“Mutually reinforcing crises, including rising debt levels, are disproportionately affecting developing countries, worsening the global employment divide between high-income and low-income countries and widening existing inequalities exacerbated by the COVID-19 pandemic,” the ILO said in its 11th edition of the World of Work report.
ILO projects that low-income countries in Africa and the Arab region are unlikely to recover to pre-pandemic levels of unemployment this year. For North Africa, the unemployment rate in 2023 is projected to be 11.2% compared to 10.9% in 2019, 6.3% for Sub-Saharan Africa as against 5.7% in 2019 and 9.3% for the Arab states as against 8.7% in 2019).
According to ILO, regions that have managed to reduce their rates substantially below pre-crisis levels includes Latin America and the Caribbean with the unemployment rate of 6.7% compared to 8% in 2019, northern, southern and western Europe with unemployment rate of 6.3% vis-a-vis 7% in 2019 and central and Western Asia with unemployment rate of 7.8% as against 9.2% in 2019.
ILO further said it has developed a new indicator, the jobs gap, which offers a more comprehensive measure of the unmet demand for employment, especially in developing countries as it captures all persons who would like to work but do not have a job.
“Variations in the jobs gap point further to a global employment divide,” it said. As per the report, low-income countries face the largest jobs gap rate at an alarming 21.5% while the rate in middle-income countries stands slightly above 11%. High-income countries, however, registered the lowest rates at 8.2%.Furthermore, low-income countries comprise the only country income group that has seen a long-term rise in the jobs gap rate, from 19.1% in 2005 to 21.5% in 2023, the report said.
ILO is of the view that rising debt levels add additional challenges for developing countries, considerably narrowing the scope for policy interventions. “Financial and fiscal constraints hamper responses to complex threats, which include conflict, natural disasters and economic crises that tend to reinforce themselves, worsening the jobs gap.
According to the report, low-income developing countries that are in debt distress are facing a significantly higher jobs gap, reaching 25.7% in 2023, compared with 11% in developing countries at low risk of debt distress.
Highlighting the significant social protection policy gaps in developing countries, the report said evidence shows that increasing investment would bring large economic, social and employment benefits and narrow the global jobs divide.
The Monitor finds that introducing universal basic old-age pensions in developing countries would increase their GDP per capita by 14.8% within 10 years and reduce extreme poverty (share of people who live on less than $2.15 a day) by 6 percentage points, which will be a drastic reduction from the current rate of 15.5%,” it said.
ILO suggests the need for global financial support for job creation and social protection during a time of multiple crises and shocks to ensure that recovery and reconstruction will leave no one behind and support long-term structural transformation.
The report stresses the critical importance of creating fiscal space for social investments in low-income countries. “This needs to be considered with urgency as part of the current global discussion on the reform of the international financial architecture,” it said.
“Investing in people through jobs and social protection will help narrow the gap between rich and poor nations and people,” Gilbert F. Houngbo, director general, ILO said.