International Labor Organization: Worldwide Economic Upswing does not lead to a Better Standard of Living of the Working Population

By Wolfgang Pomrehn

[This article published in: Junge Welt, 12/13/2005 is translated from the German on the World Wide Web,]

The global economy grew 5.1 percent in 2004. In 2005 the growth is somewhat lower but still high. World trade has expanded even more strongly at 7.5 percent. Again and again free traders praise this globalization as a panacea for spreading prosperity and combating poverty. However employees are not harvesting the fruits of this development.


A new report of the International Labor Organization (ILO), one of the oldest sub-organizations of the UN, shows how little the conjured distributed globalization has to do with reality. Half of the workers of the world, 1.38 billion persons, do not earn enough money to free themselves and their families from poverty, the ILO report says. The poverty line is defined internationally as an income of two dollars per person per day.

“The central message of our report is that better jobs and better incomes are not the priorities of the political decision-makers,” ILO director Juan Somavia said on Friday in presenting the study. “In the past, globalization did not lead to creating adequate sustainable jobs. This must change (…). We must make dignified work a central priority of all economic and social decisions,” Somavia said.

According to the report, income and working conditions are the great problems in many regions of the world, not unemployment. Jobs were created in Africa and Middle East. However a closer analysis shows these were mostly little “personal companies,” job possibilities in the informal sector that hardly feed people. These jobs were created so people would not be left completely without incomes. In sub-Saharan Africa, the number of workers who must live from less than one dollar per day rose from 1994 to 2004 by 28 million, the ILO report says. In North America and Western Europe, jobs were created in the service sector where labor is traditionally paid poorly and temporary- and part-time work have become the rule in the last years. Deteriorating conditions for employees also result here despite growth.


An ever more depressing picture results for Latin America, according to the ILO, where the number of workers living under the one-dollar-limit – the UN definition of the limit for absolute poverty – rose by 4.4 million persons from 1999 to 2003. East Asia is the only region where the living conditions of the working population improved somewhat in the past years. These conditions started from a very low level.

At the same time the ILO statistics show that the wage disparity is widening again in nearly all countries. Higher incomes have increased faster than lower incomes since the beginning of the 1990s. The reasons are the great worldwide demand for trained workers, the low need for poorly trained workers in industrial states and the growing significance of the informal sector in many countries. However high wage costs in industrial states do not automatically lead to competitive disadvantages since productivity is also essentially higher.

On the global scale, the job intensity of growth has weakened. This means stronger growth than at the end of the 1990s is needed to create the same number of new jobs. This is a consequence of growing productivity. Since many Asian developing countries, especially China and India, are presently in a rapid technological catch-up race, we can assume that this trend will intensify in the next years. In addition, this development is not limited to industrial production. In the service sector, every percent of growth creates almost twice as many jobs as in manufacturing areas. This process is clearly weakening, particularly in the United States. In Western Europe, the job intensity of the tertiary sector, as economists call this realm, is becoming slowly weaker. What has long been obvious in Germany will soon also be true internationally. Full employment is only possible by reducing working hours.