India back to strong growth but some nations facing high debts, rising costs: ILO

While some large emerging economies, such as India, have returned to strong economic growth after the Covid-19 pandemic, low-income countries are facing high levels of debt and rising costs of borrowing, which further constrain their efforts to promote decent and productive employment, says a new report by the International Labour Organisation (ILO).

The developing countries’ response to current crises is constrained by a combination of high inflation and high-interest rates, along with a growing risk of debt distress.

According to the ILO Monitor on the World of Work – 11th edition, the global unemployment in 2023 is expected to fall below pre-pandemic levels – to 191 million, corresponding to a global unemployment rate of 5.3% – and estimates show low-income countries remain “far behind in the recovery process”.

It adds that low-income countries in Africa and the Arab region are unlikely to recover to pre-pandemic levels of unemployment this year.

Some regions have managed to reduce rates substantially below pre-crisis levels, with 6.7% in Latin America and the Caribbean (8.0% in 2019), 6.3% in Northern, Southern and Western Europe (7.0% in 2019), and 7.8% in central and Western Asia (9.2% in 2019), the report adds.

On the growing employment divide, the ILO report says variations in the jobs gap -- a new indicator developed by the ILO -- point further to a global employment divide. "Low-income countries face the largest jobs gap rate at an alarming 21.5 per cent, while the rate in middle-income countries stands slightly above 11 per cent."

In 2023, the global jobs gap is projected to stand at 453 million people (or 11.7%), more than double the level of unemployment.

For developing countries, rising debt levels add additional challenges, considerably narrowing the scope for policy interventions, says the ILO. "Low-income developing countries that are in debt distress are facing a significantly higher jobs gap, reaching 25.7 per cent in 2023, compared with 11 per cent in developing countries at low risk of debt distress," says the report.

It says the increasing investment would bring large economic, social, and employment benefits and narrow the global jobs divide. Also, introducing universal basic old-age pensions in developing countries will increase GDP per capita by 14.8% in 10 years and reduce extreme poverty (share of people who live on less than 2.15 USD a day) by 6 percentage points – a drastic reduction from the current rate of 15.5%, says the report.

"Financing social protection is challenging, but not unattainable," says the report.

To reduce the poverty gap globally, the organisation suggests investing in people through jobs and social protection, which will help narrow the gap between rich and poor nations and people.