Underemployment
Underemployment
ECONOMIC GLOBALIZATION AND UNDEREMPLOYMENT
HOW GLOBALIZATION AFFECTS EMPLOYMENT AND POVERTY
It is difficult to estimate the percentage of the world population that is jobless. Unemployment, underemployment, informal employment, and the ratio of employment to the total population are all indicators that measure employment instability. Because the use of such measures varies across countries and organizations, it is important to provide information on a number of key labor market indicators to better assess global joblessness (International Labour Organization 2007a).
To illustrate, the adult unemployment rate captures the proportion of the labor force that is not working but is looking for work (ages twenty-five and older). The “youth unemployment rate” applies to those unemployed persons between the ages of fifteen and twentyfour. Although unemployment is a commonly used indicator of joblessness, a large proportion of the non-working population is not captured with this measure. For example, the unemployment rate does not count “discouraged workers.” Discouraged workers are those persons who are no longer included in the labor force, as they have essentially given up trying to find work. Nor does the unemployment rate represent the proportion of the labor force that is underemployed. According to the International Labour Organization (ILO) (2007b), the underemployed represent those “whose hours of work are insufficient in relation to an alternative employment situation in which the person is willing and available to engage.” Finally, another key labor market indicator, the ratio of employment to the total population, is often used to assess employment opportunities at the global level and is thought to provide a better estimate of joblessness than that measured by the unemployment rate alone. This measure, however, also fails to capture the underemployed. Hence, to adequately capture global joblessness, employment opportunities and trends, it is important to provide information on unemployment, underemployment, and the ratio of employment to the total population.
ECONOMIC GLOBALIZATION AND UNDEREMPLOYMENT
Economic globalization constitutes the process of increasing economic interdependence across borders. With greater economic integration comes the potential for greater market productivity and efficiency. The process of globalization is observed in the growth of international trade, the rise in transnational corporations and investments, and in the unrestrained cross-border movement of capital and goods. As predicted by economists and other policy analysts, globalization has contributed to worldwide economic gains. Yet a closer look at the social dimension of globalization reveals an unequal distribution of these benefits within and across countries.
Although international economic growth and development have the potential to promote employment and decrease poverty and exclusion around the world, the evidence to date suggests that the opposite has occurred. Macroeconomic policies that enhanced global economic integration failed to sufficiently consider the national and international implications for countries with an unequal distribution of wealth. Moreover, global economic policy did not address how to increase or improve employment for the majority of workers, nor did such policies seek to remedy gender- or birth-ascribed labor market inequality. Consequently, world economic growth has been realized through globalization; however, inter- and intra-country inequality persists among the core and periphery, developed, transitioning, and underdeveloped countries, and across distinct social groups. In other words, a strong global gross domestic product (GDP) did not correspond to a reduction in global joblessness or poverty. Persistent and increasing unemployment, underemployment, informal employment, and poverty are observed in all countries, regardless of development. Moreover, such employment uncertainty associated with the global economy is further stratified by gender (Heintz 2006) and by birthascribed characteristics and features associated with subgroup membership (including race, ethnicity, nativity, caste, legal status).
HOW GLOBALIZATION AFFECTS EMPLOYMENT AND POVERTY
With growing interdependence comes greater vulnerability across borders. The SARS outbreak in Asia, the spread of HIV/AIDS in sub-Saharan Africa, Russia, and the Ukraine, the impact of 9/11 in the United States, the Iraq War and other armed conflicts and violence, have all had a negative, if temporary, effect on regional economies (Harasty and Schmidt 2004). In the global economy, regional events affect the global marketplace. For example, the volatility of markets in Latin America and Asia have slowed global economic growth, and the global tourism and travel industry has been negatively impacted by 9/11 and the subsequent War on Terror. Thus, global economic stability is correlated with national economic and non-economic crises and events.
