1

The Employment Recovery Is Lagging Behind theRecovery in Economic Growth

As the recovery unfolds, gradual increases in earnings and em-ployment growth in many countries suggest protracted im-provements in labor markets. In early 2010, despite a recoveryin economic growth, median annual employment growth wasa tepid 1 percent; and median earnings growth was only mar-ginally higher (see figure 1, p. 2). In a smaller sample of 14 coun-tries, median annual growth in GDP and earnings nudged upwardin the second quarter of 2010; but median employment growthfell slightly to zero (see figure 2, p. 2).

The dramatic slowdown in economic growth in early 2009was felt by most countries in the sample.2 Median GDP growthfell sharply in early 2009 by roughly 7 percentage points. With-in Latin America, Mexico was heavily affected, with GDPgrowth falling by 7 percentage points, partly as a result of itsclose trade links to the United States By the third quarter of2010, however, growth had recovered to nearly 5 percent. Therecovery in growth has continued to pick up steam, as growthin the most recent quarter for which data are available equaledor exceeded their precrisis rates in 14 of the 19 countries neg-atively affected by the crisis (see figure 3, p. 3)3 In othereconomies less affected by the crisis (such as Sri Lanka, Tajik-

istan, Thailand, and the West Bank and Gaza), GDP growth inthe most recent quarter is well above the precrisis rate.

In most of the countries affected, the rapid decline in GDPgrowth resulted in lower employment growth. The decline inemployment growth was most striking in the Eastern Europeancountries hit hardest by the crisis—countries such as Bulgaria,Latvia, and Romania—and in South Africa. A few Latin Amer-ican countries (such as Chile, Mexico, and Peru) also suffered sig-nificant slowdowns. However, employment adjustments wereminor in roughly one third of the countries (figure 4, p. 4). In afew countries—Armenia, Brazil, and Turkey—there was at mosta limited reduction in employment growth, despite large dropsin GDP growth.

For most countries that suffered employment declines, re-covery has been slow. Of the 17 countries that suffered signif-icant slowdowns in employment growth during the crisis, onlyBrazil, Chile, Mexico, and Peru have fully recovered. Althoughemployment growth has also been strong in Sri Lanka, Turkey,and the West Bank and Gaza, neither GDP nor employmentgrowth fell in these three economies during the crisis. Tencountries in Eastern Europe and Central Asia, as well as SouthAfrica, experienced large employment slowdowns, and onlyKazakhstan shows promising indications of a recovery (see fig-ure 4).4 In many of these countries (such as Bulgaria, Latvia,

The Lagging Recovery in Labor Markets

This first issue of the semiannual JobsWatch brief examines labor market trends in 25 middle-income countries using quarterly datafrom March 2007 to June 2010. Economic growth has recovered rapidly, matching its precrisis rates in the majority of countries. InEastern Europe and Central Asia, however, the recovery has not been creating jobs. Earnings growth also remains low in thesecountries; and, in many cases, employment and earnings continue to shrink. In Latin America, the recovery in employment, earnings,and working hours has been much stronger, particularly in the countries most affected by the crisis.1

PREM and HD NETWORKS www.worldbank.org/JobsWatch 1

March 2011 • Number 1

THE WORLD BANK JobsWatch

October 2011 • Number 1

JobTrends

The Employment Recovery Is Lagging Behind theRecovery in Economic Growth

As the recovery unfolds, gradual increases in earnings and em-ployment growth in many countries suggest protracted im-provements in labor markets. In early 2010, despite a recoveryin economic growth, median annual employment growth wasa tepid 1 percent; and median earnings growth was only mar-ginally higher (see figure 1, p. 2). In a smaller sample of 14 coun-tries, median annual growth in GDP and earnings nudged upwardin the second quarter of 2010; but median employment growthfell slightly to zero (see figure 2, p. 2).

