SUNS  4287 Thursday 24 September 1998



LABOUR: WORLD UNEMPLOYMENT WILL RISE DUE TO FINANCIAL CRISIS

Geneva, 23 Sep (Chakravarthi Raghavan) -- The number of unemployed and under-employed in the world has never been higher, and will grow by millions before the end of the year as a result of the Financial Crisis, the International Labour Organization (ILO) said in its World Employment Report 1998-1999 published Wednesday.

"The global employment situation is grim, and getting grimmer," says Michel Hansenne, the ILO Director-General in the report. "The world financial crisis has put immense pressure on globalization, and we fear that many governments may begin turning their back on much needed economic reforms. But globalization per se is not the problem;"

The solution? The ILO speaks of the critical role of high-quality, educated skill-labour force, as among the measures to increase competitiveness, growth and employment in a globalizing world.

In the World Employment report published in 1996, the ILO had projected an optimistic picture of rising world employment, heralding a global economic revival that would cut unemployment and
under-employment.

But the present report shows that the 1996 estimate of a one-billion unemployed or under-employed has largely remained unchanged

At a press conference Wednesday in Geneva to release the report, Hansenne admitted that the ILO had taken an optimistic view of the globalization and liberalization process in the world economy, but that the financial crisis is responsible for the downturn.

After the financial crisis broke out first in Bangkok, and then spread across Asia, resulting in closures of enterprises and job losses, an ILO secretariat report for a regional conference in
Bangkok, attempted to survey the differing views on the causes. But the ILO head himself, at the Bangkok meeting, took the IMF/Washington view of the crisis being due to "crony capitalism", need for reforms, labour standards and safety nets.

According to the present report, some 150 million workers are actually unemployed or seeking or available for work. Of this figure, 10 million have been unemployed in 1998 alone due to the financial crisis.

Some 750-900 million people in the world, or 25-30 percent of the population are under-employed i.e. work substantially less than full-time, though wanting full time employment.

Some 60 million people, in the 15-24 age group, are actively seeking employment.

While some parts of the world saw economic growth in the first half of 1998, it has not spurred higher job growth in the world, but only cut unemployment and under-employment in the US, and to a lesser degree in the EU.

The persistence of unemployment and under-employment leads to social exclusion of the young and the old, less skilled disabled and entire ethnic minority groups - with a strong bias against women in all categories, says the ILO head.

But the report continues to cling to the liberal dogma, and points as solutions to investment by countries in skill development and training for the workforce.

Though the speculative capital flows have wiped out the gains made by the region in three decades of hard work and sacrifices, the ILO talks of training and education being at the heart of the South
East Asian miracle and could well provide a way-out of under-development and poverty for millions in other parts of the world.

In Asia, the picture is particularly grim.

Indonesia has seen steep increases in unemployment and under-employment, accompanied by food shortages. Real wages in 1998 could well fall further than the 15% drop in per capital GDP
presently projected, and unemployment reach 9-12 percent as against the four percent in 1996.

In Thailand, the unemployment could now rise to about 6% of labour force or almost two million jobless. And the Thai reliance of the traditional extended family for safety net will trigger a four to
five fold increase in under-employment. The ripple effects will spread far from the urban centres.

South Korean job losses have accelerated in the past year, nearly doubling between Nov 1997 and Feb 1998, reaching 7% in June.

In Hong Kong, unemployment has risen to 4.5% at second of second quarter of 1998 - up from 2.9% at end 1997. In China, some 3.5 million workers will be laid off, and unemployment will increase to 5-6 percent.

The ILO also expects worsening labour market conditions in India, Pakistan and Bangladesh, countries which so far have escaped any significant impact from the crisis.

Latin America faces the danger of being caught up in the crisis, with investors withdrawing from emerging markets, thus pushing up regional unemployment and under-employment.

In the region, Argentina with a successful stabilization and structural adjustment programme, saw an average growth rate of 5.8% between 1991-1997. But the employment situation has deteriorated, with unemployment increasing over the period - from a 6.3% in 1991 to 17.5% in 1995, and dropping to 15% in 1997.

Unemployment in other Latin American countries in 1998 is estimated to be 7.9% in Brazil, 11.3% in Venezuela, 3.4% in Mexico and 15.2% in Colombia.

In sub-Saharan Africa, the prolonged period of poor growth and deteriorating labour market conditions has given way to slight improvement. But while encouraging, there is no "cause for undue optimism" says the ILO. With growth in labour force of almost 3%, little job creation in the formal sector, and most jobs being created in the informal sector. The economically active population is predicted to grow by 2.9% a year between 1997 and 2010, and this means an estimated 8.7 million new job seekers will enter the labour market.

In Central and eastern Europe, most people will continue to suffer dramatic and painful declines in living standards, accompanied by a rapid rise in unemployment, rise in income inequalities, and
collapse of output.

In Russia, the economic turmoil has been accompanied by negative growth in real wages,

But Poland in contrast has seen a slow upswing. Growth in the industrial world has been encouraging but uneven.

In the EU more than 18 million workers are unemployed this year, and these numbers do not take into account the "discouraged" workers who have given up hope of finding work and the involuntary
part-time workers.

The long-term unemployed have poor prospects of finding work, even if the overall macro-economic environment improves. The social dimensions of this problem are enormous and have to be tackled with policy measures and programmes for reintegrating the long-term unemployed into the labour market.

The long-term unemployment problem is particularly severe in the EU, where more than 60% or nine million long-term employed in 1996 have been out of work for more than two years.

Over the past two decades, women have provided the bulk of new labour supply in developed and developing countries. But two opposing trends have now emerged: one is the expansion and
feminisation of lower-level jobs in the services sector, and other of a growing number of high-level jobs obtained by educated women. Medicine, law, accountancy and business studies are some of the areas, long dominated by males, where women are enrolling in increasing numbers. But there are fewer examples of women breaking in top traditionally male-dominated jobs at intermediate and
lower-skill levels.