Globalization failing to create new, quality jobs or reduce poverty

GENEVA (ILO News) - Global economic growth is increasingly failing to translate into new and better jobs that lead to a reduction in poverty, according to a new report issued by the International Labour Office (ILO) here today. In the report, the ILO points out that within this global trend, different regions show mixed results in terms of job creation, productivity results, wage improvements and poverty reduction.

Taking a global view, the 4th Edition of Key Indicators of the Labour Market (KILM) (Note 1) says that currently, half the world's workers still do not earn enough to lift themselves and their families above the US $2 a day poverty line.

"The key message is that up to now better jobs and income for the world's workers has not been a priority in policy-making", said ILO Director-General Juan Somavia. "Globalization has so far not led to the creation of sufficient and sustainable decent work opportunities around the world. That has to change, and as many leaders have already said we must make decent work a central objective of all economic and social policies. This report can be a useful tool for promoting that objective."

The study finds that while in some areas of Asia economic expansion is fostering solid growth in jobs and improvements in living conditions, other areas such as Africa and parts of Latin America are seeing increasing numbers of people working in less favorable conditions, especially in the agricultural sector. The KILM also says that for millions of workers, new jobs often provide barely enough income to lift them above the poverty line, or are far below any adequate measure of satisfying and productive work. The total number of working women and men living on less than $2 a day has not fallen over the past decade although at 1.38 billion it is a smaller share of global employment at just below 50 per cent, a decline from 57 per cent in 1994.

The report emphasizes that in many developing economies the problem is mainly a lack of decent and productive work opportunities rather than outright unemployment. Women and men are working long and hard for very little because their only alternative is to have no income at all.

The new KILM paints an in-depth picture of both the quantity and quality of jobs around the world by examining 20 key indicators of the labour market. The KILM covers quantitative topics such as labour force participation, employment, inactivity, employment elasticities, sectoral employment, labour productivity and unemployment, and qualitative issues such as hours worked, wages, employment status, unemployment duration and others.

In recent years there has been a weakening relationship between economic growth and employment growth, meaning that growth is not automatically translating into new jobs. The report's "employment elasticities" indicator allows one to look at the relationship between economic growth - measured in GDP - and two of growth's contributory variables, the positive or negative change in employment and productivity. The biennial study found that for every 1 percentage point of additional GDP growth, total global employment grew by only 0.30 percentage points between 1999 and 2003, a drop from 0.38 percentage points between 1995 and 1999.

With employment growing between 0.5 and 0.9 percentage points for each additional percentage point of GDP growth, the most employment-intensive growth has taken place in the Middle East and in Northern and sub-Saharan Africa. A review of other indicators, however, shows that much of the employment growth in these regions is in the category of "self-employment" which includes most women and men in the informal economy where working conditions are often poor. While more jobs are being created in economies where agriculture dominates employment such as those in sub-Saharan Africa, many of the jobs are in the informal economy, at low-levels of productivity, and fail to provide workers enough income to pull themselves or their families out of poverty. For example, the number of workers living on less than US$1 per day increased by 28 million in sub-Saharan Africa between 1994 and 2004.

By contrast, economic expansion in East Asia was sufficient to generate employment growth, productivity growth and a reduction in the high incidence of poverty in the region. Latin America, however, experienced a decline in the employment intensity of growth between 1999 and 2003. At the same time, the number of working poor in the region at the US$1 a day level increased by 4.4 million. In recent years, economic growth in Latin America has been relatively more employment intensive for females than for males, which reflects a substantial narrowing of the labour force participation gap between men and women in the region.

In both Western Europe and North America, the services sector has experienced the most robust growth - both in terms of value added and employment growth. Between 1991 and 2003, for every 1 percentage point of growth in the services sector, employment increased by 0.57 per cent in North America and by 0.62 per cent in Western Europe. However, the report finds evidence of a divergence in employment performance between North America and Western Europe between 1991 and 2003, with the employment intensity of growth decreasing in the former and increasing in the latter between 1991 and 1999, with a further significant reduction in North America and a mild reduction in Western Europe between 1999 and 2003.

The 4th Edition KILM shows that between 1990 and 2000, wages increased faster in high-skilled occupations than in low-skilled occupations globally. Although these findings do not show a general deterioration of the wage position for low-skilled workers, they do suggest widening wage inequality between high- and low-skilled workers during the 1990s.

