Financial Crisis: Unemployment, Working Poor and Vulnerable Employment to Increase

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 Link to the report: Global Employment Trends 2009The global economic crisis is expected to lead to a dramatic increase in the number of people joining the ranks of the unemployed, working poor and those in vulnerable employment, the International Labour Office (ILO) says in its annual Global Employment Trends report.

The report says global unemployment in 2009 could increase over 2007 by a range of 18 million to 30 million workers, and more than 50 million if the situation continues to deteriorate.

The ILO report also said that in this last scenario some 200 million workers, mostly in developing economies, could be pushed into extreme poverty.

“The ILO message is realistic, not alarmist. We are now facing a global jobs crisis. Many governments are aware and acting, but more decisive and coordinated international action is needed to avert a global social recession. Progress in poverty reduction is unravelling and middle classes worldwide are weakening. The political and security implications are daunting”, said ILO Director-General, Juan Somavia.

Key Projections

The new report updates a preliminary estimate released last October indicating that the global financial crisis could increase unemployment between 15 to 20 million people by 2009. Its key conclusions are as follows:

  • Based on November 2008 IMF forecasts, the global unemployment rate would rise to 6.1 per cent in 2009 compared to 5.7 per cent in 2007, resulting in an increase of the number of unemployed by 18 million people in 2009 in comparison with 2007.
  • If the economic outlook deteriorates beyond what was estimated in November 2008 (which is likely) the global unemployment rate could rise to 6.5 per cent, corresponding to an increase of the global number of unemployed by 30 million people in comparison with 2007.
  • In a current worst case scenario, the global unemployment rate could rise to 7.1 per cent and result in an increase in the global number of unemployed of more than 50 million people.
  • The number of working poor – people who are unable to earn enough to lift themselves and their families above the US$2 per person, per day, poverty line, may rise up to 1.4 billion, or 45 per cent of all the world’s employed.
  • In 2009, the proportion of people in vulnerable employment – either contributing family workers or own-account workers who are less likely to benefit from safety nets that guard against loss of incomes during economic hardship – could rise considerably in the worst case scenario to reach a level of 53 per cent of the employed population.

Other Findings 

The ILO report notes that in 2008, North Africa and the Middle East still had the highest unemployment rates at 10.3 and 9.4 per cent respectively, followed by Central & South Eastern Europe (non EU) & the Commonwealth of Independent States (CIS) at 8.8 per cent, sub-Saharan Africa at 7.9 per cent and Latin America at 7.3 per cent.

The lowest unemployment rate was once again observed in East Asia at 3.8 per cent, followed by South Asia and South-East Asia & the Pacific where respectively 5.4 and 5.7 per cent of the labour force was unemployed in 2008.

The report shows that the three Asian regions – South Asia, South-East Asia & the Pacific and East Asia – accounted for 57 per cent of global employment creation in 2008. In the Developed Economies & European Union region, on the other hand, net employment creation in 2008 was negative, minus 900,000 which explains in part the low global employment creation in this year.

Compared with 2007, the largest increase in a regional unemployment rate was observed in the Developed Economies & European Union region, from 5.7 to 6.4 per cent. The number of unemployed in the region jumped by 3.5 million in one year, reaching 32.3 million in 2008.

According to the study, sub-Saharan Africa and South Asia stand out as regions with extremely harsh labour market conditions and with the highest shares of working poor of all regions. Although the trend has been declining over the past ten years, around four fifths of the employed were still classified as working poor in these regions in 2007.




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