GENEVA: The International Labour Organization (ILO) issued a warning on Wednesday, stating that surging debt levels, coupled with high inflation and rising interest rates, have significantly hampered job opportunities in developing countries.
According to the new Monitor on the World of Work report by the ILO, while only 8.2 percent of job-seekers are unemployed in high-income countries, that number rises to over 21 percent in low-income countries, equivalent to one in every five individuals.
The impact is particularly severe in low-income countries facing debt distress, with more than one in four people unable to secure employment despite their desire to work. Mia Seppo, Assistant Director-General for Jobs and Social Protection at the ILO, highlighted that global unemployment is projected to decrease below pre-pandemic levels, with an estimated rate of 5.3 percent in 2023, equating to approximately 191 million people. However, low-income countries, especially in Africa and the Arab region, are not expected to experience the same level of unemployment reduction this year.
The report indicates that the labor market in Africa has been hit hardest by the pandemic, leading to a slower recovery on the continent. Unlike wealthy nations, African countries face challenges such as debt distress and limited fiscal and policy capacity, making it difficult to implement comprehensive stimulus packages required for economic revival, as explained by the ILO.
Seppo emphasized that without improvements in employment prospects, there can be no sustainable economic and social recovery. The ILO official stressed the importance of investing in welfare safety nets for those who lose their jobs, which are often inadequate in low-income countries.
ILO Suggestions
The agency’s research suggests that enhancing social protection and expanding old age pensions could boost gross domestic product (GDP) per capita in low and middle-income countries by almost 15 percent over a decade. The annual cost of such measures would amount to approximately 1.6 percent of GDP, a sizable yet manageable investment. Seppo proposed that the financing could be achieved through a combination of social contributions, taxes, and international support.
Seppo also called for urgent consideration of creating fiscal space for social investment in low-income countries as part of the ongoing global discussion on the reform of international financial architecture. While the projected unemployment divide presented in the report is concerning, Seppo stated that it is not inevitable. By taking concerted action on job creation and social protection funding, recovery and reconstruction can be achieved that leaves no one behind.
The ILO senior official emphasized the need to develop coherent labor market policies informed by data, with a focus on upskilling and reskilling the workforce to prepare for a greener and more digital world of work.
