12/12/2005.

Global economic growth is increasingly failing to translate into new and better jobs that lead to a reduction in poverty, according to a new report issued by the International Labour Office (ILO) on 9 December.

Taking a global view, the 4th Edition of Key Indicators of the Labour Market (KILM) that currently, half the world's workers still do not earn enough to lift themselves and their families above the US $2 a day poverty line.

"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. "Globalization has so far not led to the creation of sufficient and sustainable decent work opportunities around the world. That has to change, and as many leaders have already said we must make decent work a central objective of all economic and social policies. This report can be a useful tool for promoting that objective."

The study finds that while in some areas of Asia economic expansion is fostering solid growth in jobs and improvements in living conditions, other areas such as Africa and parts of Latin America are seeing increasing numbers of people working in less favorable conditions, especially in the agricultural sector.

The report emphasizes that in many developing economies the problem is mainly a lack of decent and productive work opportunities rather than outright unemployment. Women and men are working long and hard for very little because their only alternative is to have no income at all.

In recent years there has been a weakening relationship between economic growth and employment growth, meaning that growth is not automatically translating into new jobs. The report's "employment elasticities" indicator allows one to look at the relationship between economic growth - measured in GDP - and two of growth's contributory variables, the positive or negative change in employment and productivity. The biennial study found that for every 1 percentage point of additional GDP growth, total global employment grew by only 0.30 percentage points between 1999 and 2003, a drop from 0.38 percentage points between 1995 and 1999.
 

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.
In Central and Eastern Europe, the transition to a market economy led to an increase in productivity but a fall in employment. The new EU Member States show a significant advantage in terms of international competitiveness with unit labour cost levels at approximately 70 per cent of the US level. Increased competitiveness, however, is not benefiting the population in terms of job creation and wages. The region shows some of the world's highest unemployment rates and many of those not working have simply given up the job search, as reflected in the region's high inactivity rates.

• ILO press release
• The report