Global Employment Trends 2014

Economic growth leaves jobs behind

Corporate profits are up and global equity markets are looking forward to another strong year. But the ILO’s Global Employment Trends 2014 report shows that the good news does not extend to the labour market, as the number of unemployed and discouraged workers continues to increase.

Audio | 21 January 2014
TRANSCRIPT: The global economy experienced a modest recovery in 2013. But this has not translated into an improvement on the labour market, the ILO says in a new report.

Employment growth remains weak, unemployment continues to rise, and large numbers of discouraged potential workers are still outside the labour market, according to the Global Employment Trends 2014.

The global unemployment rate remained at 6 per cent of the labour force in 2013, unchanged from the previous year.

And for young people, the labour market outlook worsened in almost every region, as the youth unemployment rate reached more than 13 per cent.

Job creation is simply too weak to reduce unemployment significantly. And that means jobseekers remain unemployed for longer and longer periods, according to Ekkehard Ernst, the main author of the report.

“They become frustrated with their limited employment opportunities and drop out of the labour market. Or they are forced to look for alternative opportunities outside their field of qualification and accept jobs below their skill level. Both discouragement and skills mismatch have increased substantially since the beginning of the crisis. And both will make the labour market recovery more protracted. “

In developing countries, informal employment remains widespread, and the pace of improvements in job quality is slowing down. That means fewer people are moving out of working poverty.

Global recovery in labour markets is being held back by a deficit of aggregate demand, says Steve Kapsos, another of the report’s authors.

“Economic growth is gradually increasing, but household spending remains weak, especially in those economies where wages have stagnated and in those with high levels of household debt. Weak household spending has kept companies from expanding their productive capacity, because they’re uncertain where the demand for their products will come from. These factors have put pressure on government revenues and many governments have reduced their spending. This had previously provided crucial support to labour markets in the depths of the crisis and in the initial recovery period.“

A switch to more employment-friendly policies and rising labour incomes would boost economic growth and job creation, the report says. In emerging and developing countries, it is crucial to strengthen social protection floors and promote transitions to formal employment. This too would support aggregate demand and global growth, the report says.

Patrick Moser, at the ILO