Poverty Growing in Africa, Falls in Asia

Wednesday, December 21, 2005

In many developing economies, the problem is mainly lack of decent and productive job opportunities rather than outright unemployment. The report further notes that people are working long hours under hard conditions for little income because the only alternative is joblessness.

Poverty is growing in Africa and Latin America, while it is declining in Asia and Eastern Europe, states a new report released by the International Labour Organisation (ILO).

“In Africa and parts of Latin America the numbers of people working in less favourable conditions have increased dramatically, especially in the agricultural sector, while in parts of Asia economic expansion is fostering solid growth in jobs and better living conditions,” says the 4th edition of Key Indicators of the Labour Market released last week.

In many developing economies, the problem is mainly lack of decent and productive job opportunities rather than outright unemployment. The report further notes that people are working long hours under hard conditions for little income because the only alternative is joblessness.

“The key message is that up to now better jobs and income for the world’s workers has not been a priority in policy-making,” said ILO Director-General Juan Somavia. “Globalisation has so far not led to the creation of sufficient and sustainable decent work opportunities around the world.

The total number of working women and men living on less than $2 a day has not fallen over the past decade, although at 1.38 billion people it is a smaller share of global labour at just below 50 per cent, a decline from 57 per cent in 1994, the report says.

In addition, the biennual study observes, the global economic growth is increasingly failing to translate into new and better jobs that lead to a reduction in poverty. The study found out that for every one percentage point of additional GDP growth, total global employment grew by only 0.30 per cent between 1999 and 2003, a drop from 0.38 per cent points between 1995 and 1999.

With employment growing at between 0.5 and 0.9 per cent for each additional percentage point of GDP growth, the most employment-intensive growth has taken place in the Middle East and in Northern and sub-Saharan Africa.

However, the report notes that within this global trend, different regions have shown mixed results in terms of job creation, productivity results, wage improvements and poverty reduction.

It shows that between 1990 and 2000, wages grew faster in high-skilled jobs globally. Although there was no general deterioration for low-skilled workers, it suggests widening wage inequality between high and low-skilled workers during the 1990s.

The United States continues to show the highest labour productivity levels measured as value-added per person employed while in Central and Eastern Europe, the transition to a market economy led to growth in productivity but a fall in employment.

In other key findings, the report shows that women are continuing to catch up with men in terms of participation in labour markets throughout the world. However, they are disproportionately engaged in low-wage, low-productivity and part-time jobs, and in many regions such as the Middle East, North Africa and South Asia, participation in the labour market still lags far behind.

While the most severe working poverty is growing in Africa, it is declining in Asia and Central and Eastern Europe.

Youth unemployment rates are typically at least twice as high as adult rates and sometimes much higher, but in most countries’ illiteracy rates of adults are higher than those of youth, suggesting the young are increasingly better prepared for the labour market.

A review of other indicators, however, shows that much of the employment growth in these regions is in the category of “self-employment,” which includes most women and men in the informal economy where working conditions are often poor.

While more jobs are being created in economies where agriculture dominates employment such as those in sub-Saharan Africa, many of the jobs are in the informal economy, at low-levels of productivity, and fail to provide workers enough income to pull themselves or their families out of poverty.

Rising wage inequality in the developed economies has been mainly attributed to greater demand for higher-skilled labour, which is in short supply and to lesser demand for workers with lower-level education. Other factors, although of less importance, include increased trade with developing countries and increased immigration of low-skilled workers.

In developing countries, factors impacting on rising wage inequality include industry wage premiums resulting from changes in trade policy that favour workers in specific industries, the increasing size of the informal economy, which generally has lower wages and less favourable working conditions, and a shortage of high-skilled workers.

Source: The East African (Nairobi), Philip Ngunjiri, Special Correspondent (link opens in a new window)