In the past six decades the number of jobs has risen worldwide from 900 million in 1950 to 3.1 billion in 2007. This image was recently distorted by the economic crisis that started in 2008, which resulted in a global job loss of 50.4 million alone in 2009,
In addition, despite the enormous total rise of the number of jobs, the quality of work has not increased at the same rate. Work has become more informal and flexible worldwide. Half of all jobs worldwide are now considered ‘precarious’, and a quarter of all workers worldwide earn US$2.00 a day or less, which will be explained below.
Since 1950, the world population has grown by 4.6 billion people and it now totals 7.1 billion. The employment-to-population rate is most commonly used to represent overall employment. The employment figure is the percentage of countries’ working-age population (ages 15 to 64 in most countries) that is employed, including people that have stopped looking for work. For the OECD countries, the employment-to-population rate was 64.2% in the 1970s and had its peak at 66.8% in 2007-2008. It reached 65.1% in 2012.
From 1996 to 2007, global population increased by 16%, while total global employment grew with 17%. During this period the world added approximately 400 million more people and about the same amount of jobs and the global employment-to-population ratio (age 15+) remained virtually constant at 63%. What this tells us is that global job creation and global population growth were quite stable relative to one another. However, talking in absolute terms, unemployment has risen as well. In spite of the remarkable expansion of employment opportunities in recent decades, 202 million people globally were classified as unemployed by the International Labour Organization (ILO) in 2013.
Of this number, 74.5 million are young people aged 15 to 24 years old, and are unemployed and looking for work. The youth unemployment rate is 13.1%, double the official global unemployment rate.
At this point a word of warning is in order (see also box 1). Though aggregate numbers are useful to identify global trends and to compare situations – between countries, regions, age groups, sexes, etc. – aggregate numbers regarding employment must also be used and interpreted with caution. This is because social and economic situations between regions of the world and between societies can differ greatly, and measuring and defining unemployment is a complex task.
Employment data have to be used with caution. Data can be influenced by definitions, methods of data collection, differences in years of the data and unreliability of data.
Jobs cannot be characterized by a single term or really measured by a single indicator. Unemployment rates are added differently based on local circumstances. Each region in the world uses different age ranges for the ‘working age population’. For example, the World Bank, UN and OECD use the age range of 15 to 64 for the working age population, while many researchers or institutes use the age range of 20 to 65 years. To a certain extent, aggregate numbers, percentages and rates regarding employment compare apples with oranges. There is, fortunately, one definition of unemployment that is often used (e.g. ILO, OECD). According to this definition, adopted in 1982 by the 13
Although GDP growth contributed to the increase of job creation, economic growth does not automatically lead to more jobs, nor does it guarantee better paying jobs. For example, despite impressive economic growth rates in emerging markets like China, with a GDP growth on average of about 10% a year since 1978, and Brazil with around 5% growth yearly since 2004, and India with several peaks of 10% yearly since the 1980s;
For example, China expected to increase jobs through economic growth. Yet, the amount of jobs actually created (even -2.5% in some regions in 2012), did not increase at the same pace as the GDP growth (7.8% in 2012).jj If growth and work were indeed so correlated, the actual number of jobs created in China would be the result of a much lower growth, namely 2%. The same disappointing ratios of employment creation to GDP growth can be seen around the world in both the developed and less developed world, for example in Thailand (figure 2 in box 2.), South Africa, Turkey,
Hence, emerging economies like China, Indonesia, and Thailand, which have heavily focused on exports in the last decades to generate economic growth, are now trying to develop their domestic markets by changing their economic strategies. They are doing so by shifting from exports to increasing production for domestic consumption. They, like other countries in the region, are aiming to create more jobs in the next decades, but face challenges from rising population rates and advancing technology that replaces people.
Besides changes in employment, the world is also witnessing fundamental changes in the types of jobs available. This is due to technological change that affects labour productivity and international trade. Through technological change, food production, for example, could increase to feed the growing world population with less labour. However, most of the new jobs are in the service sector (figure 5). Nowadays more people work in service than in agriculture, which was traditionally the main employer. The industrial sector remains the smallest, but increasing, provider of jobs.
After the Second World War, governments in developed countries strived for full employment, with the aim that all eligible people who wanted to work could find employment at prevailing wage rates. The 1950s and 1960s saw very low rates of unemployment of around 3% on average as a result of the post-war boom and reconstruction work, where many developed countries could benefit.
The energy crises of 1973 and 1979 resulted in stagflation, with no economic growth and increased prices and unemployment.
Before 1980, most of the global employment growth took place in the Western world, but from the 1980s onwards, emerging East Asian countries and other parts of the developing world showed impressive employment growth due to an increase in international trade. Simple service-related tasks generated through computerization (and the fabrication of its components), like production work, could be outsourced and gave countries like China, Vietnam, Mexico, the Philippines and India, the opportunity to create jobs. However, it had a negative impact on the wage levels of the less-skilled workers in developed countries as a result of global competition (See the article, ‘Creating a global labour market’ in this dossier).
In the 1990s, the globalization of the financial sector became dominant, which made short-term profit- making one of the main goals for businesses. As a result, profits trickled down less to the workers and more to shareholders, investment banks, hedge funds and other investors (See the article, ‘Profits without labour benefits’ in this dossier). In the 1990s with the combination of optimism over the fall of communism and the rise of new economic powers – first in Asia with China, Thailand, India, Indonesia and Vietnam, and later in countries like Brazil and South Africa – worldwide unemployment began to fall. However, the jobs that were created were not always better jobs, as working conditions in the newly-created export sectors remained poor. Also, in developed countries the number of working poor was on the rise (See the article, ‘Job insecurity as the norm’ in this dossier), standing in sharp contrast to the emerging global rich who are not dependent on wages. Instead, the global rich tend to invest their money in capital worldwide and less in productive sectors where workers depend on the wages for a living.
