Africa, Middle East driving growing ’employment divide’, UN says

Low-income countries will not see unemployment rates recover to pre-pandemic levels in 2023, ILO says.

Low-income countries in Africa and the Middle East are missing out on the global recovery of unemployment rates to pre-pandemic levels, the United Nations labour agency has warned.

Global unemployment is expected to drop to 5.3 percent – representing 191 million people – this year, down from 5.4 percent in 2022 and 5.5 percent in 2019 as labour markets recover from the shock of COVID-19 and pandemic restrictions, according to a report released by the International Labour Organization (ILO) on Wednesday.

But much of that recovery will occur in high-income countries that have proven to be surprisingly resilient to economic shocks, leaving many low-income countries with persistently high rates of unemployment, the ILO said.

Unemployment in North Africa and the Arab states is projected to be 11.2 percent and 9.3 per cent, respectively, in 2023, remaining above pre-pandemic levels.

Latin America, the Caribbean, Europe, and Central and Western Asia have all reduced their unemployment rates to pre-crisis levels.

The growing employment divide comes as the world’s economy is expected to grow just 2.8 percent in 2023, down from 3.4 percent in 2022.

The figures, however, do not paint a full picture of the unemployment crisis in low-income countries, according to the ILO,  which said the “jobs gap” is even more severe when accounting for people who want to work but do not have a job or the ability to get one.

The ILO estimated the global jobs gap in 2023 will be 11.7 percent – representing roughly 453 million people – with lower-income countries facing a gap of 21.5 percent, compared with 8.2 percent in high-income countries.

The labour agency said the divide has been exacerbated by “mutually reinforcing crises,” including the lingering effects of the pandemic and the wars in Ukraine and Syria, which have led to high inflation, high-interest rates and currency depreciation.

Interest rates remain above 10 percent in 37 countries, raising the cost of borrowing and making it harder to pay off debt, which skyrocketed during the pandemic, the ILO said.

About 60 percent of countries are now in “debt distress or at high risk of debt distress”, according to IMF data.

ILO Director-General Gilbert F Houngbo said these challenges showed the need to develop social safety nets that could weather macroeconomic shocks.

“The findings of this report are a stark reminder of growing global inequalities,” Houngbo said. “Investing in people through jobs and social protection will help narrow the gap between rich and poor nations and people.”