The dramatic slowdown in economic growth in early 2009was felt by most countries in the sample.2 Median GDP growthfell sharply in early 2009 by roughly 7 percentage points. With-in Latin America, Mexico was heavily affected, with GDPgrowth falling by 7 percentage points, partly as a result of itsclose trade links to the United States By the third quarter of2010, however, growth had recovered to nearly 5 percent. Therecovery in growth has continued to pick up steam, as growthin the most recent quarter for which data are available equaledor exceeded their precrisis rates in 14 of the 19 countries neg-atively affected by the crisis (see figure 3, p. 3)3 In othereconomies less affected by the crisis (such as Sri Lanka, Tajik-

istan, Thailand, and the West Bank and Gaza), GDP growth inthe most recent quarter is well above the precrisis rate.

In most of the countries affected, the rapid decline in GDPgrowth resulted in lower employment growth. The decline inemployment growth was most striking in the Eastern Europeancountries hit hardest by the crisis—countries such as Bulgaria,Latvia, and Romania—and in South Africa. A few Latin Amer-ican countries (such as Chile, Mexico, and Peru) also suffered sig-nificant slowdowns. However, employment adjustments wereminor in roughly one third of the countries (figure 4, p. 4). In afew countries—Armenia, Brazil, and Turkey—there was at mosta limited reduction in employment growth, despite large dropsin GDP growth.

For most countries that suffered employment declines, re-covery has been slow. Of the 17 countries that suffered signif-icant slowdowns in employment growth during the crisis, onlyBrazil, Chile, Mexico, and Peru have fully recovered. Althoughemployment growth has also been strong in Sri Lanka, Turkey,and the West Bank and Gaza, neither GDP nor employmentgrowth fell in these three economies during the crisis. Tencountries in Eastern Europe and Central Asia, as well as SouthAfrica, experienced large employment slowdowns, and onlyKazakhstan shows promising indications of a recovery (see fig-ure 4).4 In many of these countries (such as Bulgaria, Latvia,

The Lagging Recovery in Labor Markets

This first issue of the semiannual JobsWatch brief examines labor market trends in 25 middle-income countries using quarterly datafrom March 2007 to June 2010. Economic growth has recovered rapidly, matching its precrisis rates in the majority of countries. InEastern Europe and Central Asia, however, the recovery has not been creating jobs. Earnings growth also remains low in thesecountries; and, in many cases, employment and earnings continue to shrink. In Latin America, the recovery in employment, earnings,and working hours has been much stronger, particularly in the countries most affected by the crisis.1

PREM and HD NETWORKS www.worldbank.org/JobsWatch 1

March 2011 • Number 1

THE WORLD BANK JobsWatch

Uneven Recovery from the Global Crisis in Developing Country Labor Markets

Labor market recovery from the financial crisis remains sluggish in parts of the developing world, with employment and earnings growth far below their pre-crisis rates. The global crisis caused a sharp reduction in economic growth across the developing world, but the impact on labor markets varied widely. Labor markets in East Asia largely escaped the crisis, and employment indicators in Latin America recovered rapidly by 2010 from the previous year’s contraction. In contrast, Europe and Central Asia continued to experience low earnings growth and high unemployment in 2010. More recent trends in nine large developing countries show mixed earnings growth and weak job creation thus far in 2011.

Labor market recovery from the global financial crisis in developing countries is lagging behind economic growth, according to the latest data (see figure 1). GDP grew nearly 2.5 percentage points in 2010 in 136 developing countries, nearly half way back to the pre-crisis peak of 6 percent. However, earnings and em-ployment growth remained far below their pre-crisis rates in 2010, despite a slight improvement over 2009. Slow employment growth amidst falling unemploy-ment is symptomatic of a delayed recovery in labor force participation, suggesting that discouraged or laid-off workers may be slow to re-enter the labor force.

Global numbers, however, hide important intra- and inter-regional differences (see figures 2–5). Eu-rope and Central Asia was by far the hardest hit by the crisis: average GDP growth plummeted from 6 percent in 2008 to a 3 percent contraction in 2009. This plunge led to major reductions in both earnings and employment growth, as well as a sizeable increase in unemployment.

