TRADE POLICY AND SUSTAINABLE DEVELOPMENT MEETING

Geneva, 6 -- 8 October 2015

TRADE, PRODUCTION PATTERNS AND JOBS

Session-5

M s . M a rva C O R L E Y -C O U L IB A L Y Senior Economist

ILO Research Department International Labour Organization

TRADE, PRODUCTION PATTERNS AND JOBS

Marva Corley-Coulibaly, Senior Economist, ILO Research Department

Structure

1. Estimates and trends in jobs related to trade: GSC participation

2. Interaction between trade policies and sectoral employment in GSCs

3. GSC impact on firms and workers

4. Policy challenges

Both trade in intermediate and final goods has been growing fast…

1.50

1.55

1.60

1.65

1.70

1.75

1.80

1.85

1.90

1.95

90

110

130

150

170

190

210

230

250

270

290

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Intermediate-to-final goods ratio

Trad

e in

inte

rmed

iate

and

fina

l goo

ds (V

alue

, In

dex:

200

0 =

100)

Intermediate-to-final-goods ratio Trade in final goods Trade in intermediate goods

Global trade value in intermediate and final goods (Index, 2000=100)

Source: ILO Research Department calculation based on OECD STAN database.

…with export growth and wage and salaried employment growing hand-in-hand…

Relationship between export and wage and salaried employment, 2000-2013, (% point change)

Source: ILO, Trends Econometric Models, April, 2015 and World Bank, World Development indicators.

Rwanda

Burkina Faso

Uganda

Sierra Leone Mozambique

Sri Lanka

Nicaragua

Zambia

Morocco

Liberia

Zimbabwe

Bolivia Mauritania

Ukraine

Cambodia

Viet Nam

-1

-0.5

0

0.5

1

1.5

2

-1.5 -1 -0.5 0 0.5 1 1.5 2 2.5 3

Wag

e an

d sa

larie

d em

ploy

men

t (%

tota

l em

plyo

men

t), a

vera

ge y

early

pe

rcen

tage

poi

nt c

hang

e, 2

000-

2013

Export (% GDP), average yearly percentage point change, 2000-2013

…and more and more workers in jobs linked to GSCs

Number and share of jobs linked with GSCs, 40 countries (66% of the global labour force), 1995-2013

15

17

19

21

23

25

0

100

200

300

400

500

600

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Share in total employm

ent (percentages) N

umbe

r of j

obs

(milio

ns)

Emerging economies: number of jobs (millions) Advanced economies: number of jobs (millions)Emerging economies: share in total employment (%) Advanced economies: share in total employment (%)

Source: ILO Research Department estimates based on WIOD.

In most countries, the share of workers in jobs linked to GSCs has increased in the past decade…

Share of jobs linked to GSCs in total employment (2000 and 2013)

Source: ILO Research Department estimates based on WIOD.

Average share of all sample countries

(2013)

0

10

20

30

40

50

60

2000 2013

…particularly for women in emerging economies…

Share of females in GSCs-related and total employment 2013

32

34

36

38

40

42

44

46

Emerging economies Advanced economies All selected countries

GSC-related employment Total employment

Source: ILO Research Department estimates based on WIOD and ILO, Trends Econometric Models, October 2014.

Many of the newly created jobs linked to GSCs are in the service sector…

Change in number of GSC-related jobs by sector (millions), 2000-13

Source: ILO Research Department estimates based on WIOD and ILO, Trends Econometric Models, October 2014.

0

5

10

15

20

25

30

35

Agriculture Industry: manufacturing Indusry: non-manufacturing Services

Emerging economies Advanced economies

…and the share of GSC jobs in business services has increased

Annual change in the share of GSC jobs in total employment, 2000-11, by services sector (percentage points)

-0.4

-0.2

0

0.2

0.4

0.6

0.8

Wholesale, retailtrade, incl motor

vehicles

Hotels andRestaurants

Transportationand

Communication

FinancialIntermediation

Business Services Education andHealth

Other services

Developed economies Emerging economies

Women are not well-represented in some of the sectors that are related to GSCs

Developed economies

Emerging economies

0%

20%

40%

60%

80%

100%

Education andhealth

Hotels andrestaurants

Financial services Other services Wholesale andretail trade

Business services Transport andcommunication

0%

20%

40%

60%

80%

100%

Education andhealth

Financial services Other services Wholesale andretail trade

Hotels andrestaurants

Business services Transport andcommunication

Female Male

Source: ILO Trends Econometric Models, October 2014.

Share of women in services employment, 2014 (%)

2. Trade policies and GSC-related employment

Liberalization of goods trade creates a large number of GSC jobs in services… Estimated impact of a 1-pp-decrease in trading partner’s average applied goods tariff on a country’s number of related GSC jobs, by sector (in %)

Developed economies Emerging economies

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

Manufacturing Services0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

Manufacturing Services

Trade agreements also foster GSC-related job creation Estimated impact of the presence of a trade agreement in force on a country’s number of related GSC jobs, by sector (in %)

Developed economies Emerging economies

-15.00

-10.00

-5.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

Manufacturing Services

-15.00

-10.00

-5.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

Manufacturing Services

3. GSC impact on firms and workers

… but the quality of employment and social upgrading require additional effort.

Notes: For detailed notes, see Chapter 5 of World Employment and Social Outlook: The Changing Nature of Jobs. Source ILO Research Department estimates based on OECD Trade in Value-Added (TiVA) database and WIOD.

In supplier firms, GSC participation can improve productivity through:

• cause productivity gains through economies of scale • create benefits from a diversified client base • create knowledge and technology transfers: Brach and Kappel, 2009 In supplier firms, GSC participation may not impact wages because: • there is self-selection, i.e. the entry into GSCs requires firms to be highly

productive and hence pay higher wages: Javorcik, 2014 • there is little evidence for positive wage premiums caused by GSC

participation.

Consequently, we find the wage share declining in most sectors.

Nearly all firm level evidence support positive productivity impacts, but remains mixed on wages…

Divergence of labour productivity and real labour compensation growths (Index: 1995 = 1)

Source: ILO Research Department based on OECD Productivity database and World Bank.

…there is declining wage share especially in countries with large shares of GSC-related jobs.

0.8

1.3

1.8

Japan

Real compensation Labour productivity

0.8

1.3

1.8

Korea

Real compensation Labour productivity

0.8

1.3

1.8

Poland

Real compensation Labour productivity

0.8

1.3

1.8

United States

Real compensation Labour productivity

4. Policy challenges

Achieving Decent Work in Global Supply Chains

Broad based policies to address wages gaps • labour market regulations & institutions • labour provisions in trade & investment agreements

Specific policies for countries, sectors, enterprises and workers

• enhance technological capabilities, SMEs • enhance protection of temporary, vulnerable workers

Achieving Decent Work in Global Supply Chains

Social dialogue to foster sustainable outcomes

• Codes of Conduct, CSR: voluntary basis • IFAs: instruments negotiated with global trade unions • The ILO Better Work Programme • The Bangladesh Accord on Fire and Building Safety

Thank you!

ILO World Employment and Social Outlook: www.ilo.org/research