In contrast, macroeconomic policies favoring globalization, such as freer trade and markets, government deregulation, and the emphasis on private over public sector oversight, have succeeded in increasing global productivity and efficiency. In 2006, International Monetary Fund (IMF) estimates report a slow but steady growth in global output and global labor productivity. For example, global output grew by 5.2 percent and global labor productivity grew by 3.4 percent (International Labour Office 2007b). It appears, then, that globalization benefits the economy by promoting strong worldwide economic development. Yet macroeconomic policies geared toward globalization have emphasized the unrestrained flow of capital and goods. Hence, global economic policies with a social dimension, such as increasing the cross-border flow of labor, enhancing or improving employment opportunities, or policies that attempt to reduce inter- and intra-national poverty or inequality across race, class, and gender, have not been pursued. Although it is reasonable to expect that global economic growth would likely enhance employment opportunities and reduce poverty around the world, the lack of macroeconomic
policies that address these specific concerns has resulted in an increase in joblessness around the world. Employment trends between 1996 and 2006 suggest that on the whole, globalization has had a negative impact on employment outcomes and has increased poverty.
JOBLESSNESS
In 2006, global unemployment reached an all-time high of 195.2 million persons (6.3 %), and world underemployment was estimated at between 25 and 30 percent (Köhler 2004; ILO 2007). Correspondingly, the world’s employment-to-population ratio declined between 1993 and 2006 (to 61.4 %, down from 62.6 % in 1996 and 63.3 % in 1993). The persistent decline in the employment-to-population ratio coupled with the rise in unemployment and underemployment suggests that the demand for jobs in the global economy has outstripped the supply of jobs that are available (Heintz 2006; ILO 2007b). Furthermore, the employment-to-population ratio and the unemployment and underemployment rate are stratified within and across countries. Poorer, underdeveloped countries face greater unemployment and underemployment than richer, developed countries. Moreover, underemployment is a far more prevalent and pressing problem than unemployment in underdeveloped countries (Köhler 2004). In particular, North Africa and the Middle East report the highest unemployment rate and the lowest employment-to-population ratio (12.2 % and 47.3 %, respectively) (ILO 2007b). Such findings reflect the limited employment options for women in these countries, the prominence of and dependence on the production of oil in the region (and which generates relatively few jobs), and population growth (ILO 2007b). In the United States, underemployment is associated with “the underclass,” typified by U.S.-born black men who experience extreme and concentrated poverty and joblessness in America’s inner-city neighborhoods. Observers note that underemployment in the United States is more likely to occur among women than men, ethnic and racial minorities than non-Hispanic whites, and immigrants than the U.S.-born (De Jong and Madamba 2001).
POVERTY
Nations experience poverty differently. For example, Latin America has experienced the largest gap between the rich and the poor in the less developed world. In particular, indigenous people in Latin America are disproportionately more likely to experience extreme poverty, as they make up only 10 percent of the population of Latin America but constitute the majority of the poor. In the developed world, the gap between the rich and poor is greatest in the United States. In the United States, the wealthiest 1 percent of the population is richer than the combined bottom 40 percent. The inequality gap between these two groups is widening rather than narrowing over time. Moreover, although global poverty is on the decrease, from 15.1 percent in 1993 to 12.7 percent in 2004, regional disparities remain. For example, rapid growth in China and East Asia have led to poverty reduction, but similar changes have not been realized in sub-Saharan Africa or the transition economies of Central Asia and Europe. Additionally, poverty is stratified by gender, race and ethnicity, and nativity. For example, female-headed households experience poverty at a greater rate than their male counterparts. Racial or ethnic minority status intersects with gender to heighten inequality. For example, approximately 40 percent of black and Latino female-headed households experience poverty in the United States. Moreover, immigrants are more likely to live in poverty than U.S.-born residents (17.1 % compared to 11.8 %, respectively).
