Employment recovery noted but “new clouds have emerged” — ILO

Employment has shown signs of recovering from the global downturn, particularly in emerging Asian and Latin American economies, but the global outlook remains worrying given what the International Labor Organization (ILO) sees as a protracted “labor market recession”.

In its World of Work Report 2010 released on Friday, the Geneva-based ILO noted the unprotected nature of many of the jobs created, among other issues, and said that if “current policies persist, a recovery in employment to pre-crisis levels will be delayed until 2015 in advanced economies, instead of 2013 as it projected one year ago”.

“[N]ew clouds have emerged on the employment horizon and the prospects have worsened significantly in many countries,” it said.

The study results, said the ILO, highlight the need to put employment creation “at the heart” of recovery efforts alongside low inflation and sound economic policies. It also supported the conclusions of a Sept. 13 meeting with the International Monetary Fund in Oslo, the ILO added.

Lawrence Jeff Johnson, ILO country director for the Philippines, said employment growth had been positive in most Asian countries between the first quarters of 2009 and 2010 but was “uneven” across the region.

“Employment gains are witnessed in the Philippines at 5% … [but] employment has still not recovered in Hong Kong, Japan and Sri Lanka,” Mr. Johnson said in a statement.

Job losses in the Philippines, the ILO said, came from regulated sectors and were made up for by “vulnerable” employment that was created in “unregulated establishments” where workers ended up lacking the proper benefits and protection. Also, the job losses were said to have affected rural migrants who were forced to go back to farm work.

“This is a worrying trend because the poor cannot afford to be unemployed so they are willing to take whatever work is available in order to survive,” Mr. Johnson said, urging action by the government.

“The Philippines placed creating employment opportunities, achieving inclusive growth and reducing poverty central to its national development objective. Indeed, the country’s priority to provide jobs that empower the people and provide them with opportunities to lift themselves and their families out of poverty is an important step to address the rising number of working poor and vulnerable employment,” he added.

Commenting on the report, Trade Union Congress of the Philippines Secretary-General Ernesto F. Herrera said: “The emerging trend is a consequence of high unemployment which occurred due to [the] scarcity of work … the government should ensure the creation of more jobs to stimulate the economy.”

Latest data from the National Statistics Office puts the country’s unemployment rate at 6.9% as of July this year, down from 7.6% a year earlier. The figure is equivalent to 2.7 million without work out of the 60.9 million population 15 years old and above.

The ILO said that while employment in emerging and developing countries has resumed growing, over eight million new jobs are still needed to return to pre-crisis levels in those countries.

“The longer the labor market recession, the greater the difficulties for jobseekers to obtain new employment,” the ILO said, adding that in the “35 countries for which data exists, nearly 40% of jobseekers have been without work for more than one year and therefore run significant risks of demoralization, loss of self-esteem and mental health problems.”

“Importantly, young people are disproportionately hit by unemployment.”

Among the key findings of the ILO study, which used data from 150 countries, were:

* cases of social unrest have been noted in at least 25 countries, many of them advanced economies;
* many countries that experienced jobs growth at the end of 2009 are now seen the recovery weakening;
* in over three quarters of the 82 countries with available data, people were saying that their quality of life had declined;
* satisfaction at work has deteriorated, with “a sense of unfairness” growing in 46 of 83 countries; and
* in 36 of 72 countries, people had less confidence in governments.

The lead author of the report, International Institute director Raymod Torres, said the two main factors behind the bleaker outlook are the withdrawal of stimulus measures in countries where the recovery remains weak and the failure to address the root causes of the financial crisis.

“The coexistence of private debt-led growth in certain developed countries with export-led growth in large emerging economies has proved to be the Achilles heel of the world economy,” the report said. “Recovery will be fragile as long as labor incomes continue to grow less than justified by productivity developments and the financial system remains dysfunctional.”

Getting out of the crisis, the ILO said, requires an approach that would lead to job creation in the short term and quality economic growth in the long term. This should include the strengthening of job-centered policies, a closer link between wages and productivity gains, and a true financial reform plan.

“Fairness must be the compass guiding us out of the crisis,” ILO Director-General Juan Somavia said. “People can understand and accept difficult choices, if they perceive that all share in the burden of pain.”

“Governments should not have to choose between the demands of financial markets and the needs of their citizens.” –Businessworld