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Job Trends, March 2014 Issue: Stagnant GDP Growth Rates; Sluggish Employment Growth in Developing Countries

In the second quarter of 2013...
  • Employment growth dropped to 0.9 percent, while the unemployment rate barely moved
  • Real wage growth showed improvement, but at half the rate of the previous year
  • Employment growth was halved in East Asia and Latin America

Employment outcomes continued to show almost no improvement in most developing countries over the second quarter of 2013 as gross domestic product (GDP) growth rates stagnated. Employment growth took a modest hit, dropping to 0.9 percent, while the unemployment rate barely moved. Real wage growth was the only outcome showing improvement, but the 3.2 percent growth rate found in the second quarter of 2013 was practically half of the rate for 2012.

In this same period, decreases in employment growth were more pronounced in East Asia and Latin America, where employment growth was halved. Real wage growth also dropped by half in these regions, while in East Europe and Central Asia, real wage growth stumbled to 2.9 percent. Overall, the slowdown in economic growth and in employment that started in the second half of 2012 continued unabated through the second quarter of 2013, driven by weak GDP growth and uncertainties regarding the pace of recovery in the developed world.

Regionally, comparing the second quarter of 2012 with the second quarter of 2013, East Asia sustained relatively high GDP growth, but this was driven mostly by China and the Philippines, each with growth rates surpassing 7.5 percent. In contrast, both Thailand and Indonesia saw declines in GDP growth (from 4.4 to 2.9 percent and from 6.3 to 5.8 percent, respectively), leaving the region overall with a GDP growth rate of around 6 percent. This was not the case with employment growth or with unemployment. While unemployment barely budged, employment growth plummeted from an average of 4 percent in the second quarter of 2012 to 1.7 percent in the second quarter of 2013. Although employment stagnated or declined, real wages appear to have grown in most East Asian countries. Indonesia was the exception: after a period of high real wage growth between 2011 and 2012, wages adjusted downward from 17.1 percent in the second quarter of 2012 to -1.4 in the second quarter of 2013.


Note: Values represent the median value of growth rates estimated for 20 countries: Armenia, Belarus, Brazil, Chile, China, Colombia, Ecuador, Kazakhstan, Kyrgyzstan, Lithuania, Mexico, Peru, Philippines, Romania, the Russian Federation, South Africa, Thailand, Turkey, Ukraine, and the Bolivarian Republic of Venezuela.

Europe and Central Asia present a mixed picture with respect to GDP growth. While around half of the countries—Kazakhstan, Lithuania, Moldova, and Turkey—showed increases in GDP growth, growth in the other half weakened, with Armenia, Belarus, and Ukraine actually contracting. The employment growth rate remained low throughout the region at 1 percent. Compared to the second quarter of 2012, the unemployment rate improved slightly for the Europe and Central Asia region over the same period in 2013. Overall, real wage growth showed significant declines, dropping from 9.7 percent in the second quarter of 2012 to less than a third of that rate (2.9 percent) in the second quarter of 2013. 

In the Latin America and Caribbean region, GDP growth declined in all countries except Brazil, leading the regional average to drop from 4.6 to 3.4 percent. Mexico was hit strongest: GDP growth dropped from 4.5 percent in the second quarter of 2012 to 0.5 percent in the second quarter of 2013. The region’s employment growth rate also fell substantially, from 3.3 to 1.4 percent. The regional unemployment rate decreased marginally from 6.7 percent in the second quarter of 2012 to 6.3 percent in the second quarter of 2013. Real wage growth accelerated in many countries in the region, except for the Bolivarian Republic of Venezuela, Mexico, and Peru. The average value, however, declined from 3.3 percent in the second quarter of 2012 to 1.6 percent in the second quarter of 2013, reflecting the drop registered by the Bolivarian Republic of Venezuela, where real wages contracted in the second quarter of 2013.

Finally, the South African economy showed signs of further deterioration. GDP growth decreased from 2.9 in the second quarter of 2012 to 2.3 percent in the second quarter of 2013. During this period employment growth also fell from 2.5 to 2 percent, and the unemployment rate grew from 24.9 to 25.6 percent. The largest decrease in employment-related outcomes was registered by the real wage growth, which plummeted from 6 to 1.2 percent.

For the full text of the March 2014 report, click here (PDF). 

JobTrends is a regular series monitoring labor markets in developing countries. It is a collaborative effort between the Human Development Network (HDN) and the Poverty Reduction and Economic Management (PREM) Networks of the World Bank.