China's GDP growth drop affects Asia negatively - Report
by Bandula Dissanayake
Global employment trends
According to an International Labour Organization (ILO) study on
global employment trends, the world economy is estimated have grown by
3.1% last year showing a weaker outlook than projected year before.

Developing and emerging economies will add 4.8 million to
global unemployment within the next two years.
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Growth projections for the next two years would be around 3 percent
causing challenges to the world of enterprises and workers. The slowdown
in the Chinese economy with the decline of commodity prices, is pushing
commodity exporters such as Brazil and Russia into stagnation.
Most affected
The slowing of the global economy pushed the number of unemployed
people to 197 million last year while it was 196 million in 2014. An
increase of 27 million from the pre-crisis levels. The most affected are
Latin America, some of the Asian countries including China and oil
exporting countries in the Arab region.
In most of the developed economies, job growth was better than
anticipated, mainly in the US, Central and Northern Europe.
Over 46% of total employment amounting to 1.5 billion jobs are
vulnerable due to poor job quality and limitations in social protection
schemes. Over 70% of the workers are in a vulnerable situation in
Southern Asia and Sub Saharan Africa according to the report.
Developed economies had better job creation and employment conditions
and are responsible for almost one quarter of global unemployment.
Northern, Southern and Western EU countries including Germany and Italy
had better and positive situations. The developing and emerging
economies will add 4.8 million to global unemployment within the next
two years. The global unemployment rate may remain at 5.8 % this year as
per the ILO report.
Working poverty
Due to the global economic slowdown last year, global unemployment
this year will increase by approximately 2.3 million and will go up by
another 1.1 million next year, mostly in developing and emerging
economies.
There is a possibility that in emerging economies, the limited growth
of the middle class may cause social unrest.
The ILO report says nearly 327 million employed people are in extreme
poverty, earning less than USD 1.9 per day whilst 967 million are in
moderate or near poverty, earning USD 1.9 to 5.
These low income groups are visible in sub Saharan countries, Malawi,
Mozambique, Tanzania, some of the Latin American and Asian countries
including Cambodia and Nepal. Lack of productive job opportunities and
social protection systems in emerging and developing economies, are
creating low-paid jobs which leads to higher working poverty.
Most of these countries have failed in providing a sufficient number
of formal jobs for the workforce. Over 50% of the workers in more than
half of the countries are in informal jobs with low productivity and low
salaries.
Where global employment is concerned almost 46% are in a vulnerable
situation, amounting to more than 1.5 billion, having limited access to
social protection systems.
There is a considerable gap in inclusiveness of employment.
Vulnerable job situation is higher in Asia, Africa and Latin American
regions.
Global slowdown
The slowdown in China and their corrective policies are considered to
be major factors affecting global economic slowdown. The predictions
made by the IMF confirm that the drop in GDP growth in China negatively
affects the entire Asian region.
The fact that China is the second largest export destination for
Europe, is also creating an adverse situation for those economies. The
average annual trade growth figures declined considerably from 2012
onwards.
The drop of commodity prices in the world brought in difficulties for
commodity exporters such as Australia, Canada, and Arab countries,
Brazil, Chile, Indonesia, Russia, Bolivia and Venezuela. Big time
commodity importers such as the EU, India, Thailand, Turkey and US were
unable to get the benefit of low commodity prices and to offset the
global slowdown.
The decline in long-term capital investment and slowdown in working
age population growth in emerging countries, rapidly ageing population
in advanced economies are affecting labour supply growth which in turn
affects economic growth as well.
Uneven distribution
Growth advantages are not evenly distributed among the population.
Incomes of the richest one percent of the population have grown much
faster where they own fifty percent of the global wealth, a 44 percent
increase from 2009. This situation negatively affects the capital
investments.
Gender equality and women empowerment plays a key role in the 2030
agenda for sustainable development. The report says positive signs are
visible in the number of women in decent employment and taking further
steps to narrow these gaps are considered vital.
The ILO report says that women continue to suffer from occupational
segregation, discrimination and hourly work. The ILO report says that
over 168 million children between 5 and 17 work as labourers. As far as
the gender situation is concerned 50.7% are boys and girls are slightly
lower at 49.3 %.
The ILO is calling for a shift in economic and employment policies in
the world to eradicate issues faced by various economies.
It is significant to reinforce labour market institutions and
guarantee a better social protection system and avoid an increase of
unemployment and underemployment and working poverty.
Reference: World Employment and Social Outlook 2016, IMF data
The writer is the Secretary General and CEO of the National Chamber
of Commerce of Sri Lanka and holds a BA from the University of Colombo. |