TWN Info Service on Finance and Development (Jan17/02)
24 January 2017
Third World Network
Global unemployment to rise by 3.4 million this year, says ILO
Published in SUNS #8385 dated 23 January 2017
Geneva, 20 Jan (Kanaga Raja) -- The global unemployment rate is expected to
rise modestly to 5.8 per cent in 2017, representing an increase in the number
of unemployed globally of 3.4 million compared with 2016, the International
Labour Organisation (ILO) has said.
In its World Employment and Social Outlook - Trends 2017 report released
recently, the ILO said that this will bring total unemployment to 201.1 million
The ILO further said that the global unemployment rate is then expected to hold
relatively steady in 2018, as the economic outlook improves, although the pace
of labour force growth will still outstrip employment creation, resulting in an
additional 2.7 million unemployed people.
"We are facing the twin challenge of repairing the damage caused by the
global economic and social crisis and creating quality jobs for the tens of
millions of new labour market entrants every year," said ILO
Director-General Guy Ryder, in an ILO news release.
"Economic growth continues to disappoint and under-preform - both in terms
of levels and the degree of inclusion. This paints a worrisome picture for the
global economy and its ability to generate enough jobs. Let alone quality
jobs," he added.
"Persistent high levels of vulnerable forms of employment combined with
clear lack of progress in job quality - even in countries where aggregate
figures are improving - are alarming. We need to ensure that the gains of
growth are shared in an inclusive manner," he further said.
The report said that the increases in the global unemployment level and rate in
2017 are driven by deteriorating labour market conditions in emerging
countries, which are expected to see increases in unemployment in the order of
3.6 million between 2016 and 2017 (during which time their overall unemployment
rate is expected to climb to 5.7 per cent, compared with 5.6 per cent in 2016).
In contrast, in developed countries, unemployment is expected to fall in 2017
(by 670,000), bringing the rate down to 6.2 per cent.
In developing countries, unemployment levels are expected to increase in 2017
(by 450,000), with unemployment rates hovering around 5.5 per cent in 2017 (and
Global economic growth is expected to have remained relatively unchanged in
2016, at 3.1 per cent, compared with 3.2 per cent in 2015.
The protracted slowdown since 2008 is being driven by several factors,
including continued global uncertainty regarding the economic outlook and a
range of potential policy shifts (e. g. interest rate movements), which have
dampened investment and trade and, in turn, aggregate demand.
However, said ILO, economic growth is expected to pick up slightly in 2017 (to
3.4 per cent) and 2018 (to 3.6 per cent).
The upward trend is largely being driven by anticipated improvements in
emerging countries, notably in Brazil and the Russian Federation, where major
contractions in 2016 dragged down economic growth. Furthermore, the negative
impact of the sharp terms-of-trade shock experienced by commodity exporters is
likely to reverse and an increase in capital inflows should help to buttress
For developed countries, the outlook for economic growth is also expected to
improve, although growth rates are projected to remain below 2 per cent.
Economic growth in these economies overall fell to 1.6 per cent in 2016 (from
2.1 per cent in 2015), but is expected to pick up to 1.8 per cent in 2017 (in
comparison, between 2000 and 2007 economic growth averaged close to 3 per cent
in developed economies).
The slowdown in 2016 was in part driven by lower than expected performances in
the United States and Europe.
"In both these cases, there is some uncertainty regarding the anticipated
improvements in their economic outlook going forward, which could have wider
implications for the global outlook," said ILO.
Given the disappointing global economic performance in 2016 and the below-trend
outlook, progress on reducing decent work deficits has stalled, notably as
concerns the ability (or inability) of the global economy to (i) generate a
sufficient number of jobs, (ii) improve the quality of work for those with a
job, and (iii) ensure that the gains of growth are shared in an inclusive
The report underlined that vulnerable forms of employment, i. e. own-account
work and contributing family employment, remain pervasive.
In particular, vulnerable employment as a share of total employment is expected
to fall less than 0.2 percentage points per year over the next two years
(compared with an average annual decline of 0.5 percentage points between 2000
and 2010). As a result, the share of vulnerable forms of employment is expected
to remain above 42 per cent over the coming years, accounting for over 1.4
billion people worldwide in 2017.
