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Insufficient paid work affects almost half a billion people

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Almost half a billion people are working fewer paid hours than they would like or lack adequate access to paid work, according to a new International Labour Organization (ILO) report.

In addition, the World Employment and Social Outlook: Trends 2020  (WESO) shows that unemployment is projected to increase by around 2.5 million in 2020. Global unemployment has been roughly stable for the last nine years but slowing global economic growth means that, as the global labour force increases, not enough new jobs are being generated to absorb new entrants to the labour market.

“For millions of ordinary people, it’s increasingly difficult to build better lives through work,” said ILO Director-General Guy Ryder. “Persisting and substantial work-related inequalities and exclusion are preventing them from finding decent work and better futures. That’s an extremely serious finding that has profound and worrying implications for social cohesion.”

The WESO shows that the mismatch between labour supply and demand extends beyond unemployment into broader labour underutilization. In addition to the global number of unemployed (188 million), 165 million people don’t have enough paid work and 120 million have either given up actively searching for work or otherwise lack access to the labour market. In total, more than 470 million people worldwide are affected.

It also looks at labour market inequalities. Using new data and estimates it shows that, at the global level, income inequality is higher than previously thought, especially in developing countries.

Worldwide, the share of national income going to labour (rather than to other factors of production) declined substantially between 2004 and 2017, from 54 per cent to 51 per cent, with this economically significant fall being most pronounced in Europe, Central Asia and the Americas. This is more than suggested by previous estimates, the WESO shows.

Moderate or extreme working poverty is expected to edge up in 2020-21 in developing countries, increasing the obstacles to achieving Sustainable Development Goal 1  on eradicating poverty everywhere by 2030. Currently working poverty (defined as earning less than US$3.20 per day in purchasing power parity terms) affects more than 630 million workers, or one in five of the global working population.

Other significant inequalities – defined by gender, age and geographic location – remain stubborn features of current labour markets, the report shows, limiting both individual opportunities and general economic growth. In particular, a staggering 267 million young people (aged 15-24) are not in employment, education or training, and many more endure substandard working conditions.

The report cautions that intensifying trade restrictions and protectionism could have a significant impact on employment, both directly and indirectly.

Looking at economic growth, it finds that the current pace and form of growth is hampering efforts to reduce poverty and improve working conditions in low-income countries. The WESO recommends that the type of growth needs to shift to encourage higher-value added activities, through structural transformation, technological upgrading and diversification.

“Labour underutilization and poor-quality jobs mean our economies and societies are missing out on the potential benefits of a huge pool of human talent,” said the report’s lead author, Stefan Kühn. “We will only find a sustainable, inclusive path of development if we tackle these kinds of labour market inequalities and gaps in access to decent work.”

The annual WESO Trends report analyses key labour market issues, including unemployment, labour underutilisation, working poverty, income inequality, labour income share and factors that exclude people from decent work.

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Nearly 9 in 10 People Globally Want a More Sustainable and Equitable World Post COVID-19

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In a new World Economic Forum-Ipsos survey of more than 21,000 adults from 28 countries nearly nine in ten say they are ready for their life and the world to change.

72% would like their own lives to change significantly and 86% want the world to become more sustainable and equitable, rather than going back to how it was before the COVID-19 crisis started. In all countries, those who share this view outnumber those who don’t by a very significant margin (more than 50 percentage points in every country except South Korea). Preference for the world to change in a more sustainable and equitable manner is most prevalent across the Latin America and Middle East-Africa regions as well as in Russia and Malaysia.

Next week’s World Economic Forum Sustainable Development Impact Summit will address the achievement of the sustainable development goals and the appetite for transformation which will drive the “decade of delivery”.

Clear majority ready for a more sustainable and equitable world

Globally, 86% of all adults surveyed agree that, “I want the world to change significantly and become more sustainable and equitable rather than returning to how it was before the COVID-19”. Of those, 46% strongly agree and 41% somewhat agree, while 14% disagree (10% somewhat and 4% strongly).

Russia and Colombia top the list of countries that strongly or somewhat agree with that statement at 94%. They are followed by Peru (93%) Mexico (93%) Chile (93%) Malaysia (92%), South Africa (91%) Argentina (90%) and Saudi Arabia (89%). The countries that are most change averse – disagreeing somewhat or strongly disagreeing with the statement – are South Korea (27%), Germany (22%), Netherlands (21%), US (21%) and Japan (18%).

