Developing countries are catching up with advanced economies …
The process of economic convergence between developing countries and advanced economies has gathered momentum. Between 1980 and 2011, per capita income in developing countries grew, on average, by 3.3 per cent per year – much faster than the 1.8 per cent per capita income growth recorded in advanced economies. This process of convergence has accelerated since the early 2000s, especially since the start of the global crisis in 2007–08.
There are, however, significant cross-country differences. The report identifies a group of emerging economies which have grown particularly fast. In recent years, most low- and medium-income countries and least developed countries have also made significant progress in terms of economic growth.
… with those countries that are investing in quality jobs making most progress
The extent to which countries have made efforts to improve job quality plays a part in explaining the observed growth patterns. This is particularly the case over the past decade. In countries that have made the greatest investment in quality jobs from the early 2000s, living standards (as measured by the growth in average annual per capita income) improved more than in developing and emerging economies that paid less attention to quality jobs.
However, the disparity in quality jobs remains significant …
Despite these positive trends, employment and social challenges remain acute in most emerging and developing countries. More than half of the developing world’s workers (i.e., nearly 1.5 billion people) are in vulnerable employment. These workers are less likely than wage earners to have formal working arrangements, be covered by social protection such as pensions and health care or have regular earnings.
… levels of working poverty remain elevated despite the considerable progress already made …
The reduction in the incidence of working poverty in many countries of the developing world has been impressive. Still, 839 million workers in developing countries are unable to earn enough to lift themselves and their families above the US$2 a day poverty threshold. This represents around one-third of total employment, compared with over half in the early 2000s.
To meet these challenges, it is essential, first and foremost, to boost a diversified productive capacity rather than just liberalising trade …
The evidence presented shows that development requires a strategy to diversify the economic base and enhance the ability of sustainable enterprises to create quality jobs. While manufacturing tends to be associated with faster economic growth and quality job creation, the report highlights successful experiences based on agricultural and rural development, efficient and equitable use of natural resources and services that connect with the rest of the economy. In all cases, however, it is crucial to avoid a concentration of economic growth in a few export-oriented sectors with limited links to the rest of the economy. Economic diversification policies, measures to facilitate formalization and expansion of enterprises, and the enforcement of labour standards can all contribute to broad-based development and promotion of decent work.
… second, strengthen labour market institutions rather than neglecting labour standards …
Labour and social protection institutions are important ingredients of economic growth, quality jobs and human development. It is not possible to achieve economic diversification without active measures to tackle low product-ivity in agriculture and small and medium-sized enterprise, poor working condition traps and high rates of informality. Sustained, strong growth is at risk if social inequality grows, or rent-seeking behaviour by owners of natural resources or land is allowed to continue unchecked.
… third, extend well-designed social protection floors as drivers of inclusive development, not just as a narrowly targeted safety net for the poor …
There is evidence that social protection helps to reduce the incidence of poverty, inequalities and vulnerable employment. Well-designed social protection enhances individual capabilities to access better jobs. In addition, social protection can boost economic growth and quality job creation. Much depends on the responsiveness of social protection to changing economic conditions. Countercyclical programmes in China and South Africa are interesting cases in point in this respect. In some countries, such as Ethiopia and Namibia, employment is an explicit target of social protection schemes.
… and, finally, ensure balanced income developments to avoid harmful inequalities
The widening of income inequalities within countries is now a well-established fact. Analysis suggests that this trend is associated with a change in the distribu-tion of income, to the detriment of labour. Developing countries have not been immune to these patterns. Evidence suggests widening inequalities can be detrimental to economic growth, to the extent that the negative consumption effect associated with growing in-equalities outweighs any positive impacts in terms of higher returns from investment and improved cost-competitiveness.
