Increase in unemployment expected due to global crisis

[Naveed Yaseen]

Schezee Zaidi
The 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 Organisation (ILO) says in its annual Global Employment Trends report (GET).

Based on new developments in the labour market and depending on the timeliness and effectiveness of recovery efforts, the report has developed three scenarios that illustrate that global unemployment in 2009 could increase over 2007’s number by a range of 18 million, 30 million workers to more than 50 million if the situation continues to deteriorate. For the Asia Pacific region as a whole, the three scenarios suggest unemployment increases of eight million, 15 million or 27 million.

The ILO report’s third scenario also suggests that some 200 million workers, mostly in developing economies, could be pushed into extreme poverty (an income of below US$1.25 per person per day). Of these, more than 140 million would be in Asia. The same scenario suggests that those in working poverty (below US$2 per person per day) could rise by 176 million, of whom 119 million would be in Asia Pacific.

The ILO mentions that the message in the report is realistic, not alarmist. ‘We are now facing a global job 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’.

The new report updates a preliminary estimate released last October that indicated that the global financial crisis could increase unemployment between 15 to 20 million people by 2009. Based on the November 2008 IMF economic growth forecasts, the global unemployment rate would rise to 6.1 per cent in 2009 as 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 envisaged 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 the current worst case scenario, the global unemployment rate could rise to 7.1 per cent, for East Asia, South-East Asia & the Pacific, and South Asia, the figures would be 5.5 per cent, 6.4 per cent and 6.3 per cent respectively 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. For East Asia, the figure would be 37 per cent, for South-East Asia and the Pacific 55 per cent and for South Asia 85 per cent.

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. For East Asia, South-East Asia & the Pacific, and South Asia, the figures would be 56 per cent, 64 per cent and 77 per cent respectively.

In 2008, North Africa and the Middle East still had the highest unemployment rates at 10.3 and 9.4 per cent respectively. 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 three Asian regions - South Asia, South-East Asia & the Pacific, and East Asia - accounted for the lion’s share - 57 per cent - of global employment creation in 2008. In the Developed Economies & European Union region, on the other hand, the net employment creation in 2008 was negative, minus 900,000, which explains in part the low global employment creation in this year.

The economic crisis of 2008 has deepened the concern over the social impacts of globalisation, which the ILO had previously raised. Stressing the need to take measures to support vulnerable groups in the labour market, such as youth and women, the ILO report observes that a huge labour potential remains untapped worldwide.

http://www.thenews.com.pk/daily_detail.asp?id=160609