Significantly, almost half of all workers in emerging countries are still in
vulnerable forms of employment, and almost four out of five workers in
developing countries are in this employment category. As a result, the total
number of workers in vulnerable employment is projected to grow by 11 million
Working poverty is expected to continue its long-term decline, driven by
reductions in both emerging and developing countries, decreasing from 29.4 per
cent of the employed in emerging and developing countries in 2016 to 28.7 per
cent in 2017 (at the extreme and moderately poor poverty threshold, i. e.
living on less than US$3.10 per day in purchasing power parity (PPP)).
While working poverty rates have continued to decrease, the reduction in
absolute numbers of working poor is slowing. In 2016, the emerging and
developing economies were home to a total of 783 million working poor, a figure
that is expected to fall to 776 million in 2017.
"While emerging countries are experiencing rapid reductions in both the
rate and the number of working poor, progress in developing countries is too
slow to keep up with population and employment growth."
Consequently, said the report, the number of workers earning less than US$3.10
per day is expected to increase by close to 3 million per year in developing
countries until 2018.
As a response to the ongoing global uncertainty and the persistence of major
economic challenges, the risk of social unrest or discontent has heightened
across almost all regions.
Indeed, said the report, based on the ILO's social unrest index, which measures
the expressed discontent with the socio-economic situation in countries, the
average global social unrest score increased by 0.7 points between 2015 and
2016, to 22.4 points. This level - albeit lower than the post-crisis peak -
remained above the long-term average (since 1980) of 21.9 points.
In terms of regional developments, only three regions experienced declines in
the index between 2015 and 2016, most notably Northern Africa. In contrast,
eight regions experienced increases, with the largest rise taking place in the
Arab States, followed by sub-Saharan Africa and Eastern Asia.
Discontent with the social situation and a lack of decent job opportunities are
factors that play a role in a person's decision to migrate.
Latest estimates suggest that there were more than 232 million international
migrants in the world in 2013, of which some 207 million were of working age.
Almost two-thirds of these, or 150 million, were migrant workers, accounting
for some 4.4 per cent of all workers.
According to the ILO, the protracted slowdown in global economic activity has
been a result of weaker than anticipated performance in key economic variables.
According to the report, several drivers have continued to underpin slow
economic growth. In particular, subdued private investment and trade flows have
remained a major concern for both current economic conditions and the
The trend decline in investment and trade is creating a large gap in aggregate
demand, which cannot be fully offset by public spending because of the tight
fiscal constraints (and is unlikely to be filled by private consumption due to
sluggish employment and labour income growth).
Moreover, forgoing investment today results in lower productive capital stock
and productivity growth in the future, thus lowering income growth.
However, since the onset of the global economic crisis, there has been an
overarching level of uncertainty - often difficult to assess quantitatively -
that has also played a central role.
The report pointed out that there are several factors that could explain the
slowdown in potential growth. The first is that weak trade growth over recent
years does not appear to be entirely cyclical. The intensification of global
supply chains has slowed down significantly since 2009 compared with the period
2000 to 2008, implying that trade volumes and global production could become
increasingly disconnected from one another.
Consequently, developed countries see much smaller potential productivity gains
due to global supply chain intensification, while the potential for developing
countries to benefit from innovation and technological diffusion and access to
quality imports is diminished.
In addition, developed countries have experienced low growth in conjunction
with extremely low interest and inflation rates - as well as extremely loose
monetary policy - for several years in a row.
The ILO said that if secular stagnation (i. e. lower consumption and investment
demand) does indeed intensify, global unemployment would rise by an additional
0.3 million in 2017 and almost 1 million in 2018. Under such a scenario,
developed economies would be affected the most, while emerging and developing
countries would benefit initially from higher capital inflows, but would then
also suffer due to negative spillover effects caused by lower trade and
However, a coordinated fiscal loosening would provide an immediate jump-start
to the global economy, which in the medium term might remove fears of low
growth and thereby also raise investment demand.
The scenario assumes there is an increase in public investment outlays, but
importantly it also takes into account each country's fiscal space. Under this
scenario, global unemployment could be lowered, relative to baseline
projections, by 0.7 million in 2017 and 1.9 million by 2018.
"Boosting economic growth in an equitable and inclusive manner requires a
multi-faceted policy approach; one that addresses the root causes of secular
stagnation, e. g. inequality, while also taking account of country
specificities," said the ILO.
