Decent employment, weapon against poverty
Social integration and poverty reduction require more, and better, jobs for the world’s poor
The idea that creating more and better jobs is the best way to eradicate poverty may sound like a platitude to the man on the street. For policy-makers, however, full and decent employment has long been the missing link in the economic growth and poverty reduction equation. World leaders reformulated this equation at the 2005 World Summit, agreeing to put employment back into the UN development agenda and at the heart of national and international policies. Indeed, with unemployment on the rise and the quality of jobs deteriorating, and with half the world’s workers earn less than a meager poverty line income of two dollars a day, addressing the employment dilemma is more pressing than ever. The Economic and Social Council adopted in 2006 a Ministerial Declaration on employment and decent work for all, with a number of practical measures for creating an enabling environment to deal with the structural crisis of unemployment. Now the baton is passed to the Commission for Social Development which has placed the subject of full employment and decent work for all at the top of its February agenda.
The Commission’s forty-fifth session, starting on 7 February, is expected to shed light on the impact of full employment and decent work on poverty eradication and social integration. Employment is a key pathway to poverty reduction and empowerment of marginalized groups. The impact of wages, income, job stability and decent work on people’s vulnerability is direct. As workers are affected by increasing insecurity in the workplace and opportunities for decent work in labour markets shrink, progress in the fight against poverty and in building inclusive societies cannot be realized. This is one of the more sobering points stressed by the Secretary-General in his recent report Promoting full employment and decent work for all, which has been prepared for this session and will be the cornerstone of the Commission’s discussions on employment.
“Unemployment, underemployment and job insecurity are interlinked to income insecurity and poverty in a vicious circle in which one phenomenon reinforces the others,” according to the report. Poverty eradication, full employment and social integration were the foundation of the Programme of Action of the World Summit for Social Development held in Copenhagen in 1995. In this session the Commission will review progress or regress made in the implementation of those commitments.
The course of employment worldwide clearly points to regress and weakness in one of the Copenhagen pillars. Even though globally more people are working than ever before, between 1995 and 2005 the ranks of the unemployed increased nearly 22 percent to 192 million people, and continued to expand in 2006 to an all time high of 195 million. Altogether the unemployment rate worldwide has risen from about 6.0 to 6.3 percent over the last ten years. Unemployment in sub-Saharan Africa is the highest of any region having gone from 9.2 to 9.7 percent in one decade. In Southeast Asia and the Pacific, unemployment rose from 3.9 to 6.1 percent over the same period, due in part to the 1997 Asian financial crisis. In Central and Eastern Europe, in East Asia and in Latin-America and the Caribbean, unemployment levels remained more or less unchanged.
Relying exclusively on unemployment levels as indicators of working conditions nonetheless obscures the real face of poverty today. According to Johan Schölvinck, Director of the Division for Social Policy and Development of DESA, “unemployment and employment figures only apply to the formal sector of the economy and fail to reveal what is not captured by statistics: poor working conditions and hidden unemployment in the informal economy.” Promoting full employment is not sufficient to prevent situations of risk to human security. For this reason, “the Commission stresses the promotion of decent work for all,” says Schölvinck. “Having a job does not guarantee that people will have an environment of safe work.”
Globalization and the drive for international competitiveness have greatly affected the employment situation in the last decade. They have helped spawn new job opportunities in some areas, such as research and development centres in some developing countries, but they have also widened the gap between skilled and unskilled workers, so “the opportunities offered by the forces of globalization,” notes the Secretary-General in his report, “do not reach the poor, who are largely unskilled.” They have also generated job losses, employment insecurity and new risks for the workforce.
Underemployment characterized by low productivity and inadequate income remains “pervasive and is probably on the rise,” according to the Under-Secretary-General for Economic and Social Affairs, José Antonio Ocampo. Underemployment affects especially the agricultural sector and the urban informal economy. In terms of the fight against poverty, this diagnosis has far-reaching implications since the sectors together account for the major share of employment in most developing countries, and in particular in least developed countries.
Although in decline as a percentage of the overall labour force, agriculture is still the world’s largest source of employment providing jobs to more than 1.1 billion people. Informal labour, for its part, accounts for between one half and three quarters of non-agricultural work in the bulk of developing countries, and is on the rise pushed by the fast growth of the service sector. The spread of underemployment and precarious forms of work in these areas means that work and poverty, two terms that would seem mutually exclusive, go hand in hand.
