G20 Foundation Publications Australia 2014 - Page 32

32 TRADE & FINANCE ILO Director General’s address on G20 labour markets The Director-General of the ILO, Guy Ryder, joined the G20 Labour and Employment Ministerial Meeting held in Melbourne in September 2014, during which the ILO presented a number of reports on employment issues that have been prepared to inform the Ministerial discussions TRADE & FINANCE Thank you for the floor, Minister Abetz, and thank you for the opportunity to present the joint work that the ILO, OECD and World Bank have been undertaking together over the course of this year at your request and in response to the call by G20 Leaders last year for each G20 country to develop growth strategies and employment action plans. And those overall growth trends do not give much cause for optimism at the moment. Despite a modest economic recovery in 2013-4, economic growth is expected to remain below trend over the foreseeable future. The G20 jobs gap in 2012 was about 55 million. The ILO estimates that the gap will continue to widen until 2018, reaching 63 million that year. It won’t come as a big surprise to any of the Ministers here that despite the efforts made, current employment challenges remain substantial for all G20 countries. “Jobless growth” Africa have seen further increases in already high long-term unemployment rates. However, some declines were recorded in Brazil and the Russian Federation and to a lesser extent Turkey and, although from a high base, also in Germany. The median value of long-term unemployment as a share of total unemployment had risen to 30.2 per cent by the first quarter of 2014, up from 24.6 per cent at the end of 2007. In several countries, the challenge of long-term unemployment, and unemployment more generally, is particularly acute among youth. The next slide addresses one element of the quality of employment, that is the issue of informality. Looking at the slide (below), you can see that large employment gaps opened as a result of the financial crisis that broke in 2007 and remain significant in most G20 countries. Informal employment is high in emerging economies Jobs gaps in G20 compared to pre-2007 trend Furthermore, the employment intensity of growth has also been weakened in many countries. This figure shows that even very high growth rates in China, India and Indonesia have not produced comparable growth in employment. Our projections of the future trend, based on IMF growth projections, is that the gaps will remain large in advanced G20 countries at least to 2018 and indeed may even widen. That said, in the last 12 months, the majority of the G20 countries have witnessed a modest reduction in the unemployment rate. These positive developments were largely due to welcome net job creation, especially in the United States, but in some cases they resulted at least in part from declines in the labour force participation rate. Except for Turkey, Mexico and Germany, all of the other G20 countries that did grow saw lower rates of job growth than economic growth. 1. Corresponds only to persons employed in the informal sector 2. Six cities only In addition to the sheer size of the jobs gap, then, there are clearly specific employment problems facing G20 economies. In a number of emerging G20 economies, the biggest challenge lies in moving the labour force out of low productivity, low wage informal employment and underemployment. This slide shows, disaggregated by gender, the high levels of informality in many emerging G20 countries. In addition, we have observed an emergence of informal working relationships even in the formal sector in some advanced G20 economies. Long-term unemployment has grown in many countries This has to be noted while recalling that the rate of youth unemployment declined in many countries but still remains at historically high levels in others. Coinciding with the sizeable jobs gap we looked at is a deterioration in job quality in a number of G20 countries, and here we look at the behaviour of real wage rates. Real wages have stagnated across many advanced G20 economies and even fallen in some. In the emerging G20 countries, jobs gaps are not as wide as an industrialized countries but the prospect of closing the gaps in the next five years is not very promising under current growth trends. Weak economic recovery has led to weak wage growth, especially in advanced economies Jobs gaps in G20 compared to pre-2007 trend *Selected urban areas. Q3 2007-Q3 2013 for the Russian Federation; and Q1 2008-Q1 2014 for South Africa In over half of the G20, the share of long-term unemployed has increased as a share of total unemployment, in some cases dramatically. These unemployed face daunting re-employment odds. Particularly sharp increases took place in Spain as well as in the United States, and countries such as Italy and South 33