Global economic slowdown to impact India, others: ILO

The report pointed out that despite few direct links with Russia & Ukraine, South Asia remains vulnerable to higher global commodity prices resulting from the conflict

The economic slowdown in the high-income countries projected over the next one year is likely to have important spillovers for low and middle-income countries, including India, through global supply chain linkages, the International Labour Organisation (ILO) said in the World Employment and Social Outlook released on Tuesday.

The ILO, a UN agency, noted that the conflict in Ukraine, climate change and unprecedented humanitarian challenges have hampered the recovery of the economy of the low and middle-income countries.

The ILO said global employment will expand by only 1 per cent in 2023, a marked deceleration following a 2.3 per cent growth in 2022. "The multiple crises hitting the world of work have caused projected employment growth in 2023 to be 0.5 per cent below what was projected..one year ago," it noted.

Besides unemployment, the quality of employment is also a major concern in the developing world as lack of decent work undermines social justice. In sub-Saharan Africa and South Asia, 60.8 per cent and 34.4 per cent, respectively, of the employed population in 2021 were considered to be 'working poor' at US $3.10/day. Going by the World Bank's revised threshold for extreme poverty (US $2.15/day purchasing power parity of 2015).

"Average real wages fell in 2022, meaning that wage and salaried workers are unable to raise their incomes in line with inflation. This decline is reducing the purchasing power of the middle class and hitting low-income groups particularly hard and comes on top of the substantial losses in the total wage receipts for workers and their families during the Covid-19 crisis India along with other lower-middle-income countries benefits from the low old-age dependency ratios but faces the challenge of integrating a large youth population into the labour market.

Nearly two-thirds (65.6 per cent) of South Asia's total employment was in the informal sector and the persistent economic uncertainty has pushed more persons into informal employment, which lacks many benefits offered by the formal job market that helps in social justice.

Globally, South Asia accounted for the majority (74 per cent) of the resurgence in total employment in 2022. The region is expected to provide employment to 1.1 crore persons in 2023 and 2024 but the employment-to-population ratio will remain lower at 46.5 per cent compared with the 2019 figures (46.8 per cent). It is expected to stagnate at 46.5 per cent for 2023 and 2024, the report said.

The report pointed out that despite few direct links with Russia and Ukraine, South Asia remains vulnerable to the higher global commodity prices that have resulted from the conflict and cited the example of volatile energy prices.

Noting that India's high growth projections have seen a downward revision by the International Monetary Fund (IMF) and might be revised further in the coming days. "Household consumption will be held back by the slow recovery of the labour market and by high inflation," it said.

The flagship report suggested measures to promote productivity, standardisation of public procurement policies, skill development and vocational training and creation of jobs during the transition to green economy to achieve significant benefits for sustainable economic development.