1 Billion Jobless or Work on Fringes
Solution: Pick up pace of world economy, study says
BOSTON — Close to a billion people worldwide are out of work or underemployed.
The number, representing 30 percent of the world's work force, was released yesterday in a report on world employment by the International Labor Organization (ILO), a branch of the United Nations in Geneva.
Unemployment "remains at very high levels by historical standards, and it has persisted for quite a few years now," says Eddy Lee, an ILO economist and the study's main author.
"This should be a cause for more concern than it appears to be," he says in a telephone interview from Washington.
The primary culprit: insufficient economic growth, the report says. In addition to a slowdown in growth since 1973, developed nations have seen job growth hampered by wage inflation or the slow adjustment of wages to lower productivity growth, the report says.
The ILO hopes to help "break the complacency" of world governments about unemployment - the almost "deterministic view that, 'Well you can't do very much about it,' because of either technology or globalization," Mr. Lee says.
In addition to traditional unemployment, the ILO includes underemployed workers, largely in developing nations. These people, often lacking unemployment benefits or welfare, find small jobs to survive but lack meaningful work.
Developing countries are generally struggling, with notable exceptions in Southeast Asia, with its export-led industrialization. In sub-Saharan Africa, ravaged by conflict and instability, the report says "we do not need deep explanations in terms of economic policy as to why growth is low, we need deep analyses as to why governments are not supplying social order and a minimum adequate macroeconomic environment."
Also of great concern is Europe. Britain is treading water, but unemployment for the European Union increased to an average 11.3 percent last year, including double-digit rates in Germany, France, and Italy. In Eastern Europe and the former Soviet Union, joblessness is also high.
The report finds fault with the prevalent view that "because of supply-side factors - insufficient capacity, lack of skilled labor - it is not feasible to push growth rates above what they have been at 2 and 2.5 percent" a year without kicking off more inflation, Lee notes. "There are quite strong grounds for doubting the truth of that."
To stimulate growth, several things need to be done, according to the ILO:
*Countries, especially industrialized ones, need to rethink the way wage bargaining is handled. If wages rise rapidly, central banks may raise interest rates to avoid inflation. One way to keep wage growth moderate is social pacts between employers, workers, and governments.
*The international trade and investment system must be kept open.
Lee says the right expansionary policies could help get growth up to 3 or 3.5 percent a year. It would take four to six years to bring unemployment down much. For now, he says governments need to muster the "political will to tackle the problem, to find solutions."