G20 Faces Persistent Gaps in Employment and Job Quality

September 9, 2014

Joint report by the World Bank Group, ILO and the OECD

MELBOURNE, Tuesday 9, September 2014 – A large and persistent shortfall in the number and quality of the jobs being created in G20 countries is affecting prospects for reigniting economic growth, according to a report prepared by the ILO, the OECD and the World Bank Group for the G20 Labour and Employment Ministers meeting taking place in Melbourne this week.

Despite some recent improvement, slow recovery from the financial crisis means that many G20 economies still face a substantial jobs gap, which will persist until at least 2018 unless growth gains momentum. With more than 100 million people still unemployed in the G20 economies and 447 million 'working poor' living on less than $2 a day in emerging G20 economies, the weak labour market performance is also threatening economic recovery because it is constraining both consumption and investment.

Key findings of the report include:

  • Wage growth has significantly lagged behind productivity growth in most G20 countries, while wage and income inequality either remains high or has widened..
  • Real wages have stagnated, or even fallen, for many in advanced G20 economies.
  • In emerging G20 economies, high levels of under-employment and informality are constraining both current output and future productivity.

“Jobs are a foundation for economic recovery,” the report says. “G20 countries need more and better jobs as a foundation for sustained growth and wellbeing of their societies”.

Despite overall slower growth, a number of emerging economies have made major progress in reducing absolute poverty, and some have also reduced income inequality. However, informal employment remains a major obstacle to improving job quality, particularly in emerging and developing countries.

Looking ahead, the report says that achieving sustainable, equitable and inclusive growth requires policies across all relevant sectors that improve productivity and wages, employment opportunities and outcomes, particularly for those groups most affected by the crisis or who are vulnerable. Demographic changes, such as rapid population ageing in some countries and rising youth populations in others, also mean that governments need to promote the labor market participation of women, youth and other under-represented and vulnerable groups, enhance their skills and provide job-search support.

The report also highlights social protection, social dialogue, rights at work, and workplace safety as areas in need of further action.

Quality job creation and robust, equitable growth are intertwined goals, the study concludes.

“Policy interventions that address both the demand and supply sides of the labor market are essential to reverse the current self-reinforcing cycle of slow growth, low job creation and low investment. Such policies would be much more effective if taken collectively and coordinated at the G20 level.”

“G20 labor markets: outlook, key challenges and policy responses” was prepared for the G20 Labor and Employment Ministerial Meeting (LEEM) by the World Bank Group, the International Labour Organization (ILO) and the Organization for Economic Cooperation and Development (OECD). The LEMM is taking place from 9-11 September 2014.

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