International Labour Office, Geneva, Switzerland
The challenge of productive employment creation is today arguably more daunting than ever, in both developing and developed countries. Faltering growth and structural weaknesses in many of the largest economies have undermined the prospects for a sustained and rapid global economic recovery. To make matters worse, the past few decades have been characterised by a secular trend of decreasing employment content of growth and increasing inequality. Overall, economic growth per se has become less and less efficient as a vehicle for generating productive employment and incomes from labour at the same time as the gap between the rich and the poor has widened. Inclusive, job-rich growth has never been a natural outcome of economic growth; there is no constant or invariant relationship between the two. Yet, standard analysis of economic development has not focused sufficiently on the challenges of making economic growth more job-rich and more inclusive. For a long time the ruling paradigm, as translated into political economy at both multilateral and national levels has been based on an assumption that employment is a derivative outcome – a residual – of growth and on a ‘trickle down’ assumption, that growth will eventually also benefit the poor. Employment diagnostic analysis aims to understand the nature of the deficiency of productive employment and the context-specific constraints, challenges and opportunities for increasing productive employment through sustainable and inclusive job-rich growth as a basis for a sharper and more effective focus of policies and strategies on productive employment. The purpose of the present guide is to provide a user-friendly methodological tool for such analysis.