GDP growth also declined steeply in both Latin America and East Asia, but with sharply differing im-pacts on labor markets. In Latin America, employ-ment and earnings growth contracted and unemploy-

Figure 1. GDP and Labor Market Indicators in Developing Countries

Source: International Monetary Fund (IMF), International Labour Organization (ILO), CEIC Data Company, and national statistical offices. Note: Developing countries refers to those countries classified by the World Bank as low or middle income.

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2

The Employment Recovery Is Lagging Behind theRecovery in Economic Growth

As the recovery unfolds, gradual increases in earnings and em-ployment growth in many countries suggest protracted im-provements in labor markets. In early 2010, despite a recoveryin economic growth, median annual employment growth wasa tepid 1 percent; and median earnings growth was only mar-ginally higher (see figure 1, p. 2). In a smaller sample of 14 coun-tries, median annual growth in GDP and earnings nudged upwardin the second quarter of 2010; but median employment growthfell slightly to zero (see figure 2, p. 2).

The dramatic slowdown in economic growth in early 2009was felt by most countries in the sample.2 Median GDP growthfell sharply in early 2009 by roughly 7 percentage points. With-in Latin America, Mexico was heavily affected, with GDPgrowth falling by 7 percentage points, partly as a result of itsclose trade links to the United States By the third quarter of2010, however, growth had recovered to nearly 5 percent. Therecovery in growth has continued to pick up steam, as growthin the most recent quarter for which data are available equaledor exceeded their precrisis rates in 14 of the 19 countries neg-atively affected by the crisis (see figure 3, p. 3)3 In othereconomies less affected by the crisis (such as Sri Lanka, Tajik-

istan, Thailand, and the West Bank and Gaza), GDP growth inthe most recent quarter is well above the precrisis rate.

In most of the countries affected, the rapid decline in GDPgrowth resulted in lower employment growth. The decline inemployment growth was most striking in the Eastern Europeancountries hit hardest by the crisis—countries such as Bulgaria,Latvia, and Romania—and in South Africa. A few Latin Amer-ican countries (such as Chile, Mexico, and Peru) also suffered sig-nificant slowdowns. However, employment adjustments wereminor in roughly one third of the countries (figure 4, p. 4). In afew countries—Armenia, Brazil, and Turkey—there was at mosta limited reduction in employment growth, despite large dropsin GDP growth.

For most countries that suffered employment declines, re-covery has been slow. Of the 17 countries that suffered signif-icant slowdowns in employment growth during the crisis, onlyBrazil, Chile, Mexico, and Peru have fully recovered. Althoughemployment growth has also been strong in Sri Lanka, Turkey,and the West Bank and Gaza, neither GDP nor employmentgrowth fell in these three economies during the crisis. Tencountries in Eastern Europe and Central Asia, as well as SouthAfrica, experienced large employment slowdowns, and onlyKazakhstan shows promising indications of a recovery (see fig-ure 4).4 In many of these countries (such as Bulgaria, Latvia,

The Lagging Recovery in Labor Markets

This first issue of the semiannual JobsWatch brief examines labor market trends in 25 middle-income countries using quarterly datafrom March 2007 to June 2010. Economic growth has recovered rapidly, matching its precrisis rates in the majority of countries. InEastern Europe and Central Asia, however, the recovery has not been creating jobs. Earnings growth also remains low in thesecountries; and, in many cases, employment and earnings continue to shrink. In Latin America, the recovery in employment, earnings,and working hours has been much stronger, particularly in the countries most affected by the crisis.1

PREM and HD NETWORKS www.worldbank.org/JobsWatch 1

March 2011 • Number 1

THE WORLD BANK JobsWatchin East Asia during the crisis could stem from several factors, in-cluding more flexible labor markets, the continued strong growth of China, and a marked expansion in fiscal spending.

In Africa and the Middle East, the fall in GDP growth was more contained and labor markets appear to have been relatively

ment increased. In East Asia, by contrast, labor markets remained remarkably stable. Average unemployment registered only a tiny uptick in the nine East Asian countries reporting annual unem-ployment data, and employment growth actually improved slightly in 2009. These relatively positive employment outcomes

Figure 2. GDP Growth

Source: IMF, ILO, CEIC Data Company, and national statistical offices Note: Numbers in parentheses refer to number of countries.