Rising wage inequality in the developed economies has been mainly attributed to greater demand for higher-skilled labour, which is in short supply and to lesser demand for workers with lower-level education. Other explanatory factors, although of less impact, include increased trade with developing countries and increased immigration of low-skilled workers. In developing countries, factors impacting on rising wage inequality include industry wage premiums resulting from changes in trade policy that favour workers in specific industries, the increasing size of the informal economy, which generally has lower wages and less favorable working conditions, and a shortage of high-skilled workers.

Labour costs and labour productivity bring unequal results in terms of global competitiveness

The report concludes that the competitiveness of a high-wage economy is not immediately threatened by lower labour costs elsewhere, as countries with low labour costs are usually also characterized by lower productivity levels. The report demonstrates how competitiveness is determined by the combined outcomes of elements of the productive process - the cost of utilizing labour (labour compensation) and labour productivity (output per person employed) - and by exchange rate fluctuations. The report's analysis of competitiveness in the "unit labour costs" indicator shows the following:

In the European Union-15, it is not so much high labour costs but lower productivity in the manufacturing sector and appreciation in the Euro that has threatened the competitive position of the region vis-à-vis the United States.

The manufacturing unit labour cost level in Japan has not only been high relative to the United States, but also in comparison with that of the EU-15. However, since the mid-1990s, the gap has decreased due to a moderation in wage growth in Japan, a weakening of the yen-US$ exchange rate in 2005 and an improvement in the comparative productivity performance of Japanese manufacturing.

The Republic of Korea has shown rapid improvement in labour productivity relative to the United States, but unit labour costs in the country have increased due to rapid wage increases during the early 1990s.

Productivity has weakened in Mexico, but because labour compensation levels are lower, unit labour costs have also remained lower than in the United States.

The United States continues to show the highest labour productivity levels measured as value added per person employed. Despite faster productivity growth rates in some European Union countries, especially the new EU Member States, the productivity gap, measured in value-added per person employed, between the United States and most developed economies continues to widen. One exception is Ireland where this measure of the productivity gap with the US has been steadily narrowing since1980. A slightly different picture emerges if productivity is measured by value-added per hour. This shows that some European countries are more productive than the US and for others the gap is less wide. However, most Europeans work shorter hours and have longer holidays than their US counterparts.

In Central and Eastern Europe, the transition to a market economy led to an increase in productivity but a fall in employment. The new EU Member States show a significant advantage in terms of international competitiveness with unit labour cost levels at approximately 70 per cent of the US level. Increased competitiveness, however, is not benefiting the population in terms of job creation and wages. The region shows some of the world's highest unemployment rates and many of those not working have simply given up the job search, as reflected in the region's high inactivity rates.

Women are continuing to catch up to men in terms of participation in labour markets throughout the world. Nevertheless, women continue to be disproportionately engaged in low-wage, low-productivity and part-time jobs, and in many regions such as the Middle East, North Africa and South Asia, women's participation in the labour market still lags far behind.

While the most severe working poverty is growing in Africa, it is declining in Asia and Central and Eastern Europe.

Youth unemployment rates are typically at least twice as high as adult rates and are sometimes much higher. However, in most countries, the illiteracy rates of adults are higher than those of youth, suggesting that young people are increasingly better prepared for the labour market.

Developed economies and the European Union are faced with a growing number of "underutilized" labour resources, including the unemployed and involuntary part-time workers looking for a full-time job. In both France and Italy, the rate of "underutilized" labour reached 21 per cent in 2004, up from 17 per cent in 1994 in France and 12 per cent in Italy.

The difference between God and Satan. Satan wants us to be free, totally free. To live and do as we please, to pursue our happiness as we want. Of course if your neighbor is bigger and his happiness is your misery, well to bad....law of the jungle, we're just a bunch of animals.

God says no, you're not just animals and because of that you will live by laws, strict laws and do what is right not what just feels right.

The most primitive societies we actually KNOW (as opposed to the naive Enlightenment "thinkers" who imagined parent-less primordial savages who dropped from nowhere and signed a social contract) have numerous and very complex rules.

Then there weren't enough rules, because tyranny evolved.

We must learn from history.

Without rules to check the growing power of the powerful, we lapse into tyranny again.

What does anyone imagine is the value of power if not to use it to gain even more power?

The big fish eats the small fish, and becomes bigger still.

Is the majority of mankind doomed to be the losers in a global game of Monopoly--

Doomed to go round and round the board, hoping to survive one more throw of the dice without losing everything to the owner of Park Place and Boardwalk?

Then there weren't enough rules, because tyranny evolved.

Primitive/tribal societies existed for the most of mankind's history. The first large political structures developed as a result of agriculture and increased density of population, first in Mesopotamia, then in Egypt, India and China. Their despotic character was a result of practical needs and the low level of political culture.

