Economic Turbulence & Employment Trends Dr. Fragouli Evaggelia (HARVARD, COLUMBIA) Lecturer, University of Athens, Dpt. of Economics & Senior R&D Dpt. of Hellenic Competition Commission

What impact labour markets today? Globalization Globalization Technical Progress (Rapidly changing !)‏ Technical Progress (Rapidly changing !)‏ ► Significant challenges accompany these changes: - The changing economic environment also brings greater opportunities for individuals striving to improve their way of life - The changing economic environment also brings greater opportunities for individuals striving to improve their way of life ► Economic turbulences in one economically strong region (EU, USA as a result of high oil prices and the US housing market turmoil ) have not significantly impacted on other regions attributed to their greater economic strength.

However, Risks for the global economy in 2008 and after have to be carefully watched

A severe slowdown is not expected A severe slowdown is not expected but, but, the important question is the important question is how labour markets worldwide will react towards even slightly slower growth or possibly growing uncertainty how labour markets worldwide will react towards even slightly slower growth or possibly growing uncertainty

How is the situation though now? The decent work deficit in the world is still enormous. The decent work deficit in the world is still enormous. - Five out of ten people in the world in - Five out of ten people in the world in vulnerable employment situations and four vulnerable employment situations and four out of ten living with their families in poverty, out of ten living with their families in poverty, despite working ► daunting despite working ► daunting ► Economic progress does not automatically lead to progress in the world of work ► Economic progress does not automatically lead to progress in the world of work

What is needed? ► Active engagement and the proactive decision to put labour market policies at the centre of growth and, and, ► macroeconomic policies are needed to ensure that economic progress is inclusive and does not lead to increasing inequality

Only if countries use their labour markets to make growth inclusive, will their progress have a real chance of being sustained, Only if countries use their labour markets to make growth inclusive, will their progress have a real chance of being sustained, Decent employment is the only route out of poverty Decent employment is the only route out of poverty Full and productive employment and decent work has been introduced as a target by the MDG 1 (Millenium development Goal) to halve the share of people living in extreme poverty by 2015 Full and productive employment and decent work has been introduced as a target by the MDG 1 (Millenium development Goal) to halve the share of people living in extreme poverty by 2015

What is the outlook globally for 2007?

Global Employment Situation 2007 Increase in employment rates regarding females (1)‏ Increase in employment rates regarding females (1)‏ Strong global GDP growth continued in 2007 and approximately in 2008 of 5.2 per cent worldwide Strong global GDP growth continued in 2007 and approximately in 2008 of 5.2 per cent worldwide More than 45 million jobs created between 2006 and 2007 (the majority in South Asia)‏ More than 45 million jobs created between 2006 and 2007 (the majority in South Asia)‏

Productivity levels increased more than employment levels (a repeating trend from earlier years)‏ Productivity levels increased more than employment levels (a repeating trend from earlier years)‏ 3.0 billion people aged 15 years and older were in work, a 1.6 percent increase from the previous year 3.0 billion people aged 15 years and older were in work, a 1.6 percent increase from the previous year The global unemployment rate remained constant at 6.0 per cent The global unemployment rate remained constant at 6.0 per cent

Which is the outlook for 2008?

Will turbulence stemming from a crisis in the US housing sector, and the continuing threat of high oil prices, slow GDP GROWTH AND PUT LABOUR MARKETS WORLDWIDE AT RISK? Will turbulence stemming from a crisis in the US housing sector, and the continuing threat of high oil prices, slow GDP GROWTH AND PUT LABOUR MARKETS WORLDWIDE AT RISK?

The IMF reduced the GDP growth estimate for 2008 from 4.9 to 4.8 per cent.≥ this global downward revision is the result of a downward adjustment for the Developed Economies & European Union region where the earlier expected growth rate of 2.6 per cent was reduced to 2.2 per cent. This, has so far, not had a negative impact on the economic and labour market performance of the rest of the world. The IMF reduced the GDP growth estimate for 2008 from 4.9 to 4.8 per cent.≥ this global downward revision is the result of a downward adjustment for the Developed Economies & European Union region where the earlier expected growth rate of 2.6 per cent was reduced to 2.2 per cent. This, has so far, not had a negative impact on the economic and labour market performance of the rest of the world. In 2008, according to IMF, the risk of a sound slowdown in the world economy exists, but, there is also a chance strong and independent regions to set this slowdown in the industrialized economies. In 2008, according to IMF, the risk of a sound slowdown in the world economy exists, but, there is also a chance strong and independent regions to set this slowdown in the industrialized economies.

As a result, other regions; GDP saw an upward adjustment

● According to Global Employment Trends in the Developed Economies & European Union a total increase in jobs of 2 million is expected from 2008 as well as a slight increase of the unemployment rate to 6.1 percent (increase by 5 million)‏ ● According to Global Employment Trends in the Developed Economies & European Union a total increase in jobs of 2 million is expected from 2008 as well as a slight increase of the unemployment rate to 6.1 percent (increase by 5 million)‏ ● On the contrary, according to IMF’s downward revision based on the point “worldwide growth no longer only depends on the performance of the industrialized world, it is predicted that 240,00 fewer jobs will be created as a result of slower growth ● On the contrary, according to IMF’s downward revision based on the point “worldwide growth no longer only depends on the performance of the industrialized world, it is predicted that 240,00 fewer jobs will be created as a result of slower growth

