Trade Fact Of The Week
    More than half of the world’s worst-paid jobs vanished in the last generation.
    October 8, 2014

    THE NUMBERS: Workers earning $1.25 per day or less,*

    2013 375 million
    2007 491 million
    2000 691 million
    1991 811 million

    * ILO 2014 estimates, wage equivalents in constant 2005 dollars.


    Some startlingly good news from the International Labor Organization’s World of Work Report 2014, released last May:

    “In 1994, 39 per cent of the developing world’s workers were living with their families in extreme poverty (on less than US$1.25 in consumption per household member per day). By 2004, this figure had fallen to around 25 per cent and, by 2014, it is estimated to have fallen to 13 per cent. As a result, there are 417 million fewer workers living in extreme poverty now than there were two decades ago.”

    What is happening? The world of very low-income work can be described in four short points:

    1. An eighth of the world’s workers earn extremely low incomes. By the ILO’s count, this morning 3.33 billion men, women, and children will make the trip from home to office, factory, construction site, shop, restaurant, and field. About 375 million of these workers – one in every eight – will earn $1.25 or less by evening. (And their take-home pay will be lower still, since even a minimal 25 cents for lunch and 10 cents for transport takes more than a quarter of a $1.25 worker’s daily earnings). These are the world’s working poor: about 155 million in South Asia, 130 million in sub-Saharan Africa, 43 million in China and Southeast Asia, and the rest scattered around the Middle East, Haiti, the Andes, New Guinea, and other places with pockets of deep poverty.

    2. Few extremely low-income workers earn regular wages. About 22 percent of extremely low-wage poor workers are not paid at all. These are family members helping in subsistence farming, small shops, or similar work. Another 62 percent are “own-account” informal workers – day-laborers and other temporary employees looking for odd jobs or seasonal work on plantations and construction sites. Only about 15 percent of very poor workers get regular wages or paychecks, and likewise few work in places where safety, pay, and other benefits are inspected by local governments or international businesses and agencies.

    3. Most extremely low-income workers are rural. Nearly two-thirds of extremely low-income workers – 64 percent of them, or 240 million men, women, and children – are farmers or hired farmworkers. By comparison, ‘industrial’ work in factories, mines, quarries, fishing boats, and construction sites employs about 65 million very low-income people. Services, a much larger employer, account for the remainder of very low-income work in industries like maid work, deliveries, and so on. Combining these percentages with the ILO’s 375 million-worker estimate, the world of extremely low-wage work looks like this:

    Agriculture ~240 million
    Services ~70 million
    Industry** 65 million

    ** “Industry” in ILO’s definition includes manufacturing, construction, mining/quarrying, and fisheries.

    Farms and fields are also where most child laborers work – the ILO’s 2012 estimate found 98 million of the world’s 168 million child laborers in agriculture. Though little data exists for their earnings, a separate 2007 ILO study of child labor in four countries found them (though not always) often earning less than adults for comparable jobs, suggesting that the count of very low-income workers probably includes many of the world’s child workers.

    4. Each day since 2007, the count of extremely low-income jobs has been dropping by about 53,000. The ILO’s estimates over time find the count of very poor workers down from 811 million in the early 1990s, to 491 million in 2007, to 375 million in 2013. The child labor estimates don’t go as far back, but are also down: 245 million in 2000 to 215 million in 2008, and the 168 million for 2012. Admitting uncertainties in measurement and daily fluctuations, this suggests that each day 32,000 boys and girls exit child labor, and 53,000 workers move out of very low-income life.

    In effect, by the end of today’s workday, the world will have shed tens of thousands of its worst and most exploitative jobs, and a considerable number of children will have moved from labor sites to schools. These are quiet and small shifts, unlikely to distract many people from the crimes, follies, and misfortunes of tomorrow’s morning news. But at the bottom, without attracting much attention, life appears to be getting better.



    What explains this? The answer seems to combine structural demographic trends with an assortment of clever policies:

    (1) Demographic trends appear to be steadily pushing down low-income work and child labor. Agricultural work, the center of both, provided 54 percent of developing-world jobs in the early 1990s, and 39 percent today. As farms and fields have given way to offices, shops, and factories, extremely low-income work and child labor have declined while wage-paying employment and lower middle-class jobs have grown.

    (2) Creative social and economic-development policies deserve credit too. The World Bank cites Brazil’s Bolsa Familia, which offers stipends to low-income families that keep children in school, as an effective way to help bring down child labor rates; and the ILO uses Chile in fruits and salmon, Peru in fresh vegetables, and Madagascar and Uganda in organic produce, as effective in raising the incomes of rural workers and their families.

    Data on low-income work and child labor -

    ILO’s 2014 World of Work, with the agriculture/industry/services divisions of labor by wage rate on page 11, and estimates for totals of very low-wage on page 41: http://www.ilo.org/global/research/global-reports/world-of-work/2014/WCMS_243961/lang–en/index.htm

    Marking Progress Against Child Labor, the International Labor Organization’s 2013 report: http://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_221568/lang–en/index.htm

    And from 2007, ILO researchers study the wages and incomes of child laborers in Uganda, India, the Philippines, and Ghana: www.ilo.org/ipecinfo/product/viewProduct.do?productId=7065

    Policy -

    The World Bank looks at Brazil’s Bolsa Familia : http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21447054~pagePK:64257043~piPK:437376~theSitePK:4607,00.html

    The ILO offers success stories from Egypt, Cambodia, Uganda, Colombia, and the United States on reducing hazardous child labor: http://www.ilo.org/ipecinfo/product/viewProduct.do?productId=19315

    And the U.S. Department of Labor’s International Labor Affairs Bureau manages U.S. child labor reduction programs and reporting: http://www.dol.gov/ilab/issues/child-forced-labor-trafficking/

    And a bit more context –

    Where do these 53,000 workers go? An uncertain, but probably significant, number of them are children moving from work to school. Otherwise, $1.25-per-day workers escaping extreme low-wage work don’t get very far away. Instead they move slightly up, into a group of 457 million workers earning somewhere between $1.25 and $2.00 per day.

    According to the ILO, these workers are also mostly rural people. Farmers and farmworkers accounting for 58 percent of the total, or about 265 million people. This pool of workers is also shrinking in percentage terms – down from 23.6 percent of developing-country workers in 1994 to 16.9 percent today. The absolute numbers have changed less; the ILO’s estimates are 410 million $1.25-to-$2 workers in 1991, 498 in 2007, and 460 million as of 2013. Combining both groups, the full pool of poor workers under $2 per day, has (a) contracted by about half in percentage terms, from 69 percent of developing-country workers in 1994 to 32 percent today; and (b) shrunk by just under a third in actual numbers, from 1.2 billion people to 840 million.