Jobs as a Scorecard

Employment numbers released yesterday by the World Bank shed some light on the resilience of job creation and job preservation heretofore exhibited in most emerging countries. According to the latest edition of JobTrends -- a quarterly series monitoring labor markets in a sample of emerging economies -- employment growth maintained its gradual ascent in the first quarter of 2012. In the countries surveyed, continued economic growth helped employment reach a growth rate of 2.9 percent in that period.

Keeping with the overall trend, labor markets in Europe and Central Asia continued then their steady recovery, with striking declines in unemployment in Lithuania, Moldova, Romania, and the Russian Federation. Similarly, selected labor markets in Latin America also improved, amid a slowdown in economic growth. In the four East Asian countries included in the report, employment and wage growth improved, with China's employment growth jumping to 9.9 percent.

At the same time, however, the median unemployment rate increased slightly in the sample from 5.8 to 6.2 percent, signaling that some economies may have then started to have difficulties maintaining a high pace of job creation, as they were continuing to feel the effects of the financial crisis in advanced economies. To make things more worrisome, global economic prospects deteriorated throughout the second quarter of this year. The World Bank now projects that developing country growth as a whole will slow to 5.3 percent in 2012, with GDP growth in high-income and Euro Area countries trailing far behind at 1.4 and -0.3 percent respectively, according to the most recent Global Economic Prospects report. No one would expect emerging economies to remain unscathed given the tremendous strains on the global economy. Therefore, it is not surprising that those forecasts point to a potential downward "recoupling," where continued turmoil in advanced economies will dampen growth in emerging markets.

Despite this somewhat gloomy prognosis for the near future, emerging and other developing countries still have a great potential to "switch over," and in the mid-term, consolidate their position as the new engines of global economic growth. After all, as long as adequate, country-specific reforms are implemented on the domestic level, developing countries still have a number of tracks (such as infrastructure investments, technology absorption, poverty reduction, natural resource management) along which to maintain growth dynamics -- irrespective of the doldrums faced by advanced economies. What's more, many emerging markets are not entirely exhausted in their capacity to respond to the unfolding effects of the crisis, even if they are less equipped than back in 2008-9.

The picture depicted in the most recent edition of JobTrends reflects the state of affairs of the struggle between forces toward a downward "recoupling" of emerging countries and their resilience to the crisis -- the balance of which was slightly more in favor of the latter in the beginning of the year. And one knows that jobs resilience bodes well for a faster recovery. The evolution of jobs in emerging economies can then be seen as a scorecard through which to observe the interplay of those forces. As global economic prospects have deteriorated since the first quarter, let's hope that the balance has not overwhelmingly tilted toward a downward recoupling.

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