Editorial
The next few months will be crucial for avoiding a dramatic downturn in employment
and a further significant aggravation of social unrest. The world economy,
which had started to recover from the global crisis, has entered a new phase of economic
weakening. Economic growth in major advanced economies has come to a
halt and some countries have re-entered recession, notably in Europe. Growth has
also slowed down in large emerging and developing countries.
Based on past experience, it will take around six months for the ongoing economic
weakening to impact labour markets. Indeed, in the immediate aftermath
of the global crisis it was possible to delay or attenuate job losses to a certain extent,
but this time the slowdown may have a much quicker and stronger impact on
employment. After the collapse of Lehman Brothers in 2008, many viable enterprises
expected a temporary slowdown in activity and so were inclined to retain
workers. Now, three years into the crisis, the business environment has become
more uncertain and the economic outlook continues to deteriorate. Job retention
may therefore be less widespread.
1. Market
turbulence, employment and
social unrest: Trends and
outlook
According to new survey data presented in the Report, the inability to address
the jobs crisis has led to rising social discontent. It is estimated that 40 per cent
of the 119 countries with available information face the prospect of increased
social unrest. The estimated risk of increased social unrest is especially high in
advanced economies, the Middle East and North Africa and, to a lesser extent,
Asia. By contrast the estimated risk of social unrest may have stabilized in
sub-Saharan Africa and has declined in Latin America. Moreover, in 50 out of
99 countries with available data, survey respondents indicate that their confidence
in national governments is declining. Lack of good jobs is at the heart of
these developments as the Report shows that these trends are strongly linked
to the employment situation and perceptions that the burden of the crisis is
shared unevenly.
Main
findings
Introduction
A. Labour
market conditions have
weakened
B.
Employment outlook:
Insufficient job creation
C. Recent
trends in social well-being
and unrest
D. Making
markets work for jobs: The
way forward
Appendix A.
Country groupings by income
level
Appendix B.
The impact of financial
crises on employment:
An empirical
analysis
Appendix C.
Determinants of social
unrest: An empirial analysis
References
2. Making
profits work for investment
and jobs
Pre-crisis gains in growth were distributed unevenly: between 2000 and 2009,
among 56 countries with available information (which account for roughly
90 per cent of world GDP), more than 83 per cent enjoyed an increase in the
share of profits in GDP. However, the chapter shows that, while the profit share
increased, productive investment as a percentage of GDP stagnated globally.
This disconnect between growing profits and productive investment reflects
three main factors.
• First, much of the increase in profits accrued to the financial sector. Between
2000 and 2007, in advanced economies, financial-sector profits grew by 13 per
cent annually, compared with 6 per cent in the case of the non-financial sector,
i.e. the real economy. In emerging and developing economies, the figures
are around 85 per cent and 20 per cent, respectively. Financial-sector profits
declined somewhat in 2008–09, but have since strongly recovered – both in
absolute terms and vis-à-vis profits in the real economy...
Main
findings
Introduction
A. Trends in
income distribution and
productive investment
B. Profits
and productive investment of
non-financial firms: Causes
of a growing disconnect
C. Policy considerations
Appendix A.
The dividends–investment–employment
dynamic:
An ampirical
analysis
References
3. The
labour share of income:
Determinants and potential
contribution
to exiting the financial
crisis
The global economic outlook has deteriorated significantly since 2010, signalling
that the policies implemented to date have failed on a number of fronts. First,
despite the significant and coordinated efforts of governments, the boost to economic
activity was short-lived. Second, the modest gains in output, notably in
advanced economies, have not yielded sufficient job creation. Third, against the
backdrop of weak private sector demand, governments have now come under
pressure by financial markets, limiting their ability to address persistent and
emerging challenges, particularly as regards job creation. Fourth, efforts to curb
public spending have been poorly designed – cuts to employment-friendly programmes
have exacerbated labour market conditions and are likely to worsen fiscal
conditions.
Main
findings
Introduction
A. Wage
shares: Trends and
implications
B.
Determinants of declining
wage shares
C. Policy
considerations
Appendix A.
Definition of the wage share
Appendix B.
Data sources
Appendix C.
Regression analysis
References
4. Investing
in food security as a driver
of better jobs
Given that food prices have tended to increase over the past few years, the purpose
of this chapter is to examine the employment and distributional impacts
of this trend in developing countries. On the positive side, higher food prices
could benefit many developing and emerging economies where a large proportion
of the labour force is engaged in agriculture (the “agricultural-income
effect”). On the negative side, higher food prices could aggravate the income
inequalities identified in Chapter 1 and poverty within vulnerable groups, such
as urban net buyers and rural smallholders (the “poverty effect”).