This what we call a free society was developed in city states of Greece (for the part of society, not for the slaves).

Then the Christian doctrine and practice liberated whole society. Mass democracy is a very recent and possibly short lasting experiment.

The middle class is the engine that drives growth. Without the middle class you do not have growth. The majority of job creation in the US is from small business which are headed by a majority of the middle class. The poor in the majority of times do not have the capital to drive economic growth or wealth creation. The very rich do not like to take major risks. They have theirs, why should they risk it all. Yes they will invest in safe secure industries, they may even take some risk but it is the middle class that takes the most risk, that in the past drove the savings and investing of the USA. It is because of the middle class that this country has been the greatest economic engine in the world for the last 60 years. without a middle class free trade will fail. Thus most third world countries do not see any benefit from globalization. Only when the worker protection laws/environmental laws/ and right to organize come to these third world nations will they see any wealth creation because the middle class would have been formed. the USA is in the process (due in large part by the outsourcing of middle class jobs to the dirt poor) of destroying the middle class in this country. If the cycle continues this country will look more like Mexico with a few very rich and 90% poor. Much like the USA of the 18th and 19th Centuries. An example GM has shipped countless jobs to Mexico and overseas. these jobs where good paying and help support numerous other businesses in the Area of a GM plant. These employees and the people downstream bought GM cars. Now GM is seeing their market share shrink. One reason is because these laid off workers and the downstream economy can no longer afford to buy their product thus GM is killing their own customer base and they wonder why they are losing market share. In thier Greed to make more money GM has shot itself in the foot and may have inflicted a fatal woundon itself. Free trade is not the answer.

100% right except when a free economy trades with a non free economy. In that case where the rules are different the free economy will always lose. You can not compete with price fixing, government fiat, slave labor, etc. Thus the ideal that free trade is based on is deeply flawed because the Theory believe that all countries are playing by the same rules when they are not. Free trade will slowly choke the life blood out of the USA. Fair trade on the other hand will benefit not only the Rich but the middle class and the poor also. Fair trade can only occur when the countries have the same worker/environmental laws and the same freedoms of the marketplace. Thus China/USA trade is tilted in favor of China whereas USA/UK trade is pretty even.

Power goes to power, and money goes to money, left unchecked.

Since 1980, the percentage of American workers owning stock has increased from 25% to 56%. More than 70% of American households own their own home (an all time record) and the average American household has about 57% equity in their home. Since Bush was elected, household net worth has gone from about $41 trillion to more than $50 trillion today.

In the past 30 years, the average size of a home has increased from 1,550 square feet to 2,200. In 1975, only about 40% of all homes had air condiditoning. Today, it's more than 80%. Thirty years ago, only about 40% of American households had color T.V's; now it almost 100%. Back then, less than 2% of households even had microwaves. In '75 only about 5 million had cable. Today, 85% of all American households have cable. In the 70's we were stuck with Formica, shag carpet and manual garage door openers. Now we get hardwood floors, granite counters, automatic door openers, hot tubs and home theaters.

In 1975, American's owned about 9 million recreational boats. Now it's more than 23 million. In '75, only about 55% of the population finished high school. Today it's more than 80%. Only about 15% of Americans finished four years of college in 1975 while today it's more than 25%. In 1975, there were less than 100,00 people with computers. Today, just about everyone has a computer and a cellular telephone.

Life expectancy has increased from about 71 years to almost 78 years during the past 30 years.

In the past 30 years this country has never rejected a free trade agreement and has dramatically reduced tariffs and eliminated regulations hampering trade. You can claim that the powerless are a growing segment of our society.You can also try to sell the idea that wealth only gravitates to those already holding the wealth. Unfortunately, you just can't prove it.

And in another brilliant observation, wetness thrives where it's raining.

Yet you continuously advocate for more government control over our lives. I guess you can make brilliant observations but just can't manage to grasp them.

Some folks will continue to believe that government can fight market forces and make things better. Riots in France and Germany's 11% unemployment rate are good examples for why this thinking is misguided. Capitalism, created for the first time in history, a new economic system, the necessary corollary of political freedom, a system of free trade based on a free market.

Too much government interference and control still remain in the U.S. But the extent to which certain countries were free has been the exact extent of their economic progress. The United States, the freest, has achieved the most.

The very rich do not like to take major risks. They have theirs, why should they risk it all. Yes they will invest in safe secure industries, they may even take some risk but it is the middle class that takes the most risk

Maybe you should define your terms as to what income constitutes middle class and very rich. I don't think you have any idea what the sources of investment capital are or what percentile of American incomes accept greater risk in their investments.

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