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Are Emerging Markets Leading the Way in Job Creation?

Otaviano Canuto's picture

Photo: Wiki Commons User_KozuchWith a few exceptions, industrialized nations are still struggling with unemployment, unable to recover completely from the 2008 economic crisis. In the U.S. things seem to be improving as the unemployment rate fell in January to 8.3 percent, its lowest level since early 2009, according to the U.S. Department of Labor’s Bureau of Labor Statistics. But all in all, whether it is lack of job opportunities for young people around the world, or that the global economy is not generating as many jobs as needed to keep up with labor force growth, the global job narrative is one of doom and gloom.

Nevertheless, there are reasons for optimism, particularly in the developing world. While major industrialized nations still struggle with unemployment, emerging markets are certainly doing better.

According to the new edition of Job Trends, released by the World Bank today, emerging economies continued their slow but steady job recovery in the third quarter of 2011. We are talking about countries like Brazil, China, Mexico and Turkey. But they are not the only ones. Across Eastern Europe and Central Asia, as well as in East Asia and Latin America, the employment picture has been improving over the past year in the 23 developing countries included in our global sample.

Most of the Eastern European and Central Asian countries that were covered showed a strong recovery. Employment growth in Turkey, for instance, increased to 7 percent, while wage growth remained high. In Latin America, the rapid recovery of earlier months has begun to moderate, but unemployment in most of the region fell slightly. In Brazil, for example, despite the slowdown in both GDP and wage growth in the third quarter of last year, unemployment came down to 6 percent. Furthermore, Brazil reported in December an unemployment rate of 4.7 percent, the lowest recorded since 2002.

Trends in East Asia are also positive. Urban China continues to combine impressive growth in earnings with substantial growth in employment. In South Africa, although unemployment remains remarkably high, employment growth picked up substantially, in part because of a drop in wage growth.

Many observers may see these improvements as not very consequential because, after all, wages and labor conditions in much of the developing world are below what is expected in industrialized nations. But while the global economy remains threatened by the troubles in the Eurozone, market volatility, and overall uncertainty, any positive development in emerging markets is significant. As many have noticed, one key question for 2012 is whether emerging market economies will be robust enough to partially cushion the potential impact of things getting worse in the Eurozone and elsewhere. That emerging economies continue their slow but steady recovery on the job front can only be a sign in the right direction. I’m confident that emerging economies will eventually carry the day.
 

Comments

Submitted by Rogers on
Could the employment troubles ruffling the developed countries be an indicator of saturation in the labour demand market? If the economy is not growing enough, then job creation is expected to match exactly that. This is what presents an opportunity for holistic growth in the developing countries. Just like the emerging economies are expanding employment and growth, developing countries should emulate this. Given the unexplored potential that most developing countries still have, it is predictable that employment can only grow as the developing economies grow. Developing countries should exploit their potentials and then employment will follow suit. Gone are the days when expanding the public sector would lead to employment growth. New era, new dimensions.

Submitted by Ernest Bere on
The standard of living in Zimbabwe is increasing as productivity increases. Since the introduction of US$ in Zimbabwe there has been a major shift in productivity.

Although I agree that some signs are encouraging the job market is far from healthy in developing countries. I find this report misleading, although the positive trends are stronger in the BRIC countries, they are not universal in emerging/developing economies. The report itself shows that there has been a drop in year to year job growth in China and Indonesia. Year on year unemployment has remained the same in China sustained GDP growth. And this report doesn't address the fall in hours in some countries or the fact that much of the employment is not in decent work but instable and informal work. The difference with developed countries is more likely to be the strong safety net in developed economies that allows people to be unemployed for some time. This does not exist in many of the developing countries, therefore people are forced to work even if it is under extremely poor conditions. Speaking of Asia and the Pacific. The report contains no Pacific countries (unless one includes Indonesia) and the sample chosen and the aggregate year on year numbers mask other changes. This report ignores the worrying youth unemployment numbers in Asia and the Pacific with youth 3 to 6 times more likely to be unemployed than adults and this will affect the long term labour market prospects for this cohort. In Indonesia although they experienced a steep fall in unemployment among youth from 2006 to 2010 (6.8 to 4.2 million) in the past year the youth unemployment among young people has experienced a sharp increase of 700,000. Sri Lanka also experienced a similar pattern with youth unemployment falling from 2006 to 2010 and then experiencing an increase in 2011. Finally, China, Indonesia and Thailand are not representative countries for the region. Even using these three, if one removes Thailand from the EAP sample, because the country is an outlier when it comes to unemployment, then the job picture for the region becomes arguably negative.

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