Global poverty is difficult to measure. Rough estimates suggest that extreme poverty, the number of people worldwide who live on less than two dollars a day, has approached 1.4 billion persons, or about one-fifth of the world’s population (ILO 2007b). Other estimates put this number at closer to 3 billion people. Children make up a third of this total population. According to figures generated by UNICEF, approximately 30,000 children die each day due to extreme poverty, about 11 million children under five years of age each year (Shah 2006). They “die quietly in some of the poorest villages on earth, far removed from the scrutiny and the conscience of the world. Being meek and weak in life makes these dying multitudes even more invisible in death” (UNICEF 2005). Notably, these staggering numbers actually reflect a decline in poverty that has occurred in the early years of the twenty-first century. This is due, in part, to the concerted effort by the United Nations and other international organizations to highlight and combat global poverty. Additionally, the proportion of the global labor force that is female is on the rise, which further contributes to the decline in poverty. Women are more likely to experience poverty because their work is generally low-skilled, low-wage, and insecure; however, at the level of the household, women’s wages make a positive contribution to total income. The wages women contribute to the household often alleviate the risk of extreme poverty, especially in countries where women’s work compensates for the increase in male unemployment (Heintz 2006).
Poverty is related to employment outcomes; therefore, an increase in unemployment or underemployment is often associated with an increase in poverty. Since unemployment and underemployment are on the rise, a substantial segment of the global population is vulnerable to falling below the poverty line. Growing joblessness coupled with a lack of productive and decent work in the formal sector of the global economy has led to a rise in informal employment. Informal work is generally lowskilled and low-wage, often located in the service sector, agriculture, or the non-durable manufacturing industry (Heintz 2006).
LABOR MARKET SEGMENTATION
National labor markets are stratified by gender and one or more birth-ascribed characteristics rooted in race, caste, ethnicity, nativity, or indigenous status, among others. The international labor market is a macrocosm of such structural inequality. For example, in the United States, globalization has ushered in a restructuring of the economy that is characterized by a decline in good-paying jobs in durable goods manufacturing and the aerospace and defense industries. At the same time, there has been a rise in low-wage, low-skilled jobs in non-durable goods manufacturing, such as in the garment or electronics industry, and the service industry. Hence, although jobs at the bottom and at the top of this “hourglass economy” remain plentiful, the “narrowing middle” forces occupational segregation and constrains intergenerational mobility, especially among racial and ethnic minority groups. Additionally, recent immigration policy reforms, such as the Hart-Cellar Act of 1965, the Immigration Reform and Control Act of 1986, and the Immigration Act of 1990, have dramatically increased legal immigration to the United States. Alongside legal immigration, illegal immigration by Mexican and Central American migrants continues unabated (Valdez 2005). Such economic and demographic changes have spurned a wage and work gap between non-Hispanic whites and ethnic and racial minorities that persists into the twenty-first century. For example, native-born ethnic and racial minorities are more likely to be unemployed and underemployed; native-born and foreign-born Latinos, regardless of legal status, are concentrated among the working poor. For men, such occupations include labor-intensive work in the construction or service industries. For women, occupations include domestic work or factory work in sweatshop-like conditions in the garment industry. Other industrialized nations face similar patterns of stratification across subgroups. In Japan, for instance, foreign-born men from Brazil and Pakistan work in occupations characterized as “dirty, dangerous, and difficult,” while Filipinas are relegated to work in hostess bars and other occupations in the “entertainment” industry.
INFORMAL EMPLOYMENT
Informal employment in developed and underdeveloped countries and in rural and urban settings is on the increase for men and women, as “lean” and “just in time” production techniques decrease the number of jobs that are available in formal employment. Informal employment constitutes non-standard work that is lowskilled and low-wage, often requires excessive hours of work, is generally inflexible and insecure, and lacks protections, regulations, and benefits that more formal employment guarantees. Women engage in informal employment to a greater degree than men. In less developed countries, the majority of non-agricultural women’s labor takes place in the informal sector. In developed countries, the highest percentage of informally employed women occurs in sub-Saharan Africa (84%).
The disproportionate number of women working in the informal sector relative to men is due, in large part, to gender inequality in developed and especially underdeveloped countries. For example, women in underdeveloped nations may work for subcontractors assembling work at home for a fixed price or work as unpaid family workers in family-owned enterprises. In developed nations, women’s informal employment includes domestic work, work in the entertainment industry, factory work, “home work,” and unpaid family work. Because such informal labor market practices lack the protections found in more formal employment such as childcare support or sick leave, and because women are more likely to engage in this type of work, women are more likely to experience poverty than men; this has been termed the “feminization of poverty.”
