Worldwide unemployment is projected to rise by 5.1 million in 2013: ILO

The report, Global Unemployment Trends 2013, released by International Labour Organisation (ILO) indicates that in the fifth year after the outbreak of the global financial crisis, global growth has decelerated and unemployment has started to increase again, leaving an accumulated total of some 197 mil­lion people without a job in 2012.

Furthermore, 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 3 million in 2014. A quarter of the increase of 4 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.

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 the EU region where the labour force participation rate declined by close to 1% 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 4% points or more – and has not yet recovered even in cases where the unemployment rate has started to decline.

Young people remain particularly stricken by the crisis. Currently, some 73.8 million young people are unemployed globally and the slowdown in economic activity is likely to push another half million into unemployment by 2014. The youth unemployment rate – which had already increased to 12.6% in 2012 – is expected to increase to 12.9% by 2017. The crisis has dramatically diminished the labour market prospects for young people, as many experience long-term unemployment right from the start of their labour market entry, a situation that was never observed during earlier cyclical downturns.

Currently, some 35% of all young unemployed have been out of a job for six months or longer in advanced economies, up from 28.5% in 2007. As a consequence, an increasing number of young people have become discouraged and have left the labour market. Among European countries where this problem is particularly severe, some 12.7% of all young people are currently neither employed nor in education or training, a rate that is almost 2% points higher than prior to the crisis.

Over the medium term, the global economy is expected by many commentators to recover, but growth will not be strong enough to bring down unemployment quickly. Even with an acceleration of growth, the global unemployment rate is expected to remain at 6% 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.

In the face of rising risk of jobs crisis, ILO calls for additional policy action for employment generation. Some promising areas for action include tackling uncertainty to increase investment, addressing labour market mismatch, promoting youth employment, and encouraging structural change.

Employment scenario in India

In India , total employment grew by just 2.7 million from 2004–05 to 2009-10, compared to over 60 million during the previous 5-year period (1999–2000 to 2004–05). However, this does not suggest a static labour market; rather there are many transitions taking place, most importantly a withdrawal from the labour force among young people and women, lowering net employment growth. Nonetheless, even where jobs have been created, a large share of workers remained in agri­culture, in the urban informal sector or in unprotected jobs in the formal sector. In 2010, the share of employment in agriculture was 51.1%, while the share of workers in informal employment in the non-agricultural sector was 83.6%. The share of formal employment on the other hand declined from around 9% in 1999–2000 to 7% in 2009–10, in spite of record growth rates. Moreover, it remains unclear whether the manufacturing sector will be able to absorb large numbers of job-seekers since the share of workers in manufacturing was just 11% in 2009–10, no higher than a decade earlier. A major reason for the slow growth in employment in India is the fall in female labour force participation, as the participation rate for women fell from 37.3% in 2004–05 to 29% in 2009–10.

Warm regards,

Dr. S P Sharma

Chief Economist