4 2 0 2 4 6 8

Middle East and North Africa (12)

Latin America and the Caribbean (28)

Europe and Central Asia (22)

Sub-Saharan Africa (45)

East Asia and the Pacific (19)

South Asia (8)

percent

2008 2009 2010

0 5 10 15percent

2008 2009 2010

Middle East and North Africa (7)

Latin America and the Caribbean (18)

Europe and Central Asia (20)

Sub-Saharan Africa (7)

East Asia and the Pacific (9)

Figure 3. Unemployment Rate

Source: Same as figure 2.

Middle East and North Africa (3)

2008 2009 2010

Europe and Central Asia (14)

East Asia and the Pacific (3)

Latin America and the Caribbean (9)

2 0 2 4 6 8percent

Figure 4. Change in Employment

Source: Same as figure 2.

Sub-Saharan Africa (3)

2008 2009 2010

Latin America and the Caribbean (4)

Europe and Central Asia (15)

East Asia and the Pacific (2)

-5 0 5 10 15 20percent

Figure 5. Change in Earnings by Region

Source: Same as figure 2.

3

The Employment Recovery Is Lagging Behind theRecovery in Economic Growth

As the recovery unfolds, gradual increases in earnings and em-ployment growth in many countries suggest protracted im-provements in labor markets. In early 2010, despite a recoveryin economic growth, median annual employment growth wasa tepid 1 percent; and median earnings growth was only mar-ginally higher (see figure 1, p. 2). In a smaller sample of 14 coun-tries, median annual growth in GDP and earnings nudged upwardin the second quarter of 2010; but median employment growthfell slightly to zero (see figure 2, p. 2).

The dramatic slowdown in economic growth in early 2009was felt by most countries in the sample.2 Median GDP growthfell sharply in early 2009 by roughly 7 percentage points. With-in Latin America, Mexico was heavily affected, with GDPgrowth falling by 7 percentage points, partly as a result of itsclose trade links to the United States By the third quarter of2010, however, growth had recovered to nearly 5 percent. Therecovery in growth has continued to pick up steam, as growthin the most recent quarter for which data are available equaledor exceeded their precrisis rates in 14 of the 19 countries neg-atively affected by the crisis (see figure 3, p. 3)3 In othereconomies less affected by the crisis (such as Sri Lanka, Tajik-

istan, Thailand, and the West Bank and Gaza), GDP growth inthe most recent quarter is well above the precrisis rate.

In most of the countries affected, the rapid decline in GDPgrowth resulted in lower employment growth. The decline inemployment growth was most striking in the Eastern Europeancountries hit hardest by the crisis—countries such as Bulgaria,Latvia, and Romania—and in South Africa. A few Latin Amer-ican countries (such as Chile, Mexico, and Peru) also suffered sig-nificant slowdowns. However, employment adjustments wereminor in roughly one third of the countries (figure 4, p. 4). In afew countries—Armenia, Brazil, and Turkey—there was at mosta limited reduction in employment growth, despite large dropsin GDP growth.

For most countries that suffered employment declines, re-covery has been slow. Of the 17 countries that suffered signif-icant slowdowns in employment growth during the crisis, onlyBrazil, Chile, Mexico, and Peru have fully recovered. Althoughemployment growth has also been strong in Sri Lanka, Turkey,and the West Bank and Gaza, neither GDP nor employmentgrowth fell in these three economies during the crisis. Tencountries in Eastern Europe and Central Asia, as well as SouthAfrica, experienced large employment slowdowns, and onlyKazakhstan shows promising indications of a recovery (see fig-ure 4).4 In many of these countries (such as Bulgaria, Latvia,

The Lagging Recovery in Labor Markets

This first issue of the semiannual JobsWatch brief examines labor market trends in 25 middle-income countries using quarterly datafrom March 2007 to June 2010. Economic growth has recovered rapidly, matching its precrisis rates in the majority of countries. InEastern Europe and Central Asia, however, the recovery has not been creating jobs. Earnings growth also remains low in thesecountries; and, in many cases, employment and earnings continue to shrink. In Latin America, the recovery in employment, earnings,and working hours has been much stronger, particularly in the countries most affected by the crisis.1