According to the report, the African economy is currently characterized by
relatively weak economic growth in comparison to the average growth rate
achieved in the continent over the past decade.
In the current context, the ILO said, the prevailing economic conditions are
likely to correspond to only marginal improvements in the labour market. The
unemployment rate for the continent as a whole is likely to remain unchanged
from its 2016 rate of 8.0 per cent going into 2017, which, when applied to a
rapidly growing labour force, corresponds to an increase in total unemployment
of 1.2 million.
A similar trend is observed with regard to vulnerable employment, with a slight
decrease in the rate but an increase in the number of workers in this form of
Meanwhile, despite marginal decreases in extreme working poverty (i. e.
individuals who live on less than US$1.90 per day), the region - driven by
trends in sub-Saharan Africa - is performing poorly with regard to moderate
working poverty (i. e. those living on between US$1.90 and US$3.10 per day).
At 1.6 per cent in 2016, economic growth in sub-Saharan Africa is at its lowest
level in over two decades - a sharp contrast to the annual average of nearly 5
per cent over the past ten years.
This downturn has largely been due to the effects of low commodity prices on
resource-intensive countries, such as Angola, Nigeria and South Africa (with
oil-exporting countries faring particularly poorly). The reductions in
commodity revenues have typically led to fiscal tightening, amidst inflationary
pressures and weaker terms of trade.
For sub-Saharan Africa as a whole, a slight recovery to 2.9 per cent is
anticipated for 2017, the achievement of which will rely on recoveries among
commodity exporters, alongside elevated growth rates in a number of non-
Sub-Saharan Africa's unemployment rate is forecast to be 7.2 per cent in 2017,
unchanged from 2016. While the unemployment rate remains stable, the number of
unemployed is expected to increase from 28 million in 2016 to 29 million in
2017 due to the region's strong labour force growth.
The report said that in the context of sub-Saharan Africa, however,
poor-quality employment - rather than unemployment - remains the main labour
market challenge. This problem is compounded by rapid population growth,
specifically growth of the working-age population.
For example, an additional 12.6 million youth in the region will enter the
labour force over the next four years. As such, the region risks forgoing any
gains from the potential "demographic dividend" unless sufficient
productive opportunities are provided for young people.
Across most of sub-Saharan Africa, the lack of productive opportunities for
youth and adults alike means that 247 million people were in vulnerable
employment in 2016, equivalent to around 68 per cent of all those with jobs.
While a marginal decrease in the rate of vulnerable employment is anticipated
over the next two years, due to growth in the working-age population, the
number of people in vulnerable forms of employment is expected to increase by
Inter-related with vulnerable employment is the issue of working poverty.
Sub-Saharan Africa continues to be characterized by elevated rates of working
poverty, with 33.6 per cent of all employed people living in extreme poverty in
2016 - i. e. on less than US$1.90 per day - and an additional 30.1 per cent in
moderate poverty - i. e. between US$1.90 and US$3.10 per day.
This corresponds to over 230 million people in sub-Saharan Africa living in
either extreme or moderate poverty.
Northern America recorded growth of 1.5 per cent in 2016 - substantially lower
than the 2.5 per cent growth achieved in 2015.
The slowdown in 2016 was driven principally by lower growth in the United
States: GDP grew by 1.6 per cent in 2016, compared with 2.6 per cent in 2015.
The slowdown in the United States, combined with lower commodity prices, has
also dampened growth in Canada (an estimated 1.2 per cent in 2016, compared
with 2.5 per cent in 2015).
"Weaker than expected economic performance was accompanied by weak
productivity gains, particularly in the first half of 2016 - placing further
pressure to keep interest rates low. With investment growth still weak, due to
lingering risk aversion associated with the global economic crisis and a
climate of uncertainty, growth is likely to rely on domestic consumption and,
to a lesser extent, on rebounding export growth."
Growth is anticipated to pick up in 2017, with growth of 2.2 per cent projected
for the region (2.2 per cent in the United States and 1.9 per cent in Canada).
In both countries, the unemployment rate is expected to remain relatively
stable as job creation rates keep pace with the number of people entering the
labour force and seeking employment.
