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Ukraine conflict, other crises spur decline in global labour markets

Ukraine conflict, other crises spur decline in global labour markets

The prospects for the labour market around the world have worsened in recent months and may worsen even more, due to the indirect effects of the war in Ukraine, a new report from the International Labour Organization (ILO) said.

If the current evolution continues, it is expected that the supply of employment will decrease and its increase on a global scale will slow down throughout the last quarter of 2022, according to the tenth edition of the ILO Observatory on the World of Work.

Rising inflation undermines real wage levels in many countries, adding to the broad decline in earnings during the COVID-19 crisis, which hit low-income groups particularly hard.

Inequality in the labour market can also be expected to increase, contributing to the continuing gap between developed and developing economies.

“A strong commitment is needed to initiatives like the United Nations Global Jobs and Social Protection Accelerator, which would create 400 million jobs and extend social protection to the 4 billion people who still lack it,” said Gilbert Houngbo, Director General of the ILO.

There were 3.29 billion employed people in the world at the end of 2021 (1 billion more than 30 years ago), after a drop from 3.3 billion to 3.19 billion between 2019 and 2020, due to the economic shock caused by covid.

According to the ILO Observatory “in 2022 multiple crises have converged that have been aggravated by the war in Ukraine and its indirect adverse effects, which profoundly affect the world of work”.

These effects are manifested through inflation in the price of food and energy, the reduction of real wages, the increase in inequality, the reduction in applicable political measures and the increase in debt in developing countries.

The slowdown in economic growth and aggregate demand will also lead to a decrease in the demand for employment since uncertainty and less promising expectations adversely affect the level of hiring.

Among the instruments to face this decline, Houngbo proposed “intervention in the price of public goods, the reorientation of extraordinary benefits, the strengthening of income security through social protection, and the increase in aid to guarantee income”.

Likewise, “the orientation of aid to the most vulnerable people and companies”. And, without a doubt, “a rapid conclusion to the conflict in Ukraine would contribute even more to improving the employment situation in the world.”

In early 2022, before the outbreak of the conflict, the number of working hours globally was recovering at a very fast pace, particularly in higher-skilled occupations and with respect to women, according to the study.

However, the gender gap remains wide, with women working 14.5 paid weekly hours less than men or 57.5 paid hours for every 100 hours of men, according to ILO figures.

And the recovery in employment was driven by an increase in informal employment, which jeopardizes the trend towards formalization seen for 15 years.

The situation worsened throughout the year and, according to the ILO, in the third quarter of 2022, the number of working hours was 1.5% lower than the value recorded before the pandemic, which represents a deficit of 40 million workers.

In Ukraine, in addition to the high humanitarian cost, the war has had a very adverse impact on the economy and the labour market.

According to ILO estimates, the level of employment in that country in 2022 will be 15.5% lower (2.4 million jobs) than that registered before the conflict.

That decrease is not as low as the ILO estimate from April 2022, shortly after the conflict began, that 4.8 million jobs would be lost, and the favourable difference is due to the reduction in the number of zones in Ukraine under occupation, or where hostilities are actively taking place.

On the other hand, the report estimates that 10.4% of the workforce that existed in the country before the war is currently a refugee in other countries. Most of those 1.6 million people are women, many of whom previously worked in education, health and social care.

The effects of the conflict also affect the labour markets of neighbouring countries, and in more distant areas, in Central Asia and in the rest of the world, the conflict produces an increase in prices, food insecurity and a worsening of the situation of poverty.

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