Dominic Waughray, Managing Director, at the World Economic Forum said, “The Great Reset is the task of overhauling our global systems to become more equitable and sustainable, and it is more urgent than ever as COVID-19 has exposed the world’s critical vulnerabilities. But the technology to transform things tends to outpace the human will to change. In six months, the pandemic has systematically broken down this cultural barrier and we are now at a pivot point where we can use the social momentum of this crisis to avert the next one.”

Ready for significant personal change

Across all 28 countries, 72% want their lives to change significantly rather than returning to what it was like before the COVID-19 crisis (30% strongly and 41% somewhat) while the other 29% disagree (21% strongly and 8% somewhat).

Latin America stands out for its optimism, with Mexico, Colombia and Peru in the top five countries strongly or somewhat agreeing. Agreement is also high South Africa (86%), Saudi Arabia (86%, Malaysia (86%) and India (85%). By contrast, at least two out of five adults in the Netherlands, Germany, South Korea, Japan, Sweden, the US, UK and Canada long for their life to just return to how it was before the pandemic.

MethodologyThese are the results of a 28-country survey conducted by Ipsos on its Global Advisor online platform. Ipsos interviewed a total of 21,104 adults aged 18-74 in United States, Canada, Malaysia, South Africa, and Turkey, and 16-74 in 23 other countries between August 21 and September 4, 2020. Where results do not sum to 100 or the ‘difference’ appears to be +/-1 more/less than the actual, this may be due to rounding, multiple responses or the exclusion of don’t knows or not stated responses.

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Global development efforts should increase focus on fragile states in light of COVID-19 crisis

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The COVID-19 pandemic is aggravating inequality, poverty and insecurity in vulnerable, or fragile, countries and territories, making it more important than ever to focus development efforts on such places, according to a new OECD report.

States of Fragility 2020 finds that progress on several UN Sustainable Development Goals (SDGs) – including the crucial Goal 16 relating to peace, justice and strong institutions – has stagnated or declined in fragile locations in recent years. The coronavirus crisis is hurting incomes and stability in already poor and vulnerable countries, as well as health and education – two key building blocks of sustainable development in fragile states.

“COVID-19 is a global systemic shock that is exacerbating fragility and risks, holding back progress on the Sustainable Development Goals,” said OECD Secretary-General Angel Gurría. “As we continue to fight the worst health, economic and social crisis in nearly a century, we must put people at the centre of our development co-operation efforts on addressing fragility.”

Defining fragility as the combination of exposure to risk in five areas – economic, environmental, political, social and security – and the insufficient capacity of the state or system to manage, absorb or mitigate those risks, the OECD estimates that 23% of the world’s population, and 77% of those classified before COVID-19 as extremely poor, live in “fragile” contexts. The report finds only small improvements in fragility in the 57 countries and territories it examines.

COVID-19 is adding to economic, health and societal vulnerabilities, exacerbating existing pressures driving fragility, conflict and violence, the report says. In places where violence is prevailing or increasing, mitigating the impact of COVID-19 will require greater peacebuilding efforts. Initial pandemic response measures taken by governments in some fragile locations risk compounding poverty, inequality, social fragmentation and political repression, thus adding to the root causes of conflict and fragility.

The report notes that Official Development Assistance (ODA) has become an important source of support to help fragile states onto sustainable and self-reliant pathways. It calls for it to be protected and renewed to meet the challenges of the post-COVID-19 world, particularly as measures imposed to limit the spread of the virus are affecting the ability of civil society, multilateral and humanitarian organisations to operate in fragile locations.

From 2010 to 2018, members of the OECD’s Development Assistance Committee (DAC) increased their bilateral assistance to priority sectors in fragile places, both in volume and as a proportion of total ODA. Humanitarian ODA also rose by 44% in the same period. Yet ODA for peace remains low compared to humanitarian and development finance. DAC members spent 25% of their ODA to fragile contexts on humanitarian assistance in 2018 but only 4% and 13% respectively on prevention and peacebuilding.

The report says there is a need to focus more financing on targeting the underlying drivers of fragility. Addressing fragility also requires an approach based on local needs, priorities and resilience.

