This Global Employment Trends (GET) report of International Labour Organisation (ILO) claims advance economies of North America and Europe are major victims of global labour market meltdown and slowdown in China will also hit developing economies. Youth is hit by joblessness and financial insecurity the report indicates.
In examining the impact of macroeconomic developments on labour markets, the report looks at negative feedback loops from households, firms, capital markets and public budgets that have weakened labour markets. It finds that macro imbalances have been passed on to the labour market to a significant degree.
In particular, the report singles out the impact of the global unemployment crisis – already afflicting over 197 million people worldwide – on the world’s youth, who risk losing vital professional and social skills as the length of their joblessness continues to grow.
The year 2011 saw a tapering off of the recovery, followed by a dip in both economic growth and employment growth in 2012. Unemployment increased by a further 4 million over the course of 2012.
The report examines the crisis in labour markets of both advanced economies and developing economies. The epicentre of the crisis has been the advanced economies, accounting for half of the total increase in unemployment of 28 million since the onset of the crisis. But the pronounced double dip in the advanced economies has had significant spillovers into the labour markets of developing economies as well. A quarter of the increase of 4 million in global unemployment in 2012 has been in the advanced economies, while three quarters has been in other regions, with marked effects in East Asia, South Asia and Sub-Saharan Africa.
The report estimates the quantitative and qualitative indicators of global and regional labour markets and discusses the macroeconomic factors affecting the labour markets in order to explore possible policy responses. In estimating labour
market indicators, the report uses four key analytical techniques: 1) an ILO hiring uncertainty index indicating persisting weaknesses; 2) an extension of ILO estimates of the working poor to a full income decomposition of employment to give income classes and their correlation to investment, growth and generation of quality jobs; 3) a breakdown of growth factors which differentiates between within-sector productivity growth, cross-sector productivity growth, and labour inputs, all of which have significant implications for growth patterns in advanced and developing economies; and 4) a Beveridge curve which allows some distinction between cyclical and structural factors affecting the labour market.
Weakened by faltering aggregate demand, the labour market has been further hit by fiscal austerity programmes in a number of countries, which often involved direct cutbacks in employment and wages, directly impacting labour markets. Far from the anti-cyclical response to the initial crisis in 2009 and 2010, the policy reaction has been pro-cyclical in many cases in 2011 and 2012, leading to the double dip reported here.