Main
findings
Introduction
A.
Macroeconomic, employment
and income effects of higher
food prices
B. Factors
contributing to food price
increases
C. Policy
challenges and the way
forward
References
5. Tax
reform for improving job
recovery and equity
Given the shift in public discourse from stimulus to consolidation, the purpose
of this chapter is to present an overview of government revenue measures
that could be taken to support the reduction in the debt while making
room for pro-employment programmes and moving towards more equitable
growth patterns. Following the global crisis, increased expenditures coupled
with the fall in revenues pushed fiscal deficits to 5.2 per cent in advanced countries
and 3.7 per cent in developing countries in 2009. Additionally, tax systems
have become less progressive, placing a heavier burden on real investment and
employment than on other activities, such as financial revenues or property.
• The chapter finds that the tax structure in both advanced and developing countries
has changed considerably over the past decade or so. Particularly since
the global crisis, there has been an increasing reliance on indirect taxes and
social contributions for revenue generation. This creates an extra burden on
poor households and workers, while at the same time a declining trend has
been observed in top personal income tax and corporate tax rates in at least the
past decade:...
Main
findings
Introduction
A. The
evolution in tax structure
B. Tax
burden and employment
C.
Broadening the tax base:
Selected options
Appendix A.
Definitions of various taxes
References
6. Effective
employment policy under
tight fiscal constraints
Countries have stretched their fiscal space in dealing with the consequences of
the global crisis. In G20 advanced economies, public debt reached, on average,
79 per cent of GDP in 2011, compared with 56 per cent in 2007. In emerging
economies, the figures are 40 per cent and 36 per cent, respectively. Ensuring
fiscal consolidation has therefore become a major medium-term priority for
a number of countries. At the same time, however, it is crucial for advanced
economies to boost employment, and for emerging and developing countries
to support quality jobs and social protection. These employment policies may
require some fiscal spending in the short term, but the chapter shows that, if
well-designed, employment policies will boost the recovery while at the same
time supporting fiscal goals over the medium term. When complemented with
an adequate tax base, as identified in Chapter 5, employment programmes are
a crucial component of a strategy for sustainable recovery...
Main
findings
Introduction
A. Fiscal
challenges
B.
Employment policies under
tight fiscal conditions
C. Policy
considerations
Appendix A.
Model mechanisms
References
Recent publications
List of
figures, tables and boxes by
chapter
Figures
Chapter 1
Figure 1.1
Composition of capital
inflows to emerging markets
Figure 1.2
Employment growth
developments in the most
recent period
Figure 1.3
Current employment levels
compared to pre-crisis peaks
Figure 1.4
Employment developments in
the EU-27 by job type,
2008 to 2011
Figure 1.5
Long-term unemployment and
inactivity rates
Figure 1.6
Employment projections:
Advanced economies
Figure 1.7
Employment projections:
Emerging economies
Figure 1.8
Employment projections:
Developing economies
Figure 1.9
Change in the risk of social
unrest between 2006 and 2010
Figure 1.10
People reporting confidence
in their national
government,
2006 to 2010
Figure 1.11
Change in perception of
standard of living getting
worse,
2006 to 2010
Figure 1.12
Determinants of social
unrest, 2010
Chapter 2
Figure 2.1
Capital share and investment
developments among
non-financial
firms
Figure 2.2
Capital share developments
by country, 2000 to 2009
Figure 2.3
Evolution of capital shares
by type of corporations,
2000 to
2007/09
Figure 2.4
Payouts of non-financial
corporations by type, 2000
to
2008/09
Figure 2.5
Growth of the share of
non-productive income
received
and retained
earnings over gross
operating surplus in
non-financial
corporations, 2000 to
2007/09
Figure 2.6
Investment over total
resources received for
non-financial
corporations, 2000 to 2007
Figure 2.7
Total financial assets of
non-financial firms as
a share of
GDP
Figure 2.8
Rate of unsuccessful loan
applications by small- and
medium-sized
enterprises
Chapter 3
Figure 3.1