Three points to be considered: Growth does not have as substantial an impact to reduce the levels of working poverty, especially in the poor regions Growth does not have as substantial an impact to reduce the levels of working poverty, especially in the poor regions It is essential that periods of high growth are better used to generate more decent and productive jobs It is essential that periods of high growth are better used to generate more decent and productive jobs Reducing unemployment and working poverty through creation of jobs should be viewed as a precondition for sustained economic growth Reducing unemployment and working poverty through creation of jobs should be viewed as a precondition for sustained economic growth

In 2008 (and few years before) a decrease of young people being employed (aged years) is observed ≥ tendency of being educated In 2008 (and few years before) a decrease of young people being employed (aged years) is observed ≥ tendency of being educated The gap of 2007 between employed female (49.1) and men (74.3) continued in 2008 but it was slightly less than the previous years. The gap of 2007 between employed female (49.1) and men (74.3) continued in 2008 but it was slightly less than the previous years.

The service sector pulled further contributing to employment in the world. It provides 42.7 per cent of jobs in the world The service sector pulled further contributing to employment in the world. It provides 42.7 per cent of jobs in the world The industry sector continued a rather slow upward trend. It provides 22.4 per cent of jobs. The industry sector continued a rather slow upward trend. It provides 22.4 per cent of jobs. The vulnerable was only slightly slower The vulnerable was only slightly slower

The gap between the developing regions and the developed world continous to grow even for well performing regions The gap between the developing regions and the developed world continous to grow even for well performing regions

Developed Economies and European Union The number of unemployed increased (32.1 million in 2007, 32.5 in 2008)‏ The number of unemployed increased (32.1 million in 2007, 32.5 in 2008)‏ The increase of enemployment was higher for men than for women The increase of enemployment was higher for men than for women The unemployment rate stayed almost unchanged at 6.4 per cent. The unemployment rate stayed almost unchanged at 6.4 per cent. At the same time, employement increased by 1.9 million per cent or 0.4 per cent (The increase of employement was the smallest the last few years At the same time, employement increased by 1.9 million per cent or 0.4 per cent (The increase of employement was the smallest the last few years

Employment creation was dominated by jobs for women (out of 1.9 million new jobs, 1.6 million were jobs for womenand 0.3 million for men)‏ Employment creation was dominated by jobs for women (out of 1.9 million new jobs, 1.6 million were jobs for womenand 0.3 million for men)‏ Employment to population ratios for men saw a decrease of 0.4 percentage. Employment to population ratios for men saw a decrease of 0.4 percentage. For young people the picture looks more negative: unemployment increased of 2.1 percent in one year (175,000)‏ For young people the picture looks more negative: unemployment increased of 2.1 percent in one year (175,000)‏

The sectoral picture differs between men and women The sectoral picture differs between men and women Despite slower GDP in 2007, productivity growth was with 2.1 per cent faster Despite slower GDP in 2007, productivity growth was with 2.1 per cent faster The gap between the level of productivity in the Developed Economies & European Union and other regions has further increased The gap between the level of productivity in the Developed Economies & European Union and other regions has further increased

THE OUTLOOK FOR THE COMING YEAR IS NOT POSITIVE THE OUTLOOK FOR THE COMING YEAR IS NOT POSITIVE THE SAME CONDITION will be FOR THE NEAR FUTURE THE SAME CONDITION will be FOR THE NEAR FUTURE THE SLOWDOWN EFFECT CAUSED BY OIL PRICES AND THE TURBULENCES IN THE US HOUSING SECTOR (2.2 ONLY growth for 2008)‏ THE SLOWDOWN EFFECT CAUSED BY OIL PRICES AND THE TURBULENCES IN THE US HOUSING SECTOR (2.2 ONLY growth for 2008)‏ 240,000 fewer jobs are created in ,000 fewer jobs are created in 2008

SOLUTION? Moving away from policies that discourage people from working, and companies from hiring, and by doing more to raise workers' skills Moving away from policies that discourage people from working, and companies from hiring, and by doing more to raise workers' skills Assist skills development as low skill workers have the major problem now. Assist skills development as low skill workers have the major problem now. Globalization combined with rapid technological progress is another challenge in the region. It is important people to be ready, easily adjusted to change, skills to be developed Globalization combined with rapid technological progress is another challenge in the region. It is important people to be ready, easily adjusted to change, skills to be developed

Table 1. Unemployment in the world, 1997, (millions) (ILO,Global Employment Trends Model, November, 2007)‏ Female Male Total Year

Table 2. Labour force participation rates in the world, 1997, (ILO,Global Employment Trends Model, November, 2007)‏ Adult Youth Total Year

Table 3. Labour market indicators, world and regions (ILO,Global Employment Trends Model, November, 2007)‏

Developed Economies and European Union Some issues for consideration 1. Job quality-contracts, hours of work 2. Balancing flexibility with security 3. Gender wage gaps 4. Declining employment content of growth 5. Youth unemployemnt 6. Aging societies 7. Low-skilled workers 8. Managing immigration Demographics: annual population growth rate: 0,7% Average GDP growth rate: Current labour market indicators 1. Labour force participation rate: 60,2%. Youth: 50.9%, Female: 52,7% 2. Unemployment rate: 6,4, Youth:13,2%, Female: 6,7% 3. Labour Productivity: annual growth between 1997 and 2007:1,6%