Global economic, employment and social trends Study Visit of the delegation of the Social Insurance Fund of the Russian Federation Global economic, employment and social trends Raymond Torres Director, Research Department International Labour Organisation 28 September 2015

Overview Global employment and inequality trends Changing job patterns Policy issues

I. Global employment and inequality Measurement, trends, and linkages

The global economy is slowing…again Global growth has been revised downwards again and will pick up only moderately next year Note: The G20 sample is restricted to 18 out of 19 individual countries for which data is available (Argentina identified some inconsistencies in its wage series for some years and has been excluded). Source: ILO, Global Wage Report 2014/5. Inequality has continued to widen in many countries, with only brief pauses following the initial phase of Great Recession There are exceptions such as Latin American countries, which indicates the importance of effective policy interventions. Source: EIU calculation (July 2015). World: based on 120 countries (excl. countries with limited data coverage)

Jobs are missing globally… But most of them in advanced and emerging economies In comparison to the baseline, almost 60 million jobs have been lost since 2007 Note: The G20 sample is restricted to 18 out of 19 individual countries for which data is available (Argentina identified some inconsistencies in its wage series for some years and has been excluded). Source: ILO, Global Wage Report 2014/5. Inequality has continued to widen in many countries, with only brief pauses following the initial phase of Great Recession There are exceptions such as Latin American countries, which indicates the importance of effective policy interventions. Source: Based on ILO, WESO Trends, January 2015

Labour’s share of total income is declining, G20 Note: The G20 sample is restricted to 18 out of 19 individual countries for which data is available (Argentina identified some inconsistencies in its wage series for some years and has been excluded). Source: ILO, Global Wage Report 2014/5. Inequality has continued to widen in many countries, with only brief pauses following the initial phase of Great Recession There are exceptions such as Latin American countries, which indicates the importance of effective policy interventions. Note: Market prices (AMECO). The 9 countries are Australia, Canada, Germany, France, Italy, Japan, Spain, the United Kingdom and the United States and the 11 includes the Republic of Korea and Mexico.

Income inequality is closely related to labour income shares Changes in the labour income share vs. Gini index (since 2000) Note: (a) Trends in the labour share are sensitive to adjustments in some countries such as Brazil and Mexico: * unadjusted, ** adjusted ; (b) Russia * (since 2000) and Russia ** (since 1990); (c) Italy* (1995 onwards); (d) Indonesia, Saudi Arabia and Turkey are not included due to data constraints www.ilo.org

Redistribution has become less effective Gap between market and disposable income inequality has widened since 2007 Gini index in selected G20 countries Note: The G20 sample is restricted to 18 out of 19 individual countries for which data is available (Argentina identified some inconsistencies in its wage series for some years and has been excluded). Source: ILO, Global Wage Report 2014/5. Inequality has continued to widen in many countries, with only brief pauses following the initial phase of Great Recession There are exceptions such as Latin American countries, which indicates the importance of effective policy interventions. Note: Data for EU and related countries refer to 2011, not 2012.

II. Changing job patterns

Shifting patterns of work Middle class jobs are disappearing in advanced economies…but not only there Source: ILO, WESO Trends, January 2015 www.ilo.org

Globally, there is a lack of quality jobs Self-employment is the dominant form of employment outside advanced economies… Source: ILO, WESO: The changing nature of jobs, May 2015 www.ilo.org

Income from different income sources …and labour income provides the main income in most countries… Source: ILO Research Department estimates based on household surveys

Unequal coverage by type of protection …as social protection remains underdeveloped in most Source: ILO, WESO: The changing nature of jobs, May 2015

Global labour force declines Financing social protection relies on fewer and fewer people in the labour force Source: ILO, WESO Trends, January 2015

III. Policy issues

Improving job quality helps to improve funding base! Fostering job quality Improving job quality helps to improve funding base! Lack of formal employment undermines sufficient funds in emerging economies Lack of coverage is the result of both limited access for workers and failing resources Decrease in full-time permanent employment in advanced economies has put strains on social security finances Spending on social protection remains high given past comitments But funding base has been eroded by increase temporary and part- time employment Fostering job quality is therefore essential to provide a stable and sustainable funding base for social protection Simple elasticities using GDP (IMF) and Employment (GET)

Expanding social protection More encompassing social protection can improve fiscal sustainability Social protection provides essential buffer against both individual and macroeconomic shocks Extending unemployment benefits has been shown to dampen adverse employment effects during a downturn Faster economic recovery due to comprehensive social protection Limits the social fall-out from the crisis… …and helps securing public finances by restoring budget equilibrium more rapidly Simple elasticities using GDP (IMF) and Employment (GET)

Finding new sources for public finances Recent consolidation efforts have eroded the basis for public finances Cuts in taxes and social security contributions particularly prevalent in advanced economies  will need to be reverted Simple elasticities using GDP (IMF) and Employment (GET) Source: ILO, World of Work Report: Better Jobs for a Better Economy, 2012