Trends in wage shares
Figure 3.2
Wage shares, hours worked
and wage dispersion by skill level, selected
advanced economies
Figure 3.3
Financialization and changes
in the wage share,
1985 to 2005
Figure 3.4
Changes in minimum wages and
wage shares in selected
middle- and
low-income countries, 1993
to 2005
Figure 3A.1
Ratio of total employees to
total employment in
different
regions
Chapter 4
Figure 4.1
Trends in food and oil
prices
Figure 4.2
International and domestic
wheat prices
Figure 4.3
Share of food expenditure in
total household income,
developing
countries
Figure 4.4
Net poverty effects of a 10
per cent and 30 per cent
food
price
increase
Figure 4.5
Employment impact of food
price increases among
low-income
earners
Figure 4.6
Top five producers of staple
foods in 2005
Figure 4.7
Food prices and commodity
markets, in billion US$
Figure 4.8
Total returns from commodity
index funds
Chapter 5
Figure 5.1
Government revenues,
expenditures and deficits in
advanced
countries
Figure 5.2
Government revenues,
expenditures and deficits in
emerging
countries
Figure 5.3
Sources of revenue
(percentage of total
government revenue)
Figure 5.4
Top personal income tax rate
— world average
Figure 5.5
Trends in corporate tax
rates
Figure 5.6
VAT revenue
Figure 5.7
Corporate tax revenue as
percentage of total tax
revenue
and GDP
Figure 5.8
Financing gap of social
expenditures
Figure 5.9
Average effective tax rates
in OECD countries for a
single
person with
no children
Figure 5.10
Tax wedge and structural
unemployment in OECD
countries 109
Figure 5.11
GDP growth, employment and
tax revenue as a
share of GDP
Figure 5.12
Revenue generation with a 3
per cent wealth tax, 2010
Figure 5.13
Stamp duty revenue
Figure 5.14 Revenues from
environmental taxes
Chapter 6
Figure 6.1
Employment and fiscal impact
of a budget cut
Figure 6.2
Efficiency of active labour
market spending
Figure 6.3
Additional unemployment rate
under different degrees
of income
support measures
Tables
Chapter 1
Table 1.1
Economic growth projections
for 2012, by date of
forecast
Table 1.2
Estimated employment
shortages over 2012 to 2013
Table 1.3
Dissatisfaction with the
availability of good jobs,
by age
group, 2010
Table 1B.1
Definitions and sources of
variables used in the
regression
analysis
Table 1B.2
Regression results
Table 1B.3
Alternative estimators
Table 1C.1
Definitions and sources of
variables used in the
regression
analysis
Table 1C.2
Weights of the variables
used for the social unrest
score
Table 1C.3
Estimations of the social
unrest score, unstandardized
variables
Table 1C.4
Estimations of the social
unrest score, standardized
variables
Chapter 2
Table 2.1
Corporate governance
reforms: Some country
examples
Table 2A.1
Definitions and sources of
variables used in the
regression
analysis
Table 2A.2
The investment model:
Regression results
Table 2A.3
The employment model:
Regression results
Chapter 3
Table 3C.1
Output, employment, hours
and inflation effects of
policy
changes
under different degrees of
social dialogue
Table 3C.2
Baseline regression: 16
high-income countries, 1981
to 2005
Table 3C.3
Estimation across skills: 10
high-income countries,
1981 to
2005
Table 3C.4
Estimation across medium-
and low-income countries,
unbalanced panel
Chapter 4
Table 4.1
Summary effects of
distributional impacts of
rising food
prices
Chapter 6
Table 6.1
Public debt dynamics in G20
countries
Table 6.2
Output, employment, hours
and inflation effects of
policy
changes
under different degrees of
social dialogue
Boxes
Chapter 1
Box 1.1
European financial safety
measures and recovery
prospects
Box 1.2 The
decline in employment
quality: The case of the
European
Union
Box 1.3
Determinants of social
unrest
Chapter 2
Box 2.1
Definitions and other
measurement considerations
Box 2.2
Research and development by
the private sector
Box 2.3
Advantages of profit sharing
Chapter 4
Box 4.1
Reduced access to
nutrient-rich foods through
export-oriented
price distortion
Box 4.2
Regulations on commodity
speculation in India
Chapter 5
Box 5.1
China’s tax revenue
supported by foreign
companies
Box 5.2 A
more progressive (or less
regressive) consumption
tax: Lessons
from Canada
Box 5.3
Unemployment and labour
taxes
Box 5.4 The
United Kingdom stamp duty
Box 5.5
Environmental tax design
Chapter 6
Box 6.1 Reinforced public
employment services: The
case of Germany 127
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