October 12, 2009 / 9:15 AM / 10 years ago

World's poor see few job benefits from trade boom

GENEVA (Reuters) - The boom in global trade over the last two decades has failed to improve the quality of most jobs in poorer countries, the World Trade Organisation (WTO) and United Nations labour agency (ILO) said on Monday.

Job seekers wait for work beside the road in Cape Town, May, 2003. REUTERS/Mike Hutchings

Their joint report, whose conclusions may make a new global free trade pact even harder to swallow for some, found that most workers in developing countries still have low incomes and limited job security, even in sectors tied to exports.

This situation was likely to worsen as a result of the global financial crisis, it said.

While international trade grew to represent more than 60 percent of global gross domestic product in 2007, from less than 30 percent in the mid-1980s, the number of informal workers has stayed constant or even grown in poorer states.

“Strong growth in the global economy has not, so far, led to a corresponding improvement in working conditions and living standards for many,” the Geneva-based organisations said.

“With around 60 percent of employees in developing countries working in the informal economy, large parts of society are deprived of adequate income and career opportunities.”

Informal workers in areas such as construction, agriculture and mining generally do not pay tax or have benefits such as disability insurance or pensions. They remain as vulnerable now as before the trade boom, the report said.

“Even in the formal economy, a growing proportion of workers is undeclared or works under precarious conditions,” the WTO’s Pascal Lamy and ILO chief Juan Somavia said in the report. “These outcomes are likely to worsen as a result of the global financial crisis.”

The WTO’s 153 member governments have worked for eight years to clinch a new “Doha Round” trade accord, which would open up global markets to goods and services by slashing duties and other penalties charged at borders.

That agreement, under negotiation since 2001, would also reduce the subsidies countries pay to shield their farmers and factory workers from outside competition.

But top economies including India, China, the European Union and the United States, have been reticent to do so, putting the agreement — which requires consensus — out of reach.

Razeen Sally, a senior lecturer at the London School of Economics, said the WTO and ILO report “gives the Indians and others another excuse not to make further concessions” in the Doha Round talks.

But he cautioned that labour problems reflect weak domestic employment policies and not the nature of globalisation itself. “Serious liberalisation coupled with more flexible labour markets will make a positive difference,” Sally said.

Monday’s report acknowledges that the growth which followed previous WTO trade rounds and various bilateral and regional accords had principally benefited skilled workers, with little gains for physical labourers.

The ILO and WTO concluded that further liberalisation of global trade has the potential to yield long-term labour market benefits and suggested that future trade reforms “can be implemented in an employment-friendly way”.

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