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Conflict and mass displacement increase child labour

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A new multi-organizational report finds that conflict and war over the past decade has coincided with an increase in child labour among refugee children, the internally displaced and other populations across the region.

Commissioned by the League of Arab States (LAS) and the Arab Council for Childhood Development (ACCD), the “Child Labour in the Arab Region: A Quantitative and Qualitative Analysis ” report is the first to provide an overview of the profile and trends of child labour in the League’s 22 member states. “Over the past ten years, during which the region has witnessed high levels of armed conflict resulting in the mass displacement of populations – both within and between countries – the situation has certainly worsened,” the report states.

A dearth of systematically and comprehensively-collected regional data from previous years means that exact figures on the recent rise of child labour among different population groups are difficult to assess, explained Frank Hagemann, Deputy Regional Director for Arab States from the International Labour Organization (ILO). The ILO is the lead UN agency that oversaw production of the study, in partnership with the Food and Agriculture Organization of the United Nations (FAO).

“Yet the report makes clear that the effects of recent economic shocks, political turmoil, conflict and war have worsened pre-existing levels of child labour, and have also reversed much of the progress Arab countries made in combatting child labour through policy development and practical measures,” Hagemann said. “As is the case across the globe, conflict has hit women and children disproportionately hard in the region. In consequence, child labour has emerged as perhaps the most critical child-protection issue in the region, requiring our urgent attention and action,” Hagemann said.

Worst forms of child labour

The study reports that children in parts of the Arab region “have been increasingly drawn into the worst forms of child labour and face serious and worrying exploitation, abuse and violation of their rights.”

“Refugee and displaced children work in different sectors of activity, with a notable rise in street work, bonded labour, early marriages, and commercial sexual exploitation. Child labour among refugee and displaced children is mainly a coping mechanism for their families who face extreme poverty or where adults are unemployed,” the study states.

The case of hazardous work in agriculture

“The worst forms of child labour include the kinds of hazardous work found in the agriculture sector, in which most children in the Arab region work in both paid and unpaid labour,” said Abdessalam Ould Ahmed, FAO assistant Director-General and Regional Representative for the Near East and North Africa. “Such labour takes place mostly in rural areas, and represents a cheap workforce for small-scale farming – mostly non-mechanized labour-intensive methods of production involving high risks.”

Conflicts and mass displacement had a toll on agriculture and food security. Building resilient rural livelihoods is essential to child labour reduction in this sector, which generally involve high level of work related fatalities, non-fatal accidents and occupational diseases.

“Agriculture accounts for more than half of children in employment in countries such as Yemen, Sudan and Egypt. The predominance of agriculture calls for special attention since this sector is characterized by early entry into work compared to other sectors,” Ould Ahmed added.

Mass displacement and armed conflict

The worst forms of child labour are also found in services and industry, and includes the multiple dangers associated with working on the streets.

They also include direct and indirect involvement in armed conflict and in situations associated with armed conflict.

The study reports that over half of Arab countries are currently affected by conflicts or inflows of refugees and internally displaced persons (IDPs). These include Iraq, Jordan, Lebanon, Libya, Somalia, Sudan, Syria, Tunisia, the Palestinian West Bank and Gaza Strip, and Yemen.

The study reports a rise in the recruitment and use of children by armed groups, both among local and refugee populations, especially in Yemen, Syria and Iraq.

“The majority of recruited children are generally boys. However, there is an emerging tendency to recruit more girls and children below the age of 15. Hundreds of children across the Arab region are also held in detention and even tortured on grounds of being involved in armed groups,” the report states.

Children in parts of the region are being forced into new types of activities relating to situations of armed conflict, such as smuggling goods across the border or between fighting zones, collecting oil waste, performing funerary work (collecting body parts for burial), as well as fetching water or collecting food from fields and landfills littered with explosive remnants of war, the report adds.

Children’s involvement in employment varies substantially across the Arab region, with Sudan and Yemen showing the highest rates of child employment (19.2 per cent and 34.8 per cent respectively.)
Child employment rates are higher among boys. The report cautions, however, “surveys might fail to capture hidden forms of child labour among girls, such as domestic work and unpaid household services, which merit further research and enquiry.” Unpaid work is also higher amongst the younger age group, and in rural areas.

