by Ian Marsberg
The International Labor Organization (ILO) recently released their Global Employment Trends 2004, which focuses on employment results in 2003. This report shows that global unemployment did not improve substantially in 2003, compared with the previous year. The International Monetary Fund (IMF) estimates that the world economy expanded by 3.2% last year (compared with 3.0% growth in 2002). But despite this stronger growth, the ILO estimates that global unemployment declined only marginally, from 6.3% in 2002 to 6.2% in 2003.
Although the overall unemployment rate fell somewhat, various regions have benefited differently from the overall improvement in economic growth. The jobless rate in the industrialized and South Asian economies was unchanged between 2002 and 2003, but the rate fell in the transition economies of Southeast Asia, Latin America, and the Caribbean. But in East Asia, the Middle East and North Africa, and Sub-Saharan Africa, the unemployment situation worsened during 2003.
Global Insight’s estimates show that economic growth in Sub-Saharan Africa slowed in 2002. Moreover, this trend likely continued into the first half of 2003, as the prices of non-oil commodities remained relatively weak because of uncertainty over the pace of recovery in the industrialized world. Relatively sound macroeconomic policies contributed to growth in countries such as Botswana, Cameroon, and Ghana, while ill-conceived policies continued to constrain economic growth in countries such as Nigeria and Zimbabwe.
In Global Insight’s view, the 2004 growth outlook for the Sub-Saharan region is bright. Our baseline forecast, which is also in line with the trends presented in the ILO report, calls for stronger economic growth than in the past four years. This is driven primarily by the world recovery and a significant rise in commodity prices. An improvement in global trade will benefit African exports, while aid and foreign investment are likely to increase due to peace settlements in some of the war-torn economies. However, even though the growth outlook for Sub-Saharan Africa remains bright, this region is likely to continue to under-perform when compared with other developing regions of the world.
Against this backdrop, the ILO projects the region’s average unemployment rate to decline slightly in 2004. Over the long run, the organization expects the total Sub-Saharan labor force to increase from 271 million in 2003 to 366 million in 2015. The region needs to create approximately 8-million employment opportunities annually over the next 12 years to absorb the growing number of job-seekers.
According to the ILO, if unemployment and working poverty are to be halved by 2015, it would require GDP growth in the Sub-Saharan economies to triple. Global Insight is in general agreement with the organization that it is unrealistic to expect that regional growth would triple in the coming years, especially when one considers that the unemployment problems there are largely structural. According to the ILO, most jobs are in low-productivity, low-wage sectors. Compounding the problem is the impact that HIV/AIDS is having on Sub-Saharan labor markets.
The bottom line for Sub-Saharan African is that the jobless situation will likely improve only marginally over the short term, despite the positive outlook for economic growth. Over the longer term, employment and poverty prospects for the region remain bleak, with structural challenges and HIV/AIDS compounding the plight of the unemployed.
