Global unemployment this year stands at more than 201 million, an increase of 3.4 million compared to 2016, says the International Labor Organization.
The ILO says the private sector, especially small and medium-sized enterprises, plays a crucial role in creating decent jobs around the world.
The ILO study (World Employment and Social Outlook 2017: Sustainable Enterprises and Jobs) reports private businesses account for nearly 3 billion workers, or 87 percent of total global employment. It says a strong public sector is the foundation for growth, job creation and poverty reduction.
Deborah Greenfield, the ILO deputy director general for policy, says investing in workers is a key to sustainability. She also says providing formal training for permanent employees results in higher wages, higher productivity and lower unit labor costs. Greenfield says temporary workers are at a disadvantage.
“But, intensified use of temporary employment is associated with lower wages and lower productivity without achieving any gains in unit labor costs,” Greenfield said. “The report also finds that on-the-job training is an important driver of innovation. Since temporary workers are rarely offered training, this might also affect innovation in firms in a negative way.”
The ILO report says in some cases, innovation has led to the hiring of more temporary workers, mainly women. It notes, however, that while this might be beneficial in the short term, in the long term, it depresses wages and leads to lower productivity because of the instability of temporary work and lack of benefits.
The report, however, finds innovation increases competitiveness and job creation for enterprises. It says innovative firms tend to be more productive, employ more educated workers, offer more training and hire more female workers.