Global Economic Slowdown Threatens Social Stability

By Tharanga Yakupitiyage Reprint | | Print |

UNITED NATIONS, Jan 19 2016 (IPS) - If current policies continue, the global economy will weaken and pose significant social challenges, the International Labour Organisation (ILO) warned, in a new report released here.

The report, The World Employment and Social Outlook – Trends 2016, predicts economic health and employment levels around the world, and has found that economic growth has slowed down, the effects of which are reverberating globally.

This slowdown is due, in part, to changes in macroeconomic policies in emerging and developing countries including China. The Asian country has moved away from its reliance on investment and its export-led economic growth and has reduced its demand for imports which have long helped support the global economic recovery.

According to the International Monetary Fund (IMF), a one percentage point drop in China’s gross domestic product (GDP) growth would lead to lower growth in the rest of Asia by 0.3 percentage points. It would also impact a number of European countries that are heavily dependent on exports to China.

Meanwhile, the world has also experienced a decrease in commodity prices, particularly of energy. Oil prices have dramatically declined, reaching a new low of less than $30 per barrel in the past week, compared to $110 in 2014.

This has impacted commodity exporters including Brazil and the Russian Federation, countries that have now entered a period of recession.

“The significant slowdown in emerging economies coupled with a sharp decline in commodity prices is having a dramatic effect on the world of work,” ILO Director-General Guy Ryder noted during the launch of the report.
Global unemployment rates have particularly increased as a result of the weakened economy.

In 2015, the number of unemployed people reached 197.1 million, 27 million higher than the pre-global financial crisis level of 2007. Unemployment levels are expected to continue rising over the next two years in emerging and developing countries by 4.8 million.

This has heightened not only income inequality, but also the uncertainty of existing jobs where workers have limited access to social protection and stable earnings.

Already vulnerable employment accounts for over 46 percent of total employment in the world. In both Southern Asia and Sub-Saharan Africa alone, over 70 percent of workers are in vulnerable employment.

Though the number of employed people living in poverty has decreased since 2000, progress has stagnated, especially in developing economies.

ILO has highlighted the need to address the quantity and quality of jobs, as well as income inequality. In the report, the organisation recommended the strengthening of macroeconomic policies and labour institutions and the establishment of well-designed social protection systems to prevent increases in long-term unemployment, underemployment, and working poverty.

If these issues are not tackled, there is an increased risk of social unrest, Ryder said. In light of Europe’s refugee crisis, the organisation specifically emphasized the need to provide labour opportunities.

“Integrating refugees into the labour market will be important for helping the newcomers to establish new livelihoods and to ease their social integration into the receiving countries,” the report stated.

In the long-term, ILO noted that the influx of migrants will also help European economies by filling the gaps in skill shortages and mitigating the risks related to low population growth. The provision of decent work, however, should not only be limited to refugees in Europe.

“Making decent work a central pillar of the policy strategy would not only alleviate the jobs crisis and address social gaps, but would also contribute to putting the global economy on a better and more sustainable economic growth path,” ILO concluded.

The newly-adopted Sustainable Development Goals (SDGs) includes commitments to promote decent work for all as well as sustained, inclusive and sustainable economic growth.

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