not only to reduce unemployment further but also to reduce working poverty - if those economies with the highest poverty incidence manage to reach GDP and employment growth paths similar to those achieved in the past few years by wealthier economies in the region.

The Middle East and North Africa also experienced increasing unemployment, with an unemployment rate of 12.2 per cent - the highest incidence of unemployment in the world. This resulted from a major restructuring of employment in the public sector and high labour force growth rates. An additional cause of increasing unemployment in sending countries is the effort of a number of Gulf economies to replace foreign workers with nationals. Prospects for the Middle East and Northern Africa are still clouded, as projected in the 2003 ILO report. The dependency on oil prices, the high labour force growth rates which some economies are unable to absorb, the deficits in the quality of public institutions and the high incidence of poverty in some economies are all threats for real improvements in the labour markets.

Sub-Saharan Africa slightly reduced its unemployment rate but not enough to improve its high incidence of working poverty. In addition, the impact of HIV/AIDS on labour markets and the continuing "brain drain" deprived the region of much-needed human capital, making it unlikely to reach the MDG. In sub-Saharan Africa a high incidence of working poverty - compounded by the HIV/AIDS pandemic - is the biggest obstacle to growth and development.

After years of increases in unemployment resulting from economic changes, the transition economies seem finally to have reversed this trend, with unemployment decreasing in 2003. The labour market situation in the transition economies is expected to improve somewhat as a consequence of the foreign investment they have attracted. Strong domestic demand, trade growth and overcoming the problems associated with the transition process are encouraging signs. Once again, HIV/AIDS poses a growing threat for further development in some economies in the region.


A foundation for future growth

The world economy saw growth in GDP but no overall growth in employment in 2003, a prospect that needs to change if the MDG of halving poverty in the world is to be achieved by 2015.

"The overall challenge is to absorb the 514 million new entrants to world labour markets and to reduce working poverty by 2015", the report said. "How well GDP growth will translate into employment growth in 2004 and beyond depends on the efforts of policy-makers to prioritise the importance of employment policies and to put them on equal footing with macroeconomic policies."

In addition, the ILO urged policy-makers to address the following challenges:

- Adopt "pro-poor" policies. Poverty, hand in hand with growing unemployment and underemployment, inhibits employment growth. Because of a lack of education, health and often empowerment, poor people cannot use their own potential to lift themselves and their families out of poverty. Pro-poor policies should be designed to provide this possibility by means of a decent job. This implies creating employment opportunities to help women and men secure productive and remunerative work in conditions of freedom, security and human dignity.

- If jobless growth continues, it will threaten future growth. No country can sustain growing unemployment rates in the long run, because diminishing demand will at some point limit economic growth. In addition, continued high rates of unemployment are a waste of human capital. The creation of decent work implies not only decreases in poverty but at the same time provides the essential precondition for future growth.

- Reduce youth unemployment rates and utilize the high potential of young people to avoid the creation of a huge cadre of frustrated, uneducated or unemployable young people that could have a devastating impact on long-term development prospects.

- Increase international assistance aimed at improving access to developed-country markets and reducing external debts and debt servicing, thus freeing resources for reform programmes targeted on improved governance, job creation and poverty reduction - the absence of which will prevent most of the developing world from participating in growing world demand.



(1) - Global Employment Trends, International Labour Office, Geneva 2004, ISBN 92-2-115107-7. Available on-line at http://ilo.org/public/english/employment/strat/global.htm

(2) - Global Employment Trends 2003 originally reported 180 million unemployed at the end of 2002, a figure that has since been revised to reflect more recently available information.