Additionally, women’s non-market work—unpaid labor that contributes to the maintenance of the household—is crucial for its socioeconomic stability. The time expended in non-market unpaid work is largely non-negotiable, however, and the hours left available for paid market work are compromised by such household responsibilities. The combination of unpaid non-market work and the fewer hours left available for wage-work, and the likelihood that such work will be located in the informal sector, results in the devaluation of women’s work. This “feminization of labor” characterizes the majority of women’s work in developed and developing nations (Heintz 2006).
Finally, in underdeveloped, post-colonial countries, the exploitation of children, women, and indigenous workers occurs at the national and international level. Outsourcing by developed countries leads to increased employment opportunities in less developed countries, but the factory or service jobs that are generated are labor intensive and low paying. In 2004, the ILO reported that one in six of the world’s children (ages five to seventeen) engages in child labor, which may include forced labor, prostitution, or work that is hazardous and dangerous (Harasty and Schmidt 2004). Moreover, sex tourism in Southeast Asia, the Dominican Republic, and the Caribbean promotes the exploitation of women and children from underdeveloped countries by Westerners. For example, Thailand’s sex tourism industry generates 4.3 billion U.S. dollars annually, which accounts for 3 percent of Thailand’s GDP.
FAIR GLOBALIZATION
Research on globalization has emphasized the possibility of “fair globalization” (Halonen 2005). Fair globalization seeks to promote economic growth and development while at the same time improving employment opportunities and reducing poverty. Rather than suggesting that a fair globalization is ethical, moral, or idealistic, scholars, activists, and organizations argue that the observed economic growth that has been attributed to globalization cannot be sustained without a population of decently employed workers. In other words, macroeconomic policies that facilitate economic internationalization need to expand beyond policies that promote the unrestrained cross-border flow of capital and goods. Additional policies are required that would ensure decent and productive work. The ILO (2007) defines “decent and productive work” as “opportunities for women and men to obtain decent and productive employment in conditions of freedom, equity, security and human dignity.” Such work is not produced in the informal sector but must be created in the formal sector. Policies in the early twenty-first century that target the social dimension of globalization are taking root, such as the United Nation’s Millennium Declaration, which seeks to halve world poverty and achieve universal primary education by 2015, and the ILO’s commitment to worldwide decent and productive employment as well as their strategic and aggressive policy to end child labor.
The attention being paid to the contradictions of globalization and global economic growth on the one hand and rising joblessness and poverty on the other, may have the desired effect. Macroeconomic policies may begin to address the unequal distribution of resources across developed and underdeveloped countries, if only to sustain future global economic growth. Whether such policy changes at the international (or national) level can address socioeconomic stratification at the national level is less clear, since gender and birth-ascribed stratification appears to be an endemic, structural feature of labor markets.
SEE ALSO Poverty; Social Problems; Undocumented Workers.
BIBLIOGRAPHY
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Heintz, James. 2006. “Globalization, Economic Policy and Employment: Poverty and Gender Implications.” Employment Strategy Papers, Employment Policy Unit, International Labour Office. Available from http://www.ilo.org/publns.
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_____ 2007b. Global Employment Trends, updated. Geneva: Author. Available from http://www.ilo.org.
Köhler, Gernot. 2004. “The Global Stratification of Unemployment and Underemployment.” Centro Argentino de Estudios Internacionales, Programa Teoria de las Relaciones Internationales. Available from http://www.caei.com.ar/es/programas/teoria/t12.pdf.
Shah, Anup. 2006. “Global Issues: Social, Political, Economic and Environmental Issues that Affect Us All.” Available from http://www.globalissues.org.
UNICEF. 2005. The State of the World’s Children. Available from http://www.unicef.org/sowc05/english/index.html.
Valdez, Zulema. 2005. “Two Sides of the Same Coin? the Relationship Between Socioeconomic Assimilation and Entrepreneurship Among Mexicans in Los Angeles.” In Latino Los Angeles: Transformations, Communities, and Activism, edited by Enrique C. Ochoa and Gilda L. Ochoa. Tucson: University of Arizona Press.
Zulema Valdez