Emerging economies: has growth translated into more and better jobs?

A new ILO book analyses labour market trends and regulations in various emerging markets and presents a number of policies that can lead to a synergy between economic growth and decent job creation.

GENEVA – Despite experiencing a more robust economic growth over the past few decades, decent work deficits continue to be the norm for most workers in emerging economies* , according to a new ILO book, The labour Markets of Emerging Economies: Has growth translated into more and better jobs? .

“Progress has been made on poverty reduction and most emerging countries proved to be quite resistant to the global financial crisis. However, the reality faced by many workers is the lack of decent jobs, informal work, limited social protection and access to social security,” says Sher Verick, Senior Employment Specialist at the ILO office for South Asia, co-author of the book with Sandrine Cazes.

The book focuses on the similarities and differences in the labour market situation, trends and regulations in a wide range of emerging economies. It also presents case studies on four specific countries: Brazil, Indonesia, South Africa and Turkey.

Most of the employment creation in emerging economies has not resulted in formal jobs that provide access to employment rights and benefits and social security, the book says. Among the challenges is also inadequate access to high-quality education and training, along with the mismatch between the skills of job-seekers and vacancies.

In South Africa, for example, individuals with at most a primary school education were more than three times more likely to give up the search for work during the global financial crisis than university graduates. In Indonesia, workers with low education levels are over represented in casual employment.

A positive development is that in recent decades, emerging economies are increasingly using labour and social policies to address structural challenges and respond to crises. These innovative approaches include public employment programmes, minimum wages, entrepreneurship incentives, and training – often aimed at women and youth.

In Brazil, for instance, the minimum wage has increased by more than 130 per cent in real terms since 2004. As a result, pay levels have gone up and there has been a positive impact on the pension system, since benefits are tied to the minimum wage. Meanwhile, the Bolsa Familia conditional cash transfer programme that benefits poor families has greatly contributed to reduce poverty and inequality in the country.

According to the authors, labour market institutions can play a key role in achieving decent work outcomes in emerging economies, but their effectiveness is still a challenge.

The book presents a number of other policies to translate growth into decent work creation, such as:
•Supporting returns to self-employment as well as switching from the informal to the formal economy through stronger incentives, (such as progressive taxation, improved access to social security, etc.)
•Reinforcing the implementation and relevance of labour market regulations to increase workers’ protection without reducing job creation by private employers.
•Expanding social protection coverage to improve the income security of workers and their families.
•Improving access to and the quality of education and training, while making sure that employers are involved in order to reduce skills’ mismatches and shortages.
•Strengthening labour market policies that address both long-term structural problems and mitigate the impact of economic and natural shocks through both targeted measures, (e.g. for youth and women), and universal schemes, (such as public employment programmes).
* Though there is no single definition, emerging economies are (mostly) middle-income countries that have been or are growing and developing rapidly. In this book, the main focus is on large emerging economies that play an important role at the regional and global level.