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It takes a prolonged period of dismal nominal wage growth, relative to growth in prices and aggregate demand, to make unemployed or underemployed labour attractive to firms.
But in China's case, the pool of underemployed labour in the countryside and in inefficient state-owned enterprises is so vast that real wages may rise only slowly.
At the same time it is creating a large pool of underemployed labour that is depressing investment.The digital revolution is opening up a great divide between a skilled and wealthy few and the rest of societyThe effect of technological change on trade is also changing the basis of tried-and-true methods of economic development in poorer economies.
Similar(57)
He argued that a developing country with "surplus" (ie, underemployed) rural labour could expand industrial employment for many years without causing wage inflation, because employers enjoy such a large supply of labour.
In August 2007 for example – well before the GFC hit our labour market – underemployed workers accounted for 59.1% of all underutilised workers; in May this year it was just 55.8%.
But unemployment has soared to 6%, while a further 13% of the labour force is underemployed.
Nearly one in five workers in or marginally attached to the labour force were underemployed as a result of the recession.
There is mounting evidence of employer discrimination: with over 16% of the labour force jobless or underemployed, some firms are advertising that the long-term unemployed need not apply.
In August, the underemployment ratio – which measures the percentage of employed who wish to work more hours – reached a record 9.2%, while the underemployment rate – which measures the number of underemployed as a percentage of the labour force – also hit a record high of 8.6%.
In some regions, young people are nearly three times as likely as adults to be unemployed; they are also more likely than older workers to be underemployed or work in the informal labour market, in poor quality jobs that require low levels of skills and offer limited socio-economic security, training opportunities, and working conditions (International Labour Organization 2012).
The World Bank's study argued that technological improvements in Ukraine and Mexico had helped reduce rural out-migration (though this was surprising: you might have expected new labour-saving technologies to encourage underemployed farmers to leave the land).
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com