INTERNATIONAL LABOUR ORGANISATION
RESEARCH DEPARTMENT 2015 REPORT

The latest thematic edition of the World Employment and Social Outlook 2015 focuses on the transformation of the employment relationship. The report, entitled The Changing Nature of Jobs, finds that the standard model of wage and salaried employment, entailing work on a permanent contract is less and less the norm. Today, less than one in four jobs corresponds to that model. The report also examines the implications of these changes for the economy and society, notably with respect to productivity trends, aggregate demand and income inequalities.

These emerging patterns raise major issues concerning employment regulations and social protection. Interestingly, countries have started to react – as documented in the report. However a more fundamental rethinking of policy making, at both the national and international levels, may be called for.

Chapter 1: Emerging patterns of employment: Global and regional trends

Question: The report talks about a $1.2 trillion global “wage gap”. What does this mean?

Answer: $1.2 trillion dollars is our estimate of the annual wages lost around the world due to the global jobs gap of 61 million that has opened up since the economic crisis of 2008 and 2009. The chapter argues that this global wage gap is a key indication of a vicious circle of slow economic growth and weak employment growth. Importantly, we estimate that closing the global jobs gap would add $3.7 trillion dollars to the global economy – a 3.6% boost to global output – as increased wages would lead to more global consumption, and increased profits and investment levels.

Chapter 2: Employment patterns, poverty and income inequality

Question: What strategies have countries adopted to reduce inequality?

Answer: Countries have been able to reduce overall inequality largely due to the tax and social transfers system. For example: in Argentina, employment-rich economic growth was a significant factor, while rising minimum wages and the promotion of collective bargaining may also have contributed to the decline in inequality; in Uruguay, the restoration of wage councils and increase in real wages could have led to a reduction in income inequality; and in the United Kingdom, the introduction of a 50 per cent marginal income tax rate in 2010 on top incomes might have led to a reduction in income inequality. The chapter on employment patterns and inequality discusses these and other strategies that have been adopted to reduce inequality

Chapter 3: Social protection coverage across employment patterns

Question: The report has shown that most emerging and developing countries have made significant progress in addressing gaps in legal coverage for pensions, but what about effective social protection and income security?

Answer: Progress in addressing gaps in legal coverage for pensions and including new categories of workers within the scope of laws and regulations have mainly been brought about by non-contributory mechanisms and attempts in extending coverage by legislating voluntary affiliation. These legal options have, however, led to very different levels of effective pension coverage and have raised a number of issues, including income security for the beneficiaries, as well as the availability, reliability and sustainability of public finances. Globally, since 2000, less than 60 per cent of the increase in legal pension coverage has been effectively implemented, calling for appropriate measures to make social protection more effective.

Chapter 4: Labour regulation and employment patterns

Question: Is labour market regulation an obstacle to job creation?

Answer: Chapter 4 reviews changes in employment regulation in 63 countries over the past two decades and finds that in most cases labour regulation is adapting to changing forms of work with no ill effects on job creation. Indeed, the chapter analyses the effects of changes in labour regulation on key labour market indicators including the unemployment rate. The analysis presented in the chapter highlights that there are no negative effectives from increased labour regulation. Rather, the predictability of regulation is important and where anomalies need to be corrected, it is important to ensure adequate legal and social protection (as evidenced in Chapter 3). In short, there is a need for regulation to continue to adapt and the chapter calls for carefully designed approaches based on specific labour market conditions. Chapter 5: Changes in global production patterns and impacts on enterprises and employment Question: How have global supply chains impacted on the world of work and what have been the implications for enterprises and workers? Answer: The number of jobs linked to GSC-related jobs has increased rapidly over the past decades. Out of a sample of 40 countries with available data, the report estimates that 453 million people were employed in GSCs in 2013. Although this is an increase from 300 million in 1995, it is below the pre-crisis peak of roughly 500 million. Since the crisis, most of the slowdown has been principally due to changes among emerging economies. In the sample, GSC-related jobs in emerging economies decreased by 44 million between 2008 to 2013. The report finds that the benefits of GSCs are not widely shared. In particular, economic benefits have accrued to firms in terms of higher productivity, and to workers in terms of greater opportunities for waged employment. But, this has not necessarily meant higher wages or better working conditions.

Raymond Torres
Director
ILO Research Department

2015 REPORT