The world's economy may be recovering from what was the worst economic downturn since the 1930s, but all is not well on the employment front. The most critical factor that ensures a sustained recovery is the creation of jobs, and in this area clear evidence emerges from the Global Employment Trends 2011, published by the International Labour Organisation, that despite improvements in key macroeconomic indicators such as the global Gross Domestic Product (GDP), unemployment remains stubbornly high. For instance, the annual GDP growth rate, which was 5.3 per cent in 2007, fell to 2.8 per cent in 2008, and dropped further to (—)0.6 per cent in 2009. As recent figures put out by the International Monetary Fund reveal, the world economy rebounded to 5 per cent growth in 2010 and is likely to grow by 4.5 per cent in 2011. This, however, has done little to bring down unemployment rates. From the pre-crisis figure of 5.6 per cent (2007), the rate rose to 5.7 per cent in 2008 and to 6.3 per cent in 2009, marginally moderated to 6.2 per cent in 2010 and is predicted to register 6.1 per cent in 2011. In absolute terms, 177.3 million people were jobless in 2007 and the number swelled to 205.2 million in 2009.
That the labour market continues to be slack does not augur well for sustained economic recovery, given particularly the ILO's observation that this was also caused by the lag between productivity gains and real wage growth. Considering the linkage between wages, consumption, and aggregate demand and its importance in keeping an economy on growth trajectory, the world can ill-afford risking jobless recovery. The situation calls for judicious continuation of fiscal stimuli, rather than fiscal consolidation in the developed economies. For the developing world, which has lower unemployment rates, the ILO strikes a note of caution on vulnerable employment. For South Asia, which has the largest number of vulnerable workers (in 2009, the figure stood at 508.7 million out of the 1.5 billion in the world), the current phase of better economic performance is also the appropriate time for states to put in place effective social protection measures for such workers. One of the positives of state-led programmes such as India's National Rural Employment Guarantee Scheme is their potential to serve as building blocks for a comprehensive social protection framework. A basic social protection floor, including monetary support for the unemployed and the low-paid, will be a critical state intervention to create fairer and better-functioning labour markets.
