Experts agree: high unemployment rates threaten growth and social cohesion. What they don’t agree on is what unemployment is. While the jobless rate represents the percentage share of the labor force out of work, there are, in fact, multiple ways to calculate it. Measuring unemployment within a country and comparing international rates is a very complicated affair.
The math is clear: the unemployment rate is calculated by dividing the number of unemployed individuals by all individuals in the labor force. The problem starts when it comes to figuring out exactly how many these people are. It is not just a matter of timely collecting massive amounts of data or about conflicting methods: the very same individuals in question often cannot tell whether they should consider themselves employed or unemployed.
For example: a person who loses a well-compensated full-time job and settles for a part-time position that pays a fraction is by default classified as “employed”, while another person who actively seeks work but takes a few weeks off from the search not only may be no longer considered unemployed, but not even counted as part of the labor force. An individual who would like to work but is unable due to a disability or medical condition is in the very same position.
The result is that many economists believe that—because of the existence of persons who are unemployed or hidden underemployed—statistics are inherently skewed and paint a too-rosy picture of the work force. Needless to say, unemployment and hidden underemployed too are very difficult to measure.
Tracking the labor market is a very complicated affair when different tracking tools tell different stories. Whether through census-type methods, employment office records, surveys of a sample of the population or multi-approach techniques, their conclusions will only offer an approximate reflection of the economic and social health of a country.
Nevertheless, over time, unemployment rates remain a crucial indicator of the stability, level of development and growth trajectory of an economy.
Rising unemployment results in loss of income for individuals and reduced collection of taxes for governments, hence impacting progress and increasing spending on unemployment benefits and social subsidies. Long-term unemployment can also affect social cohesion, lead to negative opinions about the effectiveness of democratic models, prompt cross-border migrations, threaten the economy of trading partners.
According to the latest edition of the World Employment and Social Outlook compiled by the International Labour Organization (ILO), global unemployment in 2018 remains at a similar level to last year’s.
Peaking at 5.9% in 2009, once the most acute phase of the financial crises was over, the world unemployment rate started slowly decreasing. After 2014, it has essentially stabilized around the 5.5% mark, with a total number of estimated unemployed persons exceeding 192 million.
The report also highlights that in recent years progress in reducing vulnerable employment (jobs with low-wages and no security or guarantees) has stalled. An estimated 1.4 billion workers were in states of vulnerable employment in 2017, and an additional 35 million are expected to join them by 2019.
Cursory unemployment rates, it goes without saying, also conceal a profusion of different underlying realities on a regional level.
According to ILO, northern Africa features the highest jobless percentage in the world, 11.5 in 2018, with youth and women being over-represented among the unemployed. In Sub-Saharan Africa, where one in three workers is living in conditions of extreme poverty and three out of four are in vulnerable employment, the rate is expected to stick to levels seen since 2017 at 7.2%. Both in Canada and to a greater degree in the United States, owing to a strong economy, the number of people out of work is at historic lows with a compound rate close to 4%. In Latin America and the Caribbean, the proportion of working-age people not earning compensation is projected to decrease marginally, from 8.2% in 2017 to 7.7% by 2019.
In the Middle East where unemployment for this year is projected at 7.8%, one-third of the almost 5 million people without jobs are women even though they represent just 16% of the labor force. In Central and Western Asia, the regional jobless rate is expected to remain at 8.5% in 2018 and 2019, with vulnerable employment affecting about 30% of workers.
Meanwhile, Asia and the Pacific are continuing to create jobs at a fast pace, keeping the unemployment low by international standards at around 4%. However, almost half of all workers—more than 900 million—are in vulnerable forms of employment.
In Eastern Europe, falling jobless rates in nations such as Poland, Ukraine and Slovakia only partly offset expectations of growing unemployment in the Czech Republic: the proportion of labour force out of work in the region is projected to decline modestly from 5.2% this year to 5.1% the next.
In Northern, Southern and Western Europe, helped by better than expected economic activity, unemployment is on course to decrease from 8.4% in 2017 to 7.7% in 2017 and 7.4% in 2019. The largest overall improvements, of the order of two percentage points, are likely to be seen in Spain and Greece (14.6% and 21.1% estimated respectively this year). In Italy, France and Portugal unemployment rates have been declining in the years following the debt crises and will continue to do so in 2019, albeit at a slower pace than before. In Ireland and in the UK they should remain stable at around 6% and 4% each.