THERE is, according to the International Labour Organisation, a higher proportion of people unemployed in the world than at any time since the 1930s. Some 30 per cent of the world's workforce, or 820 million people, are either unemployed or underemployed. It is, of course, a profoundly disturbing figure, and the ILO is doing the world a service by drawing attention to the fact that while most discussion of unemployment focuses on the problem in developed countries, it is in many ways even more of a problem for the less developed ones.
The ILO, a UN agency based in Geneva, does not frequently attract the attention of the world's media, and it may have felt galled by the way the debate about the causes of unemployment has been orchestrated by such organisations as the OECD, the IMF and the World Bank. So it has decided to publish a new annual report, World Employment 1995, which gives a different perspective both on the problem and on ways in which it might be tackled. The first such report appeared last Wednesday.
The report brings two new things to the debate. The first is its discussion of unemployment in the developing world. Thus it looks at the very different experiences of South and East Asia, of Africa and of Latin America. Naturally there has been plenty of discussion about the reasons for the astonishing economic success of East Asia over the last two decades, and a fair deal of hand-wringing about the failures of sub-Saharan Africa. But most of this has been in terms of general economic growth, incomes and investment, rather than focusing specifically on the consequences of economic growth on employment and unemployment. What emerges here is the contrast between the great job-creating machines of the economies of Singapore, Hong Kong and China, and the fall in what the ILO describes as modern-sector employment in much of sub- Saharan Africa.
In China, non-agricultural employment rose by 58 per cent between 1977 and 1990. In Ghana, in the 1980s, paid employment in manufacturing halved.
The other interesting element in the ILO report is the challenge it makes to the new orthodoxy, articulated by the IMF and OECD, that the best way to cut unemployment in the industrial world is to free job markets. It argues that there has been inadequate demand, particularly in the European economy, for the last 20 years. Policy has been biased against growth. Freeing labour markets and cutting European wage levels would only have a marginal impact on unemployment; and the imposition of a minimum wage has an insignificant effect on total employment in the industrialised countries.
In this sense, the ILO is reflecting a continental European view of the causes of unemployment, rather than an Anglo-Saxon (or for that matter East Asian) view. It is useful to have the arguments set out, though anyone doing so has to explain why high unemployment in the developed world is largely a European phenomenon if it is not - in part, at least - the result of European labour market policies. And saying that the real problem is lack of growth is only helpful if one has ideas as to how that might be increased.
The ILO does have some views on this - it calls for co-ordinated expansionary policies by the main developed countries - but it does not really answer the charge that faster growth would merely lead to higher inflation, which would soon choke off that growth.
Part of the problem within the industrial countries is that their economies are being forced by international pressures to make a rapid change in their structure, moving out of producing low-valued-added goods and services and into high-technology manufacturing and high-quality service industries. …