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Pandemic Threatens Human Capital Gains of the Past Decade

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The COVID-19 pandemic threatens hard-won gains in health and education over the past decade, especially in the poorest countries, a new World Bank Group analysis finds. Investments in human capital—the knowledge, skills, and health that people accumulate over their lives—are key to unlocking a child’s potential and to improving economic growth in every country.

The World Bank Group’s 2020 Human Capital Index includes health and education data for 174 countries – covering 98 percent of the world’s population – up to March 2020, providing a pre-pandemic baseline on the health and education of children. The analysis shows that pre-pandemic, most countries had made steady progress in building human capital of children, with the biggest strides made in low-income countries. Despite this progress, and even before the effects of the pandemic, a child born in a typical country could expect to achieve just 56 percent of their potential human capital, relative to a benchmark of complete education and full health.

Twelve Pacific Island Countries were included in this Index. Based on the report, a child born today in the Pacific Islands will on average reach 48 percent of his or her full potential, significantly lower than the global benchmark, with the lowest scoring countries being Solomon Islands and Marshall Islands at 42 percent, and Papua New Guinea at 43 percent. Stronger performing countries in the Pacific include Fiji, Kiribati, Samoa, Tonga and Palau.

“The pandemic puts at risk the decade’s progress in building human capital, including the improvements in health, survival rates, school enrollment, and reduced stunting. The economic impact of the pandemic has been particularly deep for women and for the most disadvantaged families, leaving many vulnerable to food insecurity and poverty,” said World Bank Group President David Malpass. “Protecting and investing in people is vital as countries work to lay the foundation for sustainable, inclusive recoveries and future growth.”

Due to the pandemic’s impact, most children – more than 1 billion – have been out of school and could lose out, on average, half a year of schooling, adjusted for learning, translating into considerable monetary losses. Data also shows significant disruptions to essential health services for women and children, with many children missing out on crucial vaccinations.

In the Pacific, many countries are responding to multiple crises; with response and recovery efforts continuing following April’s Tropical Cyclone Harold that caused widespread destruction in Solomon Islands, Vanuatu, Fiji and Tonga. The region had also been recovering from one of the worst measles outbreaks recorded, affecting American Samoa, Fiji, Kiribati, Tonga and, most significantly, Samoa – where the outbreak claimed 83 lives, the majority of who were young children.

Furthermore, the ongoing and increased threats of natural disasters and impacts climate change, with the added burden of some of the world’s highest rates of non-communicable diseases and overall low health capacity continue to threaten the lives and livelihoods of Pacific Islanders, that has been further exacerbated by the impacts of the global COVID-19 pandemic.

The 2020 Human Capital Index also presents a decade-long view of the evolution of human capital outcomes from 2010 through 2020, finding improvements across all regions, where data are available, and across all income levels. These were largely due to improvements in health, reflected in better child and adult survival rates and reduced stunting, as well as an increase in school enrollment. This progress is now at risk due to the global pandemic.

The analysis finds that human capital outcomes for girls are on average higher than for boys. However, this has not translated into comparable opportunities to use human capital in the labor market: on average, employment rates are 20 percentage points lower for women than for men, with a wider gap in many countries and regions. Moreover, the pandemic is exacerbating risks of gender-based violence, child marriage and adolescent pregnancy, all of which further reduce opportunities for learning and empowerment for women and girls.

Today, hard-won human capital gains in many countries are at risk. But countries can do more than just work to recover the lost progress. To protect and extend earlier human capital gains, countries need to expand health service coverage and quality among marginalized communities, boost learning outcomes together with school enrollments, and support vulnerable families with social protection measures adapted to the scale of the COVID-19 crisis.

The World Bank Group is working closely with Pacific countries to develop long-term solutions to protect and invest in people during and after the pandemic:

Ambitious, evidence-driven policy measures in health, education, and social protection can recover lost ground and pave the way for today’s children to surpass the human capital achievements and quality of life of the generations that preceded them. Fully realizing the creative promise embodied in each child has never been more important.

The World Bank Group, one of the largest sources of funding and knowledge for developing countries, is taking broad, fast action to help developing countries strengthen their pandemic response. We are supporting public health interventions, working to ensure the flow of critical supplies and equipment, and helping the private sector continue to operate and sustain jobs. We will be deploying up to $160 billion in financial support over 15 months to help more than 100 countries protect the poor and vulnerable, support businesses, and bolster economic recovery. This includes $50 billion of new IDA resources through grants and highly concessional loans.

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