ILO warns of widespread insecurity in the global labour market

This article is brought to you through the meticulous study of International Labour Organization as a source.

How is the world of work changing? Are permanent contracts the norm or the exception? Discover the new World Employment and Social Outlook 2015 (WESO).

GENEVA (ILO News) – Only one quarter of workers worldwide is estimated to have a stable employment relationship, according to a new report by the International Labour Organization (ILO).

The World Employment and Social Outlook 2015 (WESO)   finds that, among countries with available data (covering 84 per cent of the global workforce), three quarters of workers are employed on temporary or short-term contracts, in informal jobs often without any contract, under own-account arrangements or in unpaid family jobs.

Over 60 per cent of all workers lack any kind of employment contract, with most of them engaged in own-account* or contributing family work in the developing world. However, even among wage and salaried workers, less than half (42 per cent) are working on a permanent contract.

The first edition of the new, annual flagship report, entitled The Changing Nature of Jobs, shows that while wage and salaried work is growing worldwide, it still accounts for only half of global employment, with wide variations across regions. For example, in the developed economies and Central and South-Eastern Europe, around eight in ten workers are employees, whereas in South Asia and Sub-Saharan Africa the figure is closer to two in ten.

Another current trend is the rise in part-time employment, especially among women. In the majority of countries with available information, part-time jobs outpaced gains in full-time jobs between 2009 and 2013.

“These new figures point to an increasingly diversified world of work. In some cases, non-standard forms of work can help people get a foothold into the job market. But these emerging trends are also a reflection of the widespread insecurity that’s affecting many workers worldwide today,” said ILO Director-General Guy Ryder.

The way forward is to ensure that policies take into consideration the evolution of how we work today.”

Guy Ryder, ILO Director-General

“The shift we’re seeing from the traditional employment relationship to more non-standard forms of employment is in many cases associated with the rise in inequality and poverty rates in many countries,” added Ryder. “What’s more, these trends risk perpetuating the vicious circle of weak global demand and slow job creation that has characterized the global economy and many labour markets throughout the post-crisis period.”

“The way forward is to ensure that policies take into consideration the evolution of how we work today. This means stimulating investment opportunities to boost job creation and productivity, while ensuring adequate income security to all types of workers, not just those on stable contracts,” said Ryder.

Growing inequalities

Income inequality is increasing or remains high in the majority of countries – a trend that is aggravated by the rising incidence of non-permanent forms of employment, growing unemployment and inactivity. The income gap between permanent and non-permanent workers has increased over the past decade.

The report finds that despite the positive steps made towards improving pension coverage, social protection, such as unemployment benefits, is still mainly available only for regular employees. For the self-employed, even pensions are scarce: in 2013, only 16 per cent of the self-employed contributed to a pension scheme.

Labour regulation matters

According to the report’s authors there is a growing recognition that labour regulation is necessary to protect workers – especially those in non-standard work – from arbitrary or unfair treatment and to enable effective contracts between employers and workers.

 
Trends on the changing nature of jobs 

Employment protection laws have been very gradually strengthening over time, a trend that is common across most countries and regions. However, in Europe, labour protection has generally decreased since 2008 when the global financial crisis started.

“The key issue is to match regulation to an increasingly diversified labour market,” said Raymond Torres, Director of the ILO Research Department and lead author of the report. “Well-designed regulations can support both economic growth and social cohesion.”

Global supply chains

The report finally looks at the increasing importance of global supply chains (GSCs) in shaping some of the employment and income patterns that are observed in labour markets today.

An estimate based on some 40 countries with available data finds that more than one in five jobs worldwide is linked to global supply chains – that is, jobs that contribute to the production of goods and services that are either consumed or further processed in other countries.

The report considers various policies that can assist global supply chains to bring benefits to enterprises and economies as well as to workers, something that has not always been the case in certain sectors where GSCs are common.

Other key trends and data from the report
  • At the global level, employment growth has stalled at a rate of around 1.4 per cent annually since 2011. In the developed economies and European Union, employment growth since 2008 has averaged only 0.1 per cent annually, compared with 0.9 per cent between 2000 and 2007.
  • Nearly 73 per cent of the global jobs gap in 2014 was due to a shortfall in employment among women who make up only around 40 per cent of the global labour force.
  • The direct impact of the global jobs gap on the aggregate wage bill is substantial: it corresponds to an estimated US$ 1.218 trillion in lost wages around the world. This is the equivalent to about 1.2 per cent of total annual global output and approximately 2 per cent of total global consumption.
  • In addition to the reduction in the global wage bill due to the jobs gap, slower wage growth has also had a substantial impact on the aggregate wage bill. For example, in the developed economies and the European Union, slower wage growth during the crisis and post-crisis periods corresponded to an estimated $485 billion reduction in the region’s aggregate wage bill in 2013.
  • Because of multiplier effects from increased wages, higher consumption, and increased investment levels, closing the global jobs gap would add an estimated $3.7 trillion to global GDP – equal to a one-time, 3.6 per cent boost to global output.
  • Across 86 countries covering 65 per cent of global employment, more than 17 per cent of employed persons were working on a part-time basis of less than 30 hours per week. The number of women engaged in part-time employment stood at 24 per cent compared with 12.4 per cent for men.
  • Out of 40 countries (representing two thirds of the global labour force), 453 million people were employed in global supply chains in 2013, compared with 296 million in 1995. This represents a share of 20.6 per cent in total employment in the countries covered, compared with 16.4 per cent in 1995.
  • At the global level, 52 per cent of employees are currently affiliated to a pension scheme, compared with 16 per cent of the self-employed.
  • Nearly 80 per cent of employees with a permanent contract are currently contributing to a pension scheme, compared with just above half (51 per cent) of employees with temporary contracts.

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