Endorsement and recommendations

The report was presented to LAS member states, who had previously endorsed the report, at the League’s headquarters in Cairo on 7 March. LAS commissioned the report to provide an understanding of the main trends of child employment as a first step towards designing better-targeted policies and interventions to address the problem of child labour. The commission was based on a recommendation of the 20th Session of the Arab Childhood Committee (ACC) of November 2014.

The report stresses, “There is an urgent and immediate need to safeguard children in the Arab region, whether their serious exploitation is a result of pure economic issues or in combination with conflict and displacement. Arab countries need to realize that child labour poses immediate and future challenges not only to the children themselves, but also to their nations and communities, as well as the broader economy.”
“It is now urgent to address both the root causes and repercussions of child labour, and to ultimately eliminate it, especially in its worst forms,” the report states.

The study concludes with recommendations to the 22 LAS member states to improve their governance frameworks, especially by aligning national legislation with international legal standards, and ensuring the effective enforcement of child labour laws and regulations.

It recommends, secondly, protecting children from economic and social vulnerability by improving the socio-economic circumstances of families so that they do not resort to child labour to generate income for households where adults suffer from poverty and unemployment. Achieving this requires improved labour market policies, social protection, access to basic services including education, and awareness-raising programmes.

The study recommends, thirdly, protecting children from the impact of armed conflict through humanitarian programmes and aid for refugees and the displaced, protecting children from recruitment and use in armed conflict, and rehabilitating and reintegrating children used in armed conflicts.

ILO

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Vietnam’s Economy Forecast to Grow 7.5% in 2022

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Vietnam’s economic recovery accelerated over the last six months on the back of resilient manufacturing and a robust rebound in services. GDP growth is forecast to surge from an estimated 2.6 percent in 2021 to 7.5 percent in 2022, while inflation is projected to average 3.8 percent over the year, a World Bank economic update for Vietnam released today says.

Vietnam’s economy expanded 5.2 percent[1] in Q4-2021, 5.1 percent in Q1-2022, and 7.7 percent in Q2-2022, as consumers satisfied pent-up demand and foreign tourist arrivals picked up, according to the report,  “Taking Stock: Educate to Grow,” the World Bank’s bi-annual economic outlook for Vietnam.  

However, this positive outlook is subject to heightened risks that threaten recovery prospects.  Risks include growth slowdown or stagflation in main export markets, further commodity price shocks, continued disruption of global supply chains, or the emergence of new COVID-19 variants.  Domestic challenges include continued labor shortages, the risk of higher inflation, and heightened financial sector risks.

Given the nascent domestic recovery, the weakening global demand outlook, and heightened inflation risks, the report suggests a proactive response by the authorities. In the short run, on the fiscal front, the focus should be on the implementation of the Recovery and Development policy package and expanding targeted social safety nets to help buffer the poor and vulnerable from the effects of the fuel price shock and rising inflation. In the financial sector, close monitoring and strengthening non-performing loan reporting and provisioning as well as  adopting an insolvency framework would be recommended.

If upside risks to inflation materialize — with core inflation accelerating and the consumer price index moving above the 4 percent target set by the government — the State Bank of Vietnam should be ready to pivot to monetary tightening to quell inflationary pressures through interest rate hikes and tighter liquidity provision. 

“To sustain economic growth at the desired rate, Vietnam needs to increase productivity by 2-3 percent every year.” said Carolyn Turk, World Bank Country Director for Vietnam. “International experiences have shown that higher worker’s productivity can be achieved by investing in the education system, as an important part of a basket of investments and reforms. A competitive workforce will generate much-needed efficiency for Vietnam in the long term.”

The report argues that transforming the higher education system will be key to boosting Vietnam’s productivity and help achieve its goal of becoming an upper-middle-income country by 2035 and high-income country by 2045. To match average higher education enrollment levels in upper-middle economies,  3.8 million Vietnamese students would need to be enrolled in higher education institutions, almost twice as many as enrolled in 2019.

Reforms to Vietnam’s higher education system could help support development objectives, the report says. The increasing financial costs of pursuing higher education and the perception of diminishing economic returns from pursuing higher education have weakened demand. The system is further undermined by falling short of providing skills sought by employers, underinvestment by the state, and a weak and fragmented institutional structure governing higher education.

The report details suggestions for improving access to higher education, enhancing the quality and relevance of instruction, and making more efficient use of resources. Suggestions include expanding the use of digital technologies, enhancing the role of the private sector, and streamlining the regulatory framework.

