The International Labour Organisation (ILO) has hinted that despite the number of working poor continues to decline globally, 375 million workers (or 11.9 per cent of total employment) are esti?mated to live on less than US$1.25 per day in 2013.
While 839 million workers (or 26.7 per cent of total employment) have to cope with US$2 a day or less, it added.
This is a substantial reduction in compar?ison with the early 2000s when the corresponding numbers of working poor below US$1.25 and US$2 were more than 600 million and more than 1.1 billion, respectively, the ILO explained.
However, it says the progress in reducing working poverty has stalled. In 2013, the number of workers in extreme poverty declined by only 2.7 per cent globally, one of the lowest rates of reduction over the past decade, with the exception of the immediate crisis year.
Informal employment remains widespread in most developing countries, although regional variations are sizeable. In Eastern Europe, CIS countries and a few advanced economies, informal employment still accounts for over 20 per cent of total employment.
In Latin America, some countries have made good progress in maintaining informality rates below 50 per cent but low-income Andean and Central American countries continue to experience rates of 70 per cent or more.
Significantly higher informality rates can be found in economies in South and South-East Asia. In some countries in these regions, informality rates reach up to 90 per cent of total employment. Even though progress in reducing poverty has been strongest in these regions, the lack of formal employment opportunities is likely to constitute a barrier to a sustainable further reduction in poverty.
A faster recovery in global labour markets is held back by a deficit of aggregate demand. In this respect, the fiscal consolidation currently under way in many advanced economies consti?tutes a drag on faster expansion of output growth, in addition to weak private consumption.
This report shows that a rebalancing of macroeconomic policies and increased labour incomes would significantly improve the employment outlook. Simulation results suggest that in high-income G20 countries, such a rebalancing could reduce unemployment by 1.8 percentage points by 2020, which corresponds to 6.1 million additional jobs.
These achievements would also support fiscal goals. Indeed, simulation results suggest such a policy approach would result in a significant improvement over the baseline status quo scenario.
Monetary policy continues to be accommodative, providing a beneficial stimulus to aggregate demand. Estimates of the impact of the current monetary policy regime show that unemployment would have been 1?2 percentage points higher in large advanced economies if policy-makers had not undertaken swift monetary action in the face of the financial crisis, according to the latest ILO?s report entitled ?Global Employment Trends 2014: The risk of a jobless recovery?.
Recent trends, however, indicate that an increasing share of the additional liquidity generated by such accommodative monetary policy is flowing into asset markets rather than into the real economy. This is generating the risk of future stock and housing price bubbles, potentially weighing on sustainable job recovery.
Given weak demand, uncertain sources of future demand and ample liquidity, large firms have tended to buy back shares and increase dividend payments to shareholders, rather than investing in the real economy.
Estimates show that in certain countries hiring uncertainty can exercise upward pressure on unemployment over and above weak aggregate demand, an effect that can persist even when the recovery in economic activity is taking up. The result is a further constraint on employment creation.
Source The chronicle