Most of the poor in developing countries do work but jobs often provide barely enough income to lift them above the poverty threshold. Of the more than 2.8 billion workers in the world in 2005, 1.4 billion working poor earned less than two dollars a day. Out of the 1.4 billion, 485 million struggled to survive on less than one dollar a day. Many of the poorest workers are often denied basic rights and legal protection in the workplace, and forced to work in hazardous conditions.
In developed countries too, job security has decreased fuelled by increased competition and the pressure to seek more flexible work arrangements in order to cut costs. In addition to the end of the job for life, a major trend in today’s workplace is the reduction of job-related benefits such as pensions, health insurance and unemployment allowance.
Workers also find themselves in a weakened bargaining position vis-à-vis their employers as the collective strength of trade unions and other labour organizations has diminished. As the Secretary-General’s report indicates, this is a product of intense competition for jobs in manufacturing and service industries across countries, as well as increasing self-employment. Self-employment has indeed soared over the last years. In developing countries, self-employment outside the agricultural sector accounts for 60 to 70 per cent of informal work, while in the United States the number of businesses with no paid employees stood at 18.6 million in 2003.
The spread of precarious employment might be expected to lead to new social protection systems in line with the new risks but has it has not. As the report makes clear, current formal social protection systems are still largely designed to benefit those with long-term jobs in the formal economy, in the same country and with the same employer – that is to the extent that they exist at all. More than half the world’s population is excluded from any type of social security protection.
Liberalization policies adopted by many countries have given priority to economic growth to the detriment of employment. The link between global economic growth and the creation of new jobs has nonetheless proved to be weak. The increase in the unemployment rate from 6.0 to 6.3 percent between 1995 and 2006 occurred at a time when the global economy grew at a rate of 3.8 percent per year. Such jobless growth confirms that growth alone cannot guarantee job creation – much less decent work – nor ensure the significant reduction in extreme poverty needed to attain the internationally agreed development goals, including the Millennium Development Goals, as Under Secretary-General Ocampo has often said.
As DESA’s 2005 report on the world social situation reminds us, the impact of growth on poverty reduction is significantly lower when inequality is on the rise than when inequality is in decline. Jomo K.S., Assistant Secretary-General for Economic Development, describes a case in point in the DESA working paper on “Growth with Equity in East Asia?” According to Jomo, Indonesia and Malaysia experienced reductions in inequality between segments of the population over an extended period not as a result of market forces but due to government expenditures in employment and education programmes.
National employment policies are essential if Governments are to promote full employment, and smooth adjustment to changes in the structure of production brought about by trade liberalization and globalization. Many countries have implemented policies intended to create jobs, such as employment subsidies, public works and self-employment assistance. Less directly, they have bolstered public employment services by improving the capacity of the labour market through training, while enhancing access through enhanced labour market information and job matching.
Employment policies, on the other hand, have been ineffective in some countries where a balance between labour supply and demand does not exist. According to the Secretary-General’s report, the challenge in these cases is to devise a favourable macroeconomic environment that attracts investment which in turn boosts and supports labour demand. That said, globalization has intensified the interdependence between States in macroeconomic policies. Consequently, countries have little policy space to step up employment levels through more expansionary macroeconomic policies on their own. For this reason, better coordination of macroeconomic policy among countries is seen as a prerequisite to attain the global goal of full employment and decent work.
At the same time, in many developing countries, poverty reduction strategy papers are intended to serve as road maps for developing countries to reach the Millennium Development Goals. The coverage of employment issues in the strategy papers is, however, limited in terms of the quantity and quality of conditions of work. Progress reports required by poverty reduction strategies rarely mention decent work objectives, policies and programmes. Although employment and social protection are beginning to receive more attention in the strategy papers, only a few of them fully integrate employment into macroeconomic development policies relating to tax, public expenditure, social services, agriculture, industrial development, trade or investment.
Overall, the picture of decent work and full employment worldwide is grim. Even with strong global economic growth in 2007 there is serious concern about the prospects for decent job creation and reduction in the numbers of working poor. The creation of an enabling environment at the international and national levels that promotes decent work together with economic growth, enterprise development and poverty reduction is therefore all the more urgent. As ILO concluded in January in its 2007 report on Global Employment Trends, the ball is now in the court of Governments and the international community. It is up to national Governments and international policy-makers to ensure that the favourable economic conditions materialize into decent job growth.
Full access to the Report of the Secretary-General on promoting full employment and decent work for all, and further information on the 45th session of the Commission for Social Development are available at http://www.un.org/esa/socdev/csd/csocd2007.htm.
For more information on the World Summit for Social Development held in Copenhagen in 1995, please visit http://www.un.org/esa/socdev/wssd/.