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Financial education gaps are primary barrier to retail investing in capital markets

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New research from the World Economic Forum finds that 40% of non-investors have chosen not to invest because they do not know how or find it too confusing. Furthermore, roughly 70% of people would be more likely to invest, or invest more, with expanded financial education

Done in collaboration with BNY Mellon and Accenture, The Future of Capital Markets: Democratization of Retail Investing also finds that increased participation of retail investors in capital markets is a largely positive trend. Though some concerns about riskier investments remain, retail investors are showing themselves to be prudent investors using markets to build long-term wealth.

“Even amid market volatility, participation in capital markets can empower people to take ownership of their financial future,” said Meagan Andrews, Investing Lead at the World Economic Forum. “We’re just now starting to understand the new wave of retail investors and the power they are wielding in the market. It’s important industry leaders take steps to empower individuals so they can optimize financial decisions for their betterment, whether they currently invest or not.”

Based on a global survey of over 9,000 respondents from 9 countries and expert interviews, the report highlights the importance of enhancing personalized advice for retail investors and improving the reliability of information and investor protections. It also underscores opportunities to improve education, trust and access to increase inclusion in global capital markets.

With the current market volatility, industry players, policy-makers and others need to act now to ensure the benefits of investing are increasingly accessible worldwide.

“Global capital markets are undergoing a fundamental transformation, with more individual and retail investors seeking access than ever before in history,” said Akash Shah, Chief Growth Officer at BNY Mellon. “This research highlights opportunities for the entire financial industry to build the trust and transparency needed to empower and democratize market participation in underserved communities around the world.”

Trends of retail investors
The survey results provided critical insights into the factors and mindsets impacting individuals’ decisions to enter capital markets globally.

Notably, the survey found that individuals primarily look to capital markets to build long-term wealth, especially in emerging markets. Half of those surveyed were investing to save for retirement or to build generational wealth.

Retail investors are skewing younger, with Gen Z and younger Millennials investing at higher rates. Younger investors are much more likely than their peers to have received financial education earlier in life.

Meanwhile, non-investors are less confident they will achieve their long-term financial objectives and, when compared to investors, a higher proportion only learned about investing many years after entering the workforce. Their main reasons for avoiding financial markets were fear of losing money and because of an investing knowledge gap.

Generational wealth also plays a vital role in deciding to invest early. Respondents whose parents invested in the market reported that they began investing earlier in life compared to those with parents who did not invest.

The survey also revealed significant gaps in product awareness. For instance, surveyed investors noted they had a greater understanding of newer products like cryptocurrencies and non-fungible tokens (NFTs) compared to more traditional instruments like stocks and bonds.

Expanding the benefits of retail investing

There are many ways capital markets and global society can work together to grow wealth for more individuals in a responsible manner.

1. Financial literacy and improving investor education

Personal finance education – from setting a budget to learning how to secure one’s retirement – is integral to building wealth responsibly. Industry players should focus on increasing basic financial literacy, promoting responsible investment strategies and improving proactive retirement planning outside of pensions.

Providing information is not enough – content should be fit for purpose, with efforts to make it as understandable as possible. Both policy-makers and private sector actors need to improve their tactics to meet the desires of today’s investors.

2. Personalized, outcome-oriented advice for all

Solutions that financial institutions currently offer are often siloed and don’t always resonate with investors. Those at lower wealth thresholds are often left with few options to get financial advice: 80% of current investors state being able to speak with an adviser is essential to making an investment decision but only 48% are able to turn to a financial adviser or wealth manager for advice.

All investors should have access to the tools and guidance they need to be successful participants in capital markets. This should be inclusive of investors of all income and wealth levels. The industry must expand access to personalized advice and scale services to thrive to meet increasing retail investor demand – this must happen across all wealth brackets.

3. Collaboration and public-private partnerships

Increased collaboration across the industry, including public-private partnerships, will be needed.

Brokerages, wealth managers and exchanges are integral to this effort due to their proximity to retail investors and the speed at which they can enact change. From educational efforts to initiatives to lower the barriers to entry for retail investors, public-private partnerships will be essential.

“Increasing market participation and empowering retail investors has to include collaboration from all stakeholders,” said Kathleen O’Reilly, Global Lead, Accenture Strategy. “Financial institutions especially, from the C-suite to individual wealth managers, must play a critical role in offering relatable education efforts in addition to the investment products that will help investors become smarter and more confident.”

