Working poverty to continue challenging planners in 2017

By Mansoor Ahmad

LAHORE: Planners in Pakistan must address the problem of poverty that is prevalent among the employed, and take heed of the International Labour Organisation’s (ILO) warning of marginal rise in global unemployment rates in 2017.

In its report on trends in world employment and social outlook for 2017, the ILO states that working poverty remained a problem in 2016, with nearly half of the workers in South Asia and two-thirds in sub-Saharan Africa living in extreme or moderate working poverty (ie living on less than $3.10 per day in purchasing power terms).

Underlying these aggregate labour market and social trends are disparities, often wide, across a number of demographic groups. Of notable concern are gender disparities in labour market opportunities, which cut across and persist in a number of areas.

For example, in South Asia, close to 82 percent of women were in vulnerable employment in 2016, compared with just over 72 percent of men.

Pakistan’s economy is on the move, as even the World Bank has upgraded its GDP growth forecast from 4.5 to 5.2 percent. The 8 percent increase in Large Scale Manufacturing growth in November augers well for more job opportunities.

The export package announced by the Prime Minister would create jobs in labour intensive sectors like apparel and carpet. Moreover, the expected investment on the China-Pakistan Economic Corridor (CPEC) route would also address unemployment problems. But the wage structure in many sectors would have to be addressed to reduce working poverty.

According to ILO, an underlying feature of the chronic nature of poverty is the persistence of poor-quality employment. In emerging and developing countries, people in vulnerable employment experience rates of extreme poverty that are three times as high as for wage and salaried workers.

Central to the problem is the narrow range of income sources accessible to the poor.

In developing countries, the poor rely substantially on their labour incomes and have few opportunities to benefit from social transfers.

Moreover, economic growth alone is insufficient to eradicate poverty.  This stems, in part, from inequitable transfers of natural resources, wealth, and also from disconnections between the agricultural sector – where around two-thirds of the world’s poor work – and export-led sectors. Even where better connections exist, decent jobs are not guaranteed and income inequality often worsens with economic growth.  Discontent with the social situation and lack of decent job opportunities are both factors (among others) that play a role in a person’s decision to migrate.

Policies that address both the root causes of secular stagnation and structural impediments to growth need to be incorporated into macroeconomic policies and placed at the forefront of the policy agenda.  The ILO estimates that a coordinated effort to provide fiscal stimulus – an increase in public investment – that takes into account each country’s fiscal space would provide an immediate jump-start to the global economy.

Global unemployment levels and rates are expected to remain high as the global labour force continues to grow. As a result, global unemployment rate is expected to rise to 5.8 per cent in 2017 (from 5.7 percent in 2016).  This means an addition of 3.4 million more unemployed people globally, bringing the total unemployment to just over 201 million in 2017. In short term, labour force growth would outstrip job creation.

Workers in vulnerable forms of employment are typically subject to high levels of precariousness, eg they often have limited access to contributory social protection schemes, which tend to be more common among wage and salaried workers.

However, only marginal improvements in the share of workers in vulnerable employment are expected for the coming years: the rate of vulnerable employment is expected to fall by less than 0.2 percentage points per year over the next two years, compared with an average annual decline of 0.5 percentage points between 2000 and 2010. As such, vulnerable forms of employment are expected to remain above 42 percent of the total employment in 2017, accounting for 1.4 billion people worldwide.

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