Economy

Labour Day: 10 worrying signs from the world at its youngest

A few points on the state of works in the world

 
By DTE Staff
Last Updated: Wednesday 01 May 2019
Labour Day
Image: Getty Images Image: Getty Images

Labour Day, popularly known as International Workers’ Day, has many historical anecdotes attached to it. But what it precisely is identified with is the state of the world’s labour force.

In the last few years, Labour Day has been marred with widespread protests over unemployment and human rights. A lowdown on the state of employment and the state of work:

1. Planet’s youngest-ever population: The world is hosting not only the youngest-ever population but also a restless generation. Close to 1.8 billion people are in the age group of 15-29 years and more than four-fifth of them live in developing countries. In South Asia and Africa, one in every three people is a young person.

2. Highest-ever demographic dividend: The world has the highest potential of demographic dividend due to its young population. It means, if encashed, the young population can usher unheard prosperity to the world by simply deploying their critical capital of labour and skills.

3. Protests: We don’t have a universally accepted definition of “protests”. But since 2011, there has been a surge in protests, mostly led by the youth across the world. According to the International Labour Organization (ILO), protests by youth surged in 2011-12 and it became widespread in 2015-17.Then why are they restless? The growth rate of the average working-age population (above 15 years) has been declining since 1990. According to the International Labour Organization, this will keep the unemployment rate high.

4. Labour force or spent force: Currently, around 61 per cent of the world’s working-age population is either employed or seeking employment. This is called the labour force participation rate. This rate is consistently declining at 0.1 and 0.2 per cent every year since more than the past 25 years.

5. Shrinking labour force: The demographic dividend is of value if we get to use them productively. Recent data has pointed out that growth of this population is slowing down already. The population growth rate of the working-age group has slowed down from 1.9 per cent in 1990-95 to 1.3 per cent in 2013-18. By 2028, it is expected to dip to 1.1 per cent. That means the world’s labour force is shrinking.

6. Unemployment rate came down, but: The world has recently been experiencing a dip in unemployment rate. The employment rate can’t be more than the labour force growth rate. During 2004-2007, employment growth rate was higher than the labour force growth rate. This brought down the global unemployment rate significantly. For the last eight years, both the rates have been relatively the same, but the employment rate has been slightly higher than the work force rate.

However, the warning comes from the fact that during 2018-20, the two rates are expected to be similar so global unemployment rate will remain essentially unchanged. But unemployment takes years to decline. For example, in 2018, the global unemployment rate was 5 per cent. In 2008, the year of economic slowdown, unemployment rate was 5 per cent and it went up to 5.6 per cent in 2009. But it took more than nine years to come down to 5 per cent.

The number of people unemployed is projected to increase by 1 million per year to reach 174 million by 2020 as a result of the expanding labour force.

7. Women still not employed: As the world gets younger and more and more people seek employment, the division between genders in employment share raises concerns — not only to ensure equality but also to speed up overall development. This is where the world is up for a shock.

Two out of five in the global labour force are women. This ratio has been stagnating for the last 15 years, according to the latest Global Employment and Social Trends, a flagship annual survey published by ILO. Women’s participation in the labour force globally was only 48 per cent in 2018. For men, this was 75 per cent. 

8. Women, the underutilised labour force: ILO has a new category called “potential labour force”, which includes those who are looking for a job but are not available to take up employment or who are available but are not looking for a job. This group has 140 million people and 61 per cent of this group constitutes women. This group is also called “underutilised labour”.

9. Employed but poor: Employment is usually treated as the most effective tool to eradicate poverty. But of late, inequality in income between men and women means that women, despite being employed, remain poor. “Being employed does not always guarantee decent living,” says Damian Grimshaw, ILO director of research. “For instance, 700 million people are living in extreme or moderate poverty despite having employment.” Most of these could be women.

10. Environment as the enemy: According to the World Bank’s report titled Poverty and Shared Prosperity 2018: Piecing Together the Poverty Puzzle, poverty reduction rate has slowed down. During 1990-2015, extreme poverty reduced annual by one per cent, but during 2013-15, reduction slowed down below one per cent.

The report’s most worrying takeaway is the dramatic change in the distribution of the poor in the world over the last two decades. This change indicates what fragile ecology means to the state of economic well-being.

Poverty in absolute terms is increasing in areas usually associated with the likes of sub-Saharan Africa and South Asia. But as one analyses the change in the geographical distribution of poverty, another picture emerges. Now, sub-Saharan Africa and South Asia host over 85 per cent of the poor in the world. This is a major shift. In 1990, half of the world’s poor lived in East Asia and the Pacific. Further, 26 of the world’s 27 poorest countries were in sub-Saharan Africa. This region had just a quarter of the world’s poor in 2002. But by 2015, it has now more poor than the rest of the world combined. 

At the global level, just five countries — India, Bangladesh, Nigeria, Ethiopia and the Democratic Republic of Congo — account for half of the extreme poor in the world. This is at a time when half of the countries in the world have less than three per cent poverty level. And strikingly, these five countries, barring Congo, are witnessing rapid economic growth.

The current geography of the poor has two situational realities. One is that the poor reside mostly in rural areas. Going by the bank’s report, three-fourth of the total poor live in rural areas. Secondly, these places have a highly degraded ecology. Most of the poor depend on natural resources like land, forests and livestock for survival. So, for them, economy is all about ecology. Degradation of the ecology, thus, leads to poverty.

There are other reasons for economic underdevelopment, but ecological degradation is at the core of their economic well-being. According to the United Nations’ Millennium Assessment, lives of more than one billion people are at stake due to desertification and the drying up of lands and livelihoods. It is no wonder then that most of the poor now reside in such areas and are overtly dependant on land for survival.

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