One of the most distressing aspects of the frail economic recovery from the global crisis has been lagging job creation. In developed and developing countries alike, millions of people remain unemployed (some 200 million by ILO estimates), and many who still have jobs live in fear of losing them or seeing their incomes and benefits stagnate. Fortunately, the worst may be over in several parts of the world. While the labor market in developed countries like the U.S. keeps improving, many developing countries are actually doing better despite the sluggish economic growth.
According to the new edition of Job Trends , released by the World Bank today, labor markets in developing countries have continued their gradual recovery despite slower growth in the fourth quarter of 2011 –the latest period for which we have data on GDP growth, unemployment, wage growth and employment growth for our sample of 24 countries.
Eastern Europe and Central Asia pretty much led the way, with unemployment falling to 6 percent from 6.7 percent in the fourth quarter of 2010, and wages increasing by 8.3 percent. Lithuania, for instance, continued its strong recovery from the financial crisis with a strong rise in employment, while increased economic growth in Turkey, and to a lesser extent, Russia and Armenia, led to sizable declines in unemployment and increased wage growth.
In Latin America and the Caribbean, unemployment fell and wages increased as well. In Mexico, one of the most affected countries by the global crisis, workers benefited from accelerating employment and wage growth, as well as reduced unemployment, which dropped to 4.8 from 5.3 percent a year earlier. And Brazil, my country, saw unemployment continue to come down to an average 5.2 percent in the fourth quarter of 2011 despite having experienced very slow economic growth, unfavorable weather shocks, and weaker demand from China.
Despite the slowing down of its economy, China remained stable with no change in unemployment, while the Philippines and Thailand did better despite significant decreases in GDP growth. Finally, in South Africa—a country with very high unemployment—slowing wage growth contributed to higher employment growth and, hopefully, at some point, these gains will become more sustainable.
These are very good trends, indeed, but this is not the time for complacency. The global recovery is still under the shadow of the Eurozone, and any disruption on that front would certainly impact the economic trajectory of many developing countries. So far, from Brazil to Russia and from China to South Africa, labor markets have proven resilient to sluggish GDP growth. But there is no better ally of employment than strong, dynamic and inclusive growth. We are still far away from getting that.