The emergence of a middle-class in the developing world, surpassing 40 per cent of the workforce, could potentially play a stronger role in the global economic recovery, says the Global Employment Trends report of the International Labour Organisation. But the study warns that an adverse international trade scenario that continues to hurt occupations dependent on exports and volatile financial flows that affect inward investments could dampen the prospects of an alternative engine of growth. There was a rapid reallocation of workers from low to higher productivity activities in many sectors prior to the 2007-08 financial crisis and the global meltdown, resulting in reductions in rates of working poverty and vulnerable employment. These structural changes, which lost momentum in subsequent years, have been aggravated by the resurgence of the crisis in 2012. The lack of avenues for higher productivity also means that jobs are not moving out of agriculture into the services sector as fast as before. Of particular concern is the prospect of long-term unemployment that young workers face. The current slowdown in economic activity is expected to push another half a million young people out of employment by 2014, adding to the existing 73.8 million. Overall unemployment, currently at 6.5 per cent, is forecast to rise in the current year and the next. Regions that have managed to avert an increase in unemployment have experienced a worsening in the quality of jobs, raising the number of those living below the poverty line.
The advanced economies of Europe have been at the epicentre of the global jobs crisis, accounting for half of the rise in the number of the unemployed since the 2007 meltdown. The uncoordinated policies of fiscal reform and austerity in eurozone countries grappling with the sovereign debt crisis have caused a massive socio-economic upheaval at home and contributed in no small measure to the bleak world scenario. The region has not heeded calls from the International Monetary Fund and the World Bank for the adoption of policies to stimulate growth and employment. If anything, the eurozone’s response to the crisis has been characterised as too little too late. The spillover effects of Europe’s 2012 wave of recession have been felt in many parts of the world. In particular, China’s slowest rate of growth since 1999 and India’s in a decade account for a reduction in Asia’s GDP growth rate. While beggar-thy-neighbour policies in global trade would only accentuate the crisis, policies to enhance skills and better guarantees of social protection in developing countries would go a long way to augment employment-generating growth.
Keywords: global economic recovery, Global Employment Trends report, global jobs crisis, International Labour Organisation, GDP growth rate, debt crisis, global debt crisis, economic activity, global meltdown