PREM and HD NETWORKS www.worldbank.org/JobsWatch 1

March 2011 • Number 1

THE WORLD BANK JobsWatch

unaffected by the crisis. The world oil price decline associated with the crisis had little effect on unemployment in the Middle East and North Africa. In Sub-Saharan Africa, average unem-ployment across seven countries trended down in both 2009 and 2010, while earnings growth in South Africa, Botswana, and Mauritius increased both years. Africa may have benefited from less economic integration with the hard-hit countries in Europe and United States. South Asia also appears to have es-caped the brunt of the crisis.

Not only did the crisis have varying impacts across the devel-oping world, but labor market recovery has varied as well. Latin

American economies picked up again in 2010, with average growth exceeding the 2008 rate. This growth recovery created jobs—unemployment fell to its 2008 level and employment growth averaged nearly 4 percent. In contrast, the recovery was slower in Europe and Central Asia. Employment growth mark-edly improved in 2010, but unemployment remained high and median earnings growth slowed from roughly 6 percent in 2009 to 2 percent in 2010.

Even within regions there is considerable heterogeneity in labor market outcomes as a result of the crisis (see figures 6 and 7). While labor markets in most Latin American countries are

Above 6.1%Between 3.3% and 6.1%'Below 3.3%Not in the sample

S I t ti l M t F d

Figure 7. 2010 GDP Growth

Source: International Monetary Fund

Above 0%Between -5.9% and 0%

Figure 8. 2010 Unemployment Growth

Figure 6. GDP Growth for 2010

Source: IMF.

Above 0%B t 5 9% d 0%

Figure 8. 2010 Unemployment Growth

Between -5.9% and 0%Below -5.9%Not in the sample

Sources: International Monetary Fund, International Labour Organization, CEIC Data Company, and national statistical offices

Figure 7. Change in the Number of Unemployed Persons, 2010

Sources: IMF; ILO; CEIC Data Company; and national statistics offices.

4

The Employment Recovery Is Lagging Behind theRecovery in Economic Growth

As the recovery unfolds, gradual increases in earnings and em-ployment growth in many countries suggest protracted im-provements in labor markets. In early 2010, despite a recoveryin economic growth, median annual employment growth wasa tepid 1 percent; and median earnings growth was only mar-ginally higher (see figure 1, p. 2). In a smaller sample of 14 coun-tries, median annual growth in GDP and earnings nudged upwardin the second quarter of 2010; but median employment growthfell slightly to zero (see figure 2, p. 2).

The dramatic slowdown in economic growth in early 2009was felt by most countries in the sample.2 Median GDP growthfell sharply in early 2009 by roughly 7 percentage points. With-in Latin America, Mexico was heavily affected, with GDPgrowth falling by 7 percentage points, partly as a result of itsclose trade links to the United States By the third quarter of2010, however, growth had recovered to nearly 5 percent. Therecovery in growth has continued to pick up steam, as growthin the most recent quarter for which data are available equaledor exceeded their precrisis rates in 14 of the 19 countries neg-atively affected by the crisis (see figure 3, p. 3)3 In othereconomies less affected by the crisis (such as Sri Lanka, Tajik-

istan, Thailand, and the West Bank and Gaza), GDP growth inthe most recent quarter is well above the precrisis rate.

In most of the countries affected, the rapid decline in GDPgrowth resulted in lower employment growth. The decline inemployment growth was most striking in the Eastern Europeancountries hit hardest by the crisis—countries such as Bulgaria,Latvia, and Romania—and in South Africa. A few Latin Amer-ican countries (such as Chile, Mexico, and Peru) also suffered sig-nificant slowdowns. However, employment adjustments wereminor in roughly one third of the countries (figure 4, p. 4). In afew countries—Armenia, Brazil, and Turkey—there was at mosta limited reduction in employment growth, despite large dropsin GDP growth.