The economic crisis, especially in developed countries, worsened many of these trends resulting in higher unemployment, lower wages and more insecure jobs. As said, almost 202 million people were unemployed in 2013, up from 177 million in 2000.
In contrast to the rising unemployment in Western regions where the exception is a rise of the unemployment rate of at least a percentage point in six European countries in the years to come (Greece, Italy, the Netherlands, Poland, Portugal and Spain) (OECD, 2013), most developing regions and especially the emerging markets have higher employment numbers now than before the crisis.
Latin America and the Caribbean have even seen a decrease of the general and youth unemployment rates over the last 13 years from 8.6% total unemployment in 2000 down to 6.5% in 2013 (ILO, 2014). A further gradual, yet more moderate, decline in unemployment is prospected until 2018.
The Central and Southeastern Europe (non-EU) and Commonwealth of Independent States, with 8.2% unemployment in 2013, also dealt with a lower percentage than in 2000 (when it still was 10.7%). Yet the region has not shown a continuous decrease as the 2013 percentage is the same as it was in 2007, while in the in-between years the percentage temporarily peaked to 9.9% in 2009 (ILO, 2014).
Southeast Asia and East Asia have shown impressive employment growth, however, with an extremely high population growth, unemployment remains high. East Asia accounts now for about 20% of the total world’s share of people without a job. This is the second position in unemployment shares globally, with 39.4 million officially unemployed in 2013 (an increase of 8.0 million people since 2007). Yet, in 2013, an estimated 415 million workers held a salaried job in East Asia (ILO, 2014). The region has seen impressive growth with a near doubling employment level in comparison to 1991. The share of wage workers in total employment increased from 18.5% in 1991 to 50.1% in 2013. In this period the region “successfully moved 464.5 million workers out of poverty, an astounding and unprecedented pace of improving household incomes and living standards,” according to the ILO (2014, p.53). The question for the region now is how to retain the trend of increasing employment, if investment and growth levels stabilize.
In addition to unprecedented job growth, the last half century has also been a period in which the quality of jobs available worldwide has improved dramatically due to the progressive shift from manual work to mental work, indicated by the falling percentage of the world’s workforce employed in low-wage agricultural jobs, according to the Club of Rome.
Furthermore, the trend all around the world is to have a more flexible workforce, and this is increasingly so in the developed countries. The trend of flexibilization started before the global economic crisis, but has been exacerbated as a consequence of it. The number of people with a part-time contract in developed regions has increased over the last decades.
The ILO attributes the trend of more part-time work to “the increase in the number of women in the labour market, but also to attempts to introduce labour market flexibility in reaction to changing work organization within industry and to the growth of the services sector.”
For many emerging and developing countries informality is not a new trend. It is estimated that globally, up to 60% of the workforce is in the informal sector.
In addition to this, it can be said that for the 200 million people worldwide who do not have a job and are actively looking for one, 1.5 billion people
Informal work, vulnerable work, unstable work, flexibilization, precariousness, and working poverty are different concepts that refer to the quality of work. Whereas ‘informal work’ and ‘vulnerable work’ focus on the formality of the job, ‘unstable work’, ‘precarious work’ and ‘flexibilization’ refer to the level of security and stability that the job gives. ‘Working poverty’ explains the impact these kinds of jobs can have on the financial circumstances of a worker and his or her family, or about the kind of jobs that these circumstances urge him to take.
Precarious workers often have no job security and face growing socioeconomic vulnerability (Remery, Van Doorne-Huiskes, and Schippers, 2002). Informality can refer to both work in the informal sector and informal work in the formal sector. Originally the term ‘informal sector’ was based on the distinction between wage employment and self-employment. Nowadays informal employment includes “(…) all remunerative work, both self-employed and wage employment, not recognized, regulated, or protected by existing local or regulatory frameworks, as well non-remunerative work undertaken in an income-producing enterprise” (Arnold and Bongiovi, 2012).
The increasing flexibility has altered many employees’ relation to work. With deregulations and more temporary jobs, workers are increasingly in a situation that is insecure, unpredictable and risky. Precarious work takes place both in the formal and in the informal sector and both in developed and developing countries. Long assumed to be a sign of underdevelopment, the informal sector remains pervasive throughout the world, also in countries that have experienced impressive growth rates.
In insecure and unstable work and in unemployment numbers, certain groups are overrepresented, namely youth, elderly, and women. Although their participation is increasing, women continue to be underrepresented on the labour market.
The impact of low-quality jobs and increasing insecurity when one has a job is reflected in the fact that, especially in developing countries, part of the workers are still poor. The number of working poor is falling in line with the decreasing numbers of extremely and moderately poor in the developing world.
The challenge is not only to create enough jobs for the growing world population, but also to create better jobs with a decent wage. Therefore, a focus primarily on GDP growth is not enough, since growth does not automatically lead to higher employment rates in emerging countries and developed countries.
Abdoul Mijiyawa, Economist, African Center for Economic Transformation (ACET), Accra, Ghana
Jens Lind, Professor, Department of Sociology and Social Work, University of Aalborg, Denmark
Jan Rieländer, Economist, OECD Development Centre, Paris, France