In the case of Canada, unemployment is projected to remain stable throughout
2017 and 2018, at 7.1 per cent. For the United States, the rate is expected to
remain at 4.9 per cent in 2017, rising moderately to 5 per cent in 2018.
The unemployment rate for the Latin America and Caribbean region is expected to
rise by 0.3 percentage points in 2017, to 8.4 per cent.
This significant increase in the region's unemployment rate is largely being
driven by Brazil, where the deeper than anticipated recession of 2016 will be
playing out in 2017. Brazil's unemployment rate is expected to reach 12.4 per
cent in 2017, almost 1 percentage point higher than the 2016 rate.
The number of unemployed people in the region in the coming years will be
further increased as labour force growth exceeds job creation.
In Mexico, the region's second largest economy, the unemployment rate is
expected to remain comparatively low in 2017, at 4 per cent, with a modest
upturn anticipated in 2018, when job creation is expected to slow relative to
labour force growth.
The report said that vulnerable forms of employment in the region steadily
declined between 2009 and 2014.
However, since the onset of the slowdown in 2015, the share of workers in
vulnerable employment has risen at a steady pace - climbing nearly a full
percentage point between 2014 and 2016, from 31.0 per cent to 31.9 per cent
(and anticipated to remain there through 2018). The number of people in
vulnerable employment is expected to continue to increase, reaching over 93
million in 2018, up from 90.5 million in 2015.
Accounting for nearly 60 per cent of the global workforce, the Asia and the
Pacific region's net employment expanded by over 20 million in 2016, equivalent
to growth of around 1.1 per cent, with a similar expansion anticipated in 2017.
Southern Asia has created most of the new employment, with employment expanding
by 13.4 million in 2016, underpinned by population-driven labour force growth.
The majority of this new employment was created in India.
Total employment expanded by around 5 million in South-Eastern Asia and the
Pacific, equivalent to growth of 1.6 per cent, and is forecast to grow by
another 4.5 million in 2017, with Indonesia and the Philippines accounting for
the majority of employment growth in this sub-region.
In Eastern Asia, employment is growing the least, at less than half a percentage
point each year, largely as growth of China's workforce starts to shrink.
Vulnerable employment as a share of total employment in the region as a whole
decreased from nearly 60 per cent in 2000 to 50.1 per cent in 2016. However,
within the region, vulnerable employment is still stubbornly high. For example,
Southern Asia had an estimated rate of 74.8 per cent in 2016, compared with
30.9 per cent in Eastern Asia and 50.8 per cent in South-Eastern Asia and the
Economic activity in the Northern, Southern and Western Europe region is
expected to continue to slow, with GDP growth forecast to reach 1.5 per cent in
2017, down from 1.7 per cent in 2016 and 2.1 per cent in 2015. The region's
economic growth is set to pick up again in 2018, albeit only marginally.
Several global and interlinked forces are weighing negatively on growth
projections for 2017. First, said ILO, the benefit of low energy prices, which
supported regional aggregate demand throughout 2016, is expected to wane in
2017, as oil prices are likely to rebound. Second, weaker aggregate demand by
key trade partners, notably large emerging market economies, is weighing on
In addition, the outcome of the United Kingdom's vote to leave the EU is likely
to undermine investors' and financial markets' confidence in the medium term,
both in the United Kingdom and in Europe.
These downside risks are only partially offset by the expectations that
expansionary monetary policy by the European Central Bank will continue and
that EU countries will engage in more growth-oriented fiscal policy.
Within the region, said the report, the largest downside revision to GDP growth
concerns the United Kingdom, where growth in 2017 is projected to be 1.1 per
cent, down from an average of 2.3 per cent between 2013 and 2016.
The regional unemployment rate is projected to reach 9.1 per cent in 2017, down
by 0.2 percentage points with respect to values anticipated for 2016.
Considering that the regional unemployment rate fell by almost 2 percentage points
between 2013 and 2016, this represents an important slowing of the region's
progress towards returning the unemployment rate to its pre-crisis level of 7.4
per cent (in 2008).
Indeed, significant reductions in the unemployment rate are expected in only a
few countries, including Croatia, Ireland, the Netherlands, Portugal and Spain.
However, a small number of countries within the region, most notably the United
Kingdom, are likely to see their unemployment rates edging upwards over the
next couple of years, the ILO said. +