For most countries that suffered employment declines, re-covery has been slow. Of the 17 countries that suffered signif-icant slowdowns in employment growth during the crisis, onlyBrazil, Chile, Mexico, and Peru have fully recovered. Althoughemployment growth has also been strong in Sri Lanka, Turkey,and the West Bank and Gaza, neither GDP nor employmentgrowth fell in these three economies during the crisis. Tencountries in Eastern Europe and Central Asia, as well as SouthAfrica, experienced large employment slowdowns, and onlyKazakhstan shows promising indications of a recovery (see fig-ure 4).4 In many of these countries (such as Bulgaria, Latvia,

The Lagging Recovery in Labor Markets

This first issue of the semiannual JobsWatch brief examines labor market trends in 25 middle-income countries using quarterly datafrom March 2007 to June 2010. Economic growth has recovered rapidly, matching its precrisis rates in the majority of countries. InEastern Europe and Central Asia, however, the recovery has not been creating jobs. Earnings growth also remains low in thesecountries; and, in many cases, employment and earnings continue to shrink. In Latin America, the recovery in employment, earnings,and working hours has been much stronger, particularly in the countries most affected by the crisis.1

PREM and HD NETWORKS www.worldbank.org/JobsWatch 1

March 2011 • Number 1

THE WORLD BANK JobsWatch

South Africa, the Russian Federation and Colombia, and re-mained low in Mexico. Unemployment rates fell slightly in the latest quarter with available data, but still exceeded 6 percent in most countries.

Conclusions

• Although GDP growth showed signs of improvement in 2010, the labor market was slow to recover. Earnings and employment growth remain far below their pre-crisis levels.

• In 2010, Latin America’s GDP rose by around 6 percent and labor markets recovered as well, with robust job growth and unemployment declining to pre-crisis levels. GDP grew by 4 percent in Europe and Central Asia in 2010, but

showing strong signs of revival, the pace of growth and unem-ployment reduction remains much slower in Central America, Venezuela, and Mexico. In Europe and Central Asia, European Union members Romania, Bulgaria, and Lithuania are lagging behind Turkey, Belarus, Ukraine, and Kazakhstan.

The most recent available data from nine large developing countries suggests continued uneven labor market recovery in 2011, with weak job creation and mixed earnings growth (see figure 8). Annual employment growth accelerated rapidly in South Africa compared to the previous year, and picked up slightly in Thailand and Indonesia. However, employment growth fell in the other six countries. Earnings growth improved considerably in Indonesia, Thailand, and Brazil, but stalled in

0 5 10 15

Mexico

Thailand

Brazil

Colombia

Indonesia

Russian Federation

South Africa

Turkey

China

Philippines

GDP growth (%)

2010 Q4 2011 Q1 2011 Q2

not available

0 10 20 30

Thailand

China

Mexico

Brazil

Indonesia

Phillipinies

Russian Federation

Turkey

Colombia

South Africa

unemployment rate (%)

2010 Q1 2010 Q2 2011 Q1 2011 Q2

not available

not available

not available

not available

Figure 8. GDP Growth, Unemployment Rate, Employment Growth, and Earnings Growth by Quarter

a. GDP growth b. Unemployment rate

5 0 5 10

South Africa

Thailand

Philippines

Mexico

Russian Federation

Brazil

Colombia

Indonesia

Turkey

employment growth (%)

2010 Q1 2010 Q2 2011 Q1 2011 Q2

not available

not available

not available

5 0 5 10 15

Mexico

Russian Federation

Colombia

Brazil

Thailand

South Africa

Indonesia

earnings growth (%)

2010 Q1 2010 Q2 2011 Q1 2011 Q2

not available

not available

not available

not available

d. Earnings growthc. Employment growth

Source: ILO, CEIC Data Company, and national statistical offices.

5

The Employment Recovery Is Lagging Behind theRecovery in Economic Growth

As the recovery unfolds, gradual increases in earnings and em-ployment growth in many countries suggest protracted im-provements in labor markets. In early 2010, despite a recoveryin economic growth, median annual employment growth wasa tepid 1 percent; and median earnings growth was only mar-ginally higher (see figure 1, p. 2). In a smaller sample of 14 coun-tries, median annual growth in GDP and earnings nudged upwardin the second quarter of 2010; but median employment growthfell slightly to zero (see figure 2, p. 2).

