New ILO report sees weak global job growth in 2004 - Says European job growth remains static

Despite robust economic growth, the global employment situation improved only slightly in 2004, with employment increasing and unemployment down marginally, the International Labour Office (ILO) said in its annual Global Employment Trends, released today.

While unemployment worldwide declined from 6.3 per cent to 6.1 per cent, or from 185.2 million in 2003 to 184.7 million 2004, unemployment in Europe and Central Asia (Note 1) remained unchanged at 35 million, according to the ILO report and a supplementary analysis prepared for the 7th ILO European Regional Meeting to be held in Budapest, Hungary on 14-18 February (Note 2).

The ILO said the global decline in unemployment, though slight, marked the first time since the year 2000 that year-over-year unemployment decreased and was only the second decrease since 1994. The report said a robust global economic growth rate of 5 per cent in 2004 played a large role in these developments. However, the growth of global employment of 47.7 million, an increase of only 1.7 per cent in the total number of jobs worldwide, remained disappointing and employment as a share of the working age population stayed virtually unchanged at 61.8 per cent in 2004.

"While any global decline in unemployment is positive, we must not lose sight of the reality that employment creation still remains a major challenge for policy makers", said ILO DirectorGeneral Juan Somavia. "In other words, we need policies that encourage more employment intensive growth."

The ILO Global Employment Trends said that in addition to creating new jobs, other key challenges facing policy-makers today included eliminating decent work "deficits" wherever they exist. Declines in unemployment rates do not in themselves indicate improvements in decent work "deficits", they are only the tip of the iceberg. The focus of policy should therefore not be on unemployment alone, but also on the conditions of work of those who are employed.

In this regard, the report addresses the challenges of improving working conditions in the growing informal economy in many developing countries, as well as achieving a fairer globalization and resolving the problem of high youth unemployment. It also asks for urgent action to provide sufficient international aid as rapidly as possible for reconstruction of workplaces, equipment, infrastructure repair and workers' health in areas affected by the Indian Ocean earthquake and Tsunami. In addition, it calls for adequate policies on HIV/AIDS in the workplace to address the massive anticipated loss of workers to the labour market as a result of the epidemic.

The regional employment trend which showed the strongest decline in unemployment was the Latin American and the Caribbean region, where it dropped from 9.3 per cent in 2003 to 8.6 per cent in 2004, but the improvement in the employment picture was more modest elsewhere.

In the developed economies (which include the EU-25) there was only a slight decline from 7.4 to 7.2 per cent. In South East Asia and the Pacific, the rate evolved from 6.5 per cent in 2003 to 6.4 per cent in 2004, while in South Asia the change was from 4.8 per cent to 4.7 per cent. The rate remained unchanged in East Asia at 3.3 per cent and in the Middle East and North Africa at 11.7 per cent. Meanwhile, in Sub-Saharan Africa, unemployment edged up slightly from 10.0 per cent to 10.1 per cent despite a 4.4 per cent GDP growth rate registered in 2004.


Trends in Europe and Central Asia

A closer look at the European and Central Asian region (Note 3) showed that the unemployment rate decreased from 9.1 per cent to 9 per cent in the European Union (EU-25), from 8.5 per cent to 8.3 per cent in Central and Eastern Europe and the CIS (Note 4) countries and from 4.2 per cent to 4.1 per cent in non-EU countries in Western Europe (Note 5). During 2004, employment grew by only 2 million (or 0.5 per cent) in the Europe and Central Asia region as a whole despite a GDP growth of 3.5 per cent, the report said. Thereby the employment intensity of growth worsened compared to 2003 when GDP growth of 2.2 per cent led to employment growth of 0.4 per cent.

Though the current unemployment rate in the EU-25 is lower than the 11.2 per cent rate of a decade ago, it remains considerably higher in the emerging countries in Central and Eastern Europe and the CIS states where it increased from a level of 6.5 per cent in 1994. In non-EU countries in Western Europe, it remained almost static over the ten years at just above 4 per cent. With the exception of the latter region, the other regions have higher unemployment rates than the world on average.

However, an analysis of labour market indicators in the region also noted that despite the somewhat stagnant evolution of employment and unemployment, labour productivity (measured as output per person employed) showed considerable improvement, especially in Central and Eastern Europe and the CIS countries, where it increased by an annual average growth rate of over 4 per cent over the last 5 years. The EU-25 also saw higher growth in productivity than the world on average during this period, which was mainly driven by the performance of the new Member States.

In Europe and Central Asia, the ILO noted that several countries in the region appeared to have succeeded in sustaining low levels of unemployment and high labour market participation rates, without an acceleration of inflation or a worsening of income inequality. The ILO's report for its 7th European Regional Conference (Note 6) says social dialogue has played a pivotal role in balancing social pressure with economic constraints and joins with EU Employment Taskforce in calling for increased adaptability of workers and enterprises, attracting more people to the labour market, investing more and more effectively in human capital and ensuring the effective implementation of reforms through better governance in order to deal with the employment issue.

Mr. Somavia noted that the report of the World Commission on the Social Dimension of Globalization (Note 7), published one year ago, has called on the relevant United Nations bodies such as the World Bank, the International Monetary Fund, the World Trade Organization and the ILO to join together to promote "policy coherence initiatives". Social dialogue and globalization are among the top agenda items at the Budapest meeting.

"The meeting being held in Budapest offers ILO constituents - governments, workers and employers - together with the EU and others, an opportunity to launch impact analyses of the effects on decent work of international economic, financial and trade policies, as a contribution to the development of policy options to ensure that globalization contributes to the goal of decent work for all", Mr. Somavia said.


APPENDIX:

Table 1: Unemployment in the world, 1994, 1999, 2002-2004 (millions)
Table 2: Labour Market Indicators
Table 3: Global working poverty 1994 to 2004


Note 1 - The region of Europe and Central Asia includes: EU-25, Western Europe (non-EU), Eastern Europe and CIS economies (including Turkey and Israel).

Note 2 - Global Employment Trends, Brief February 2005 and Supplement for Europe and Central Asia, February 2005, International Labour Office, (Geneva, 2005).

Note 3 - See footnote 1.

Note 4 - Including Turkey and Israel.

Note 5 - Iceland, Norway and Switzerland.

Note 6 - Seventh European Regional Meeting, Report of the Director-General, vol. II: Managing transitions: Governance for decent work, pp 16-17, International Labour Office, Geneva, 2005.

Note 7 - A Fair Globalization: Creating Opportunities for All, World Commission on the Social Dimension of Globalization, published, International Labour Office, Geneva 2004.