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Global economy: Outlook worsens as global recession looms

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Still reeling from the COVID pandemic and Russia’s invasion of Ukraine, the global economy is facing an increasingly murky and uncertain outlook, according to the latest report released on Tuesday by the International Monetary Fund (IMF).

The World Economic Outlook Update July 2022: Gloomy and More Uncertain, highlights the significant consequences of the stalling of the world’s three main economic powerhouses – the United States, China and the major European economies.

“The outlook has darkened significantly since April,” said Pierre-Olivier Gourinchas, IMF Economic Counsellor and Director of Research.

“The world may soon be teetering on the edge of a global recession, only two years after the last one”.

The baseline forecast for global growth is for it to slow from 6.1 per cent last year, to 3.2 per cent in 2022 – 0.4 per cent lower than forecast in the last Outlook update in April.

Three key economies

With higher-than-expected inflation – especially in the US and the largest European economies – global financial conditions are becoming tighter.

In the US, reduced household purchasing power and tighter monetary policy will drive growth down to 2.3 per cent this year and one percent next year, according to the outlook.

China’s slowdown has been worse than anticipated amid COVID-19 outbreaks and lockdowns, with negative effects from Russia’s invasion of Ukraine continuing.

Moreover, further lockdowns and a deepening real estate crisis there has pushed growth down to 3.3 per cent this year – the slowest in more than four decades, excluding the pandemic.

And in the Eurozone, growth has been revised down to 2.6 per cent this year and 1.2 percent in 2023, reflecting spillovers from the Ukraine war and tighter monetary policy.

“As a result, global output contracted in the second quarter of this year,” said Mr. Gourinchas.

Inflation

Despite the global slowdown, inflation has been revised up, in part due to rising food and energy prices.

This year it is anticipated to reach 6.6 per cent in advanced economies and 9.5 per cent in emerging market and developing economies – representing upward revisions of 0.9 and 0.8 percentage points respectively. And it is projected to remain elevated for longer.

Broadened inflation in many economies reflects “the impact of cost pressures from disrupted supply chains and historically tight labour markets,” the IMF official stated.

Downward risks

The report outlines some risks ahead, including that the war in Ukraine could end European gas supply from Russia altogether; rising prices could cause widespread food insecurity and social unrest; and geopolitical fragmentation may impede global trade and cooperation.

Inflation could remain stubbornly high if labour markets remain overly tight or inflation expectations are too optimistic and prove more costly than expected.

And renewed COVID-19 outbreaks and lockdowns threaten to further suppress China’s growth.

“In a plausible alternative scenario where some of these risks materialize…inflation will rise and global growth decelerate further to about 2.6 per cent this year and two per cent next year, a pace that growth has fallen below just five times since 1970,” said the IMF economist.

“Under this scenario, both the United States and the Euro area experience near-zero growth next year, with negative knock-on effects for the rest of the world”.

Destabilizing inflation

Current inflation levels represent a clear risk to macroeconomic stability, according to the outlook.

Responding to the situation, central banks in advanced economies are withdrawing monetary support faster than expected, while many in emerging market and developing economies began raising interest rates last year.

“The resulting synchronized monetary tightening across countries is historically unprecedented, and its effects are expected to bite, with global growth slowing next year and inflation decelerating,” said Mr. Gourinchas.

Policy priorities

While acknowledging that tighter monetary policy would have economic costs, the IMF official upheld that delaying it would only exacerbate hardship.

And hampered by difficulties in coordinating creditor agreements, how and whether debt can be restructured, remains unpredictable.

He argued that domestic policies responding to the impacts of high energy and food prices should focus on those most affected, without distorting prices.

“Governments should refrain from hoarding food and energy and instead look to unwind barriers to trade such as food export bans, which drive world prices higher,” advised the IMF official.

Meanwhile, mitigating climate change continues to require prompt multilateral action to limit emissions and raise investment to accelerate a “green transition”.

Policymakers are urged to ensure that measures are temporary and only cover energy shortfalls and climate policies.

Teetering on the edge

From climate transition and pandemic preparedness to food security and debt distress, multilateral cooperation is key, said the IMF economist.

“Amid great challenge and strife, strengthening cooperation remains the best way to improve economic prospects and mitigate the risk of geoeconomic fragmentation,” he underscored.

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