The challenge of jobless growth in developing countries: an analysis with cross-country data

The long standing view that high rates of economic growth will take care of poverty has recently encountered a challenge as growth without employment has become much more prevalent. High output growth accompanied
by low rate of employment growth can become much perilous for a country. 

In some countries, it is seen that if a low rate of growth is accompanied with a high rate of employment, there reflect distress and employment of  last resort where the alternative is unemployment and starvation. Again, there is often a possibility of a trade-off between employment growth and labour productivity. Output growth in several cases has not only been “jobless” in a literal sense, there has been a decline in employment when output has grown. There appears to have been a general decline in the employment intensity of growth in the manufacturing sector of the developing countries of Asia during the 1990s compared to the 1980s.
     
Importantly, East Asia managed to escape the trade-off between labour productivity growth and employment growth. These countries enabled them to combine high growth of employment and productivity by creating sufficient scope for employment to increase.
 
The experience of the East and South East Asian countries demonstrates that high rates of economic growth may be associated with a good mix of labour productivity and employment growth.
   
It is important to go beyond estimates of employment elasticity and look at actual figures on output and employment growth. Again, it is found that there are countries where the problem is not only low employment growth but also low growth of output. In such situations, the policy concern would be how to raise both output and employment growth.