Business News of 2014-05-29

Developing countries are catching up with advanced economies - ILO

The International Labour Organization''s (ILO) World of Work Report 2014, said the process of economic convergence between developing countries and advanced economies has gathered momentum, with the former catching up with the latter.

According to the report, between 1980 and 2011, per capita income in developing countries grew, on average, by 3.3 per cent per year – much faster than the 1.8 per cent per capita income growth recorded in advanced economies.

It said this process of convergence has accelerated since the early 2000s, especially since the start of the global crisis in 2007–08.

The report which was made available to the Ghana News Agency on Tuesday by the ILO observed that there are, however, significant cross-country differences.

The report identifies a group of emerging economies which have grown particularly fast.

It noted that in recent years, lowest- and medium-income countries and least developed countries have also made significant progress in terms of economic growth.

It said the extent to which countries have made efforts to improve job quality plays a part in explaining the observed growth patterns, adding that this is particularly the case over the past decade.

It noted that in countries that have made the greatest investment in quality jobs from the early 2000s, living standards improved more than in developing and emerging economies that paid less attention to quality jobs.

Among those countries where working poverty – including workers earning less than $2 a day – declined most steeply from the early 2000s, overall per capita income grew by 3.5 per cent, on average, over the 2007–12 period.

The report said in South Asia and sub-Saharan Africa, more than three out of four workers are in vulnerable forms of employment, with women disproportionately affected compared to men.

It said over the next five years there will be an estimated 213 million new labour market entrants – 200 million in developing countries alone, raising the issue of youth unemployment.

The report stated that regionally, the highest youth unemployment rates are found in the Middle East and North Africa region, where nearly one in three young people in the labour force is unable to find work.

It said young women, in particular, are struggling to find work in these regions, with unemployment rates approaching 45 per cent.

It said the lack of quality jobs is a central determinant of emigration, especially among educated youth in developing countries, with the gap in wages between receiving and sending countries tends to be as high as 10 to 1.

While manufacturing tends to be associated with faster economic growth and quality job creation, the report highlights successful experiences based on agricultural and rural development, efficient and equitable use of natural resources and services that connect with the rest of the economy.

It said labour and social protection institutions are important ingredients of economic growth, quality jobs and human development.

According to the report, wage-setting mechanisms and labour regulations need to be properly designed and attention must be given to implementation capacity.

The findings of the Report suggest that sustained development is not possible without making progress on the employment and decent work agenda.

It recommends that employment and decent work should, therefore, be a central goal in the post-2015 development agenda.

This year’s edition focuses on developing countries, and argues that quality jobs are a key driver for development.

It draws on evidence from over 140 developing countries and finds that a common factor amongst those countries that have achieved higher per capita income and sustained growth was quality jobs.