Global unemployment on the rise

Global unemployment increased by a further four million over the course of 2012, the Global Employment Trends report for 2013 (special edition) released last week by the International Labour Organisation stated.

The report stated that the epicentre of the crisis has been the advanced economies, accounting for half of the total increase in unemployment of 28 million since the onset of the crisis. But the pronounced double dip in the advanced economies has had significant spillovers into the labour markets of developing economies as well.

In the fifth year after the outbreak of the global financial crisis, global growth has decelerated and unemployment has started to increase again, leaving some 197 million people without a job in 2012. Moreover, some 39 million people have dropped out of the labour market as job prospects proved unattainable, opening a 67 million global jobs gap since 2007.

Despite a moderate pick-up in output growth expected for 2013-14, the unemployment rate is set to increase again and the number of unemployed worldwide is projected to rise by 5.1 million in 2013, to more than 202 million in 2013 and by another three million in 2014.

A quarter of the increase of four million in global unemployment in 2012 has been in the advanced economies, while three quarters has been in other regions, with marked effects in East Asia, South Asia and Sub-Saharan Africa. Those regions that have managed to prevent a further increase in unemployment often have experienced a worsening in job quality, as vulnerable employment and the number of workers living below or very near the poverty line increased.

Incoherence between monetary and fiscal policies adopted in different countries and a piecemeal approach to financial sector and sovereign debt problems, in particular in the Euro area, have led to uncertainty weighing on the global outlook. Investment has not yet recovered to pre-crisis levels in many countries.

The indecision of policy-makers in several countries has led to uncertainty about future conditions and reinforced corporate tendencies to increase cash holdings or pay dividends rather than expand capacity and hire new workers.

Labour force participation has fallen dramatically, in particular in advanced economies, masking the true extent of the jobs crisis. The problem is particularly severe in the Developed Economies and European Union region where the labour force participation rate declined by close to one percentage point and is expected to recede further as long-term unemployment and a weak economic outlook discourages people from staying in the labour market.

As a consequence, the employment-to-population ratio has fallen sharply, in some cases four percentage points or more, and has not yet recovered even in cases where the unemployment rate has started to decline.

Over the medium term, the global economy is expected by many commentators to recover, but growth will not be strong enough to bring down the unemployment rate quickly. Even with an acceleration of growth, the global unemployment rate is expected to remain at 6 percent up to 2017, not far from its peak level in 2009.

At the same time, the global number of unemployed is expected to rise further to some 210.6 million over the next five years.

Despite the slowdown in structural change, the rate of working poverty has continued to decrease, but at a slower pace than before the crisis.

Currently some 397 million workers are living in extreme poverty; an additional 472 million workers cannot address their basic needs on a regular basis.

As those countries with particularly high rates of working poverty continue to experience faster growth than the world average, the rate of working poverty is expected to continue to decline.

However, as they are also growing faster demographically, the absolute number of working poor is expected to increase in some regions unless faster economic growth returns.