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Employment Trends www.ilo.org/trends

Theo Sparreboom

Employment TrendsInternational Labour Organization

Geneva, Switzerland

Working poverty in the world

New estimates using

household survey data

Manila, October 2011


Overview

Estimates of the working poor based onnational household surveys

Key characteristics of the working poor

New global and regional estimates


Key Indicators of the Labour Market, 7th edition, includes new estimates of the working poor for 54 countries

This represents a new dataset to monitor the working poverty indicator under MDG Target 1B on decent work

All estimates can be analysed in conjunction with labour market and other characteristics, which allows for greater policy relevance at the national level

The dataset is also used to produce revised global and regional estimates on working poverty

Estimates of the working poor


Background & technical support

• New estimates have been produced through ILO-World Bank collaboration to produce country-level working poverty estimates at $1.25 & $2 levels– Existing HIES/LSS have been used to tabulate working poverty

data– Cross-tabulations of household poverty status with individual

labour market characteristics:• Employment, unemployment, status in employment, industry,

education, age and gender

– Detailed metadata have been produced, and comparisons made between HIES and LFS where possible

• Support to countries in producing national estimates• National studies on the working poor on-going


Regional coverage of working poverty estimates


Characteristics of the working poor


Young workers aged 15-24 make up a disproportionally large share of the world’s working poor: young workers account for 24 per cent of the working poor, compared with 19 per cent of non-poor workers

There is little difference between the sexes in terms of likelihood of workers being among the extremely poor: the share of women among the working poor is the same as the share of female employment in total employment

Extreme poverty among workers is largely a rural phenomenon; nearly 80 per cent of the working poor live in rural areas, versus 43 per cent of non-poor workers



Working poor are disproportionally in vulnerable employment, that is, are either own-account workers or contributing family workers

More than two third of the working poor are employed in the agricultural sector, while only a quarter of non-poor workers are employed in this sector

In datasets with data for children (aged below 15), the cohort of working poor children is 9 per cent of the estimated number of working poor aged 15 years and above



• Previous global and regional estimates of the working poor were based on a macroeconomic model utilizing a ‘top down’ approach

• The model relied on broad assumptions regarding the relationship between poverty rates for the total population and labour market status of the working-age population

• Some of the assumptions do not hold in many countries: – the poverty rate of the working-age population was found to typically be lower

than that of the total population

– employment rates of the working-age poor were found to be considerably lower than 100 per cent

– and the unemployment rate of the poor was found to be non-negligible in many cases

Global and regional estimates



Model characteristics Previous model Current model

Dependent variable

Step 1: Ratio of the working poverty rate (aged 15 years and above) to the total poverty rate (aged 0 years and above)

Poverty rate for population aged 0 years and above

Step 2: Share of working poor aged 15 and above in total working-age (15+) population

Independent variables

Step 1: Employment-to-population ratio; ratio of the working-age (15+) population to the total population; log of labour productivity, measured as output per worker

Log of per-capita GDP; country dummy variables

Step 2: Share of employment in agriculture; share of the population aged 25-54 years; log of labour productivity interacted with regional dummy variables; country dummy variables

Regression specification

Linear regression conducted separately for each region

Pooled linear regression (including all countries) with regional interaction variables

Methodology for generating working poverty estimate

Multiply estimated poverty rate by labour force (lower-bound) or working-age population (upper-bound)

Estimated on the basis of above regression equations


• At the US$1.25 a day level, the share of the working poor in total global employment has fallen from 38.6 per cent in 1991 to 15.5 per cent in 2010

• While we do not have 1990 estimates available for working poverty, we assume a rate of change for 1990–1991 equal to the average over the years 1991 to 1994. This results in a global working poverty rate of 39.3 per cent in 1990

• Thus, halving the share would require the working poverty rate to drop to 19.6 per cent

• According to the estimates from the new model, this was achieved in the year 2005, with a rate of 18.5 per cent. This is comparable, though slightly ahead of estimates from the World Bank for the total global poverty rate, which showed that the rate declined from 46 per cent in 1990 to 27 per cent in 2005



Selected resources

• ILO Key Indicators of the Labour Market, 6th edition,

– Indicator 20b: National working poverty

– Chapter 1c: Background of ILO working poverty activities

• ILO Key Indicators of the Labour Market, 7th edition (forthcoming)

– Chapter 1a: “Working poverty in the world: Introducing new estimates using household survey data”

• ILO Employment Trends Website

• World Bank PovcalNet, Online Poverty Analysis Tool

employment trends theo sparreboom employment trends international labour organization geneva,...

Documents

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