The dramatic slowdown in economic growth in early 2009was felt by most countries in the sample.2 Median GDP growthfell sharply in early 2009 by roughly 7 percentage points. With-in Latin America, Mexico was heavily affected, with GDPgrowth falling by 7 percentage points, partly as a result of itsclose trade links to the United States By the third quarter of2010, however, growth had recovered to nearly 5 percent. Therecovery in growth has continued to pick up steam, as growthin the most recent quarter for which data are available equaledor exceeded their precrisis rates in 14 of the 19 countries neg-atively affected by the crisis (see figure 3, p. 3)3 In othereconomies less affected by the crisis (such as Sri Lanka, Tajik-

istan, Thailand, and the West Bank and Gaza), GDP growth inthe most recent quarter is well above the precrisis rate.

In most of the countries affected, the rapid decline in GDPgrowth resulted in lower employment growth. The decline inemployment growth was most striking in the Eastern Europeancountries hit hardest by the crisis—countries such as Bulgaria,Latvia, and Romania—and in South Africa. A few Latin Amer-ican countries (such as Chile, Mexico, and Peru) also suffered sig-nificant slowdowns. However, employment adjustments wereminor in roughly one third of the countries (figure 4, p. 4). In afew countries—Armenia, Brazil, and Turkey—there was at mosta limited reduction in employment growth, despite large dropsin GDP growth.

For most countries that suffered employment declines, re-covery has been slow. Of the 17 countries that suffered signif-icant slowdowns in employment growth during the crisis, onlyBrazil, Chile, Mexico, and Peru have fully recovered. Althoughemployment growth has also been strong in Sri Lanka, Turkey,and the West Bank and Gaza, neither GDP nor employmentgrowth fell in these three economies during the crisis. Tencountries in Eastern Europe and Central Asia, as well as SouthAfrica, experienced large employment slowdowns, and onlyKazakhstan shows promising indications of a recovery (see fig-ure 4).4 In many of these countries (such as Bulgaria, Latvia,

The Lagging Recovery in Labor Markets

This first issue of the semiannual JobsWatch brief examines labor market trends in 25 middle-income countries using quarterly datafrom March 2007 to June 2010. Economic growth has recovered rapidly, matching its precrisis rates in the majority of countries. InEastern Europe and Central Asia, however, the recovery has not been creating jobs. Earnings growth also remains low in thesecountries; and, in many cases, employment and earnings continue to shrink. In Latin America, the recovery in employment, earnings,and working hours has been much stronger, particularly in the countries most affected by the crisis.1

PREM and HD NETWORKS www.worldbank.org/JobsWatch 1

March 2011 • Number 1

THE WORLD BANK JobsWatch

unemployment remained high and employment growth low.

• East Asian labor markets remained remarkably stable throughout the crisis despite declines in GDP, while Africa and the Middle East were relatively unaffected by the crisis in both economic growth and labor market indicators.

• Labor markets trends show considerable heterogeneity within regions, as pockets of countries in Latin America and Europe continue to experience slow GDP and labor market improvements.

• 2011 data from nine large developing countries show mixed earnings growth and sluggish job creation.

JobTrends is a regular series monitoring labor markets in developing countries. It is a collaborative effort between the Human Development Network (HDN) and the Poverty Reduction and Economic Management (PREM) Network of the World Bank. This note was prepared by Javier Arias-Vazquez, Gladys Lopez-Acevedo, Lucia Madrigal, and David Newhouse. For more information on this series, contact David A. Robalino, Lead Economist in the Social Protec-tion Unit of the Human Development Network, or Gladys Lopez-Acevedo, Senior Economist on the Poverty Reduction and Equity Group of the Poverty Reduc-tion and Economic Management Network. The team gratefully acknowledges partial financial support from the governments of Austria, Germany, the Republic of Korea, Norway, and Switzerland through the Multi-Donor Trust Fund on Labor Markets, Job Creation, and Economic Growth.