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ILO: Countries investing in high quality jobs can make economic leaps

This helped cushion the impact of the global crisis which erupted in 2008.

The World of Work 2014: Developing with Jobs report, which provides an in-depth analysis for 140 developing and emerging nations, shows for the first time that investing in quality jobs, reducing vulnerable employment and tackling working poverty leads to higher economic growth.

It also finds investment in high quality jobs tends be associated with lower income inequalities.

“Development doesn’t happen through such things as exports, open trade and foreign direct investment on their own,” said Guy Ryder, Director-General of the ILO. “Social protection, respect for core labour standards and policies that promote formal employment are also crucial for creating quality jobs that raise living standards, increase domestic consumption and drive overall growth. Decent work opportunities for women and men help trigger development and reduce poverty.”

Countries as cases in point

The report cites Senegal as one country where growth increased as a result of focusing on quality jobs. The country increased its share of wage and salaried workers from around 12 per cent in 1991 to 26 per cent in 2013. The share of the working poor decreased by 34 percentage points over the same period, while productivity increased by an average of 0.5 per cent per year.

Peru is another country where the share of wage and salaried workers increased by an estimated 15 percentage points, from 34 per cent in 1991 to 49 per cent in 2013. In the same period, productivity grew by an average of 1.8 per cent per year, and the share of working poor decreased by 23 percentage points.

In Vietnam, the share of wage and salaried workers rose 22 percentage points, accompanied by a dramatic decrease in the working poor to one-third of the 1991 level by 2013, and productivity grew rapidly.

“Improving the quality of jobs is also essential to tackle underemployment of both youth and adults, which is a major economic problem in many emerging economies and developing countries,” said Raymond Torres, Director of the ILO Research Department. “In view of the evidence, it is essential to make decent work a central goal in the post-2015 development agenda. Over the next decade, developing countries will need to create around 40 million new jobs every year in order to keep up with the growing working age population.”

Key role for social protection

The report stresses the importance of combining well designed social protection with a strategy to increase the productivity of agriculture and invest income from oil and other natural resources into the rest of the economy. It means governance measures to provide an enabling environment that can facilitate the creation and expansion of businesses. This includes simplifying administrative procedures, as Uruguay has done with a “single tax” social protection scheme for the self-employed, leading the way to formal entrepreneurship.

“We noted that there are two very different phenomena going on at the same time,” said Moazam Mahmood, Deputy Director of ILO’s Research Department and lead author of the report. “Many developing countries, notably in Latin America and Asia, are making efforts to tackle inequalities and improve job quality as well as social protection. By contrast, a number of advanced economies, notably in Europe, seem to be going in the opposite direction.”

Global employment trends update

The 2014 edition of the World of Work discusses the importance of job quality amid somewhat positive global employment developments. Reflecting a smaller increase than previous projections, global unemployment stood at just under 200 million in 2013 and is expected to rise by 3.2 million in 2014. By 2019, given current trends and policies, unemployment will reach 213 million. Global joblessness is projected to remain broadly at the current level of 6 per cent until 2017.

The highest unemployment rates, in North Africa and the Middle East, are expected to remain at 12.3 and 11.1 per cent in 2014. The largest increase in 2014 is estimated for Central and South-Eastern Europe and former Soviet bloc countries, where unemployment will reach 8.3 per cent in 2014.

Over the next five years, 90 per cent of jobs will be created in emerging and developing countries. This is expected to have a significant impact on migration flows (See box below).

“Migration patterns look set to change as emerging and developing countries make further progress in improving the quality of jobs,“ said Mahmood. “Already, South-South migration is on the rise while workers are also leaving advanced economies, particularly some hard-hit European countries, for work opportunities in developing countries.”

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