More than two years of economic stagnation has boosted the ranks of unemployed worldwide, with little prospect of any improvement in the global employment situation this year, says a new report entitled Global Employment Trends issued last week by the International Labor Office (ILO), a United Nations organization.

The ILO study estimates that the number of unemployed worldwide grew by 20 million since the year 2000 to reach a total of 180 million at the end of last year. In addition, the report says the weakness of labor markets has reversed recent reductions in "working poverty" achieved in the late 1990s.

"This deteriorating world employment picture and the prospect of a weak or delayed recovery is very disturbing," says Juan Somavia, Director-General of the Washington-based ILO. "A continuation of these trends will dramatically increase the number of unemployed and working poor. A full-scale global recession could have grave consequences for the social and political stability of large parts of the world."

The report found that last year the number of working poor — workers living on $1 or less a day — resumed its upward trend, returning to the level of 550 million recorded in 1998.

While the global economic slowdown and post-Sept. 11 developments increased unemployment worldwide, Latin America and the Caribbean were hit hardest, with recorded joblessness rising to nearly 10 percent.

Unemployment began to grow soon after the information and communication technology (ICT) bubble burst in spring 2001, sparking an economic slowdown. The aftermath of the Sept. 11 attacks in New York and Washington, DC. brought further shocks and amplified the economic downturn. This slower growth in industrialized nations meant job losses in the export-oriented industries of developing countries. Worst hit were labor-intensive, export-oriented sectors, such as the garment industry which largely employ women.

In addition, weakening confidence among investors brutally exposed the financial fragility of countries in several regions, with the ensuing crises putting many people out of work. In the Middle East, for example, joblessness spiraled in the West Bank and Gaza Strip, while the recession in Israel continued.

Employment growth in industrialized countries decreased between the years 2000 and 2002, with the exception of Italy and New Zealand, where employment growth continued in 2001 but at the cost of falling productivity. Overall, unemployment has been rising steadily in the industrialized countries, from 6.1 percent in 2000 to 6.9 percent in 2002. In the European Union, unemployment decreased between 2000 and 2001, from 7.8 percent to 7.4 percent, but began rising again in 2002 to 7.6 percent. Meanwhile, in North America, unemployment increased rapidly in 2001 and 2002, from 4.8 percent to 5.6 percent in the United States and from 7.2 percent to 7.6 percent over the same period in Canada.

In Latin America and the Caribbean, the 2001 global economic slowdown sent the unemployment rate to nearly 10 percent, despite fewer people entering the work force.

Asia suffered most severely from the bursting ICT bubble, which cut exports to the industrialized countries. South-East Asia faced the 2001 downturn just as it was beginning to recover from the 1997-98 financial crisis, posting a rise in unemployed from 6 percent in 2000 to 6.8 percent in 2001, with a slight fall to 6.5 percent projected for 2002. Individual Southeast Asian countries varied considerably. Indonesia, Malaysia, Philippines, Singapore and Thailand, which depend heavily on trade, suffered from exposure to global economic trends.

East Asia also recorded significantly lower output growth and deteriorating employment during the two-year period with joblessness rising from 3.2 percent in 2000 to 3.6 percent in 2001 and 4 percent in 2002. While the official figure covering the unemployment rate in urban areas of China was 3.6 percent in 2001, recent estimates suggest that it might be as high as 7.5 percent today as a result of high underemployment in the agricultural sector and of ending the practice of keeping redundant workers in the public sector.

South Asian economies proved resilient in the face of the global economic difficulties during 2001-2002. Nevertheless, security concerns, poor weather conditions, a slowdown in exports and declining tourism revenues caused the employment situation to rise from 2.9 percent in 1995 to 3.4 percent in 2002, with unemployment rates in Pakistan, for example, climbing in recent years to nearly 8 percent.

Sub-Saharan Africa managed to sustain a fairly constant economic growth rate, though in per capita terms it is often below 1 percent. The open unemployment rate increased from 13.7 percent in 2000 to 14.4 percent in 2002, though estimates for 2002 may be revised due to a growing food crisis. In addition to child labor and job loss due to conflicts, an issue of growing importance for the region is the "brain drain" siphoning off much-needed human capital. The health situation, especially HIV/AIDS, is also having a severe impact on human capital.

Middle East and North Africa experienced a dramatic decline in overall economic conditions over the past two years with GDP growth falling from more than 6 percent in 2000 to 1.5 percent in 2001. Dismissals and redundancies resulting from reductions in the size of the public sector pushed up unemployment, which reached double-digit levels in some countries. Youth unemployment was distressingly high in some countries, including Syria, Algeria, Bahrain and Morocco. Moreover, the Gulf countries are increasingly adopting policies to replace migrant workers with their own nationals, a move that could have significant consequences for employment as well as remittances to countries supplying labor.

Greater unemployment and poverty will place severe pressure on governments’ budgetary targets, given the fragile financial position of many countries, the report says. Policymakers should focus on measures to secure and spread the recovery and ensure that faster growth yields the maximum number of decent work opportunities, reduces unemployment and poverty and restarts employment growth.

To absorb new entrants into the labor market and reduce working poverty and unemployment, at least one billion new jobs are needed during the coming decade to get on track for the UN goal of halving extreme poverty by 2015.

"Only through pro-jobs and pro-poor policies can we address this growing employment crisis and place decent work at the heart of economic and social policies," Somavia says. "Faster economic growth is necessary, but it is not enough. Failure of policymakers to act now could have grave consequences for us all."

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— Arab News Features 30 January 2003