Working through the Crisis : Jobs and Policies in Developing Countries during the Great Recession

Working through the Crisis documents how the Great Recession affected employment outcomes in developing countries and how those countries’ governments responded. The chapters comprise a unique compilation of data and analysis from different sources, including an inventory of policies implemented during the crisis, among countries in Latin America, Eastern Europe, Asia, and Africa. The effects of the crisis depended on the size of the shock, the channels through which it was manifested, the structure of institutions in the country―especially labor institutions―and the specific policy responses undertaken. Although these factors resulted in differing outcomes among the countries studied, common patterns emerge. In terms of impacts, overall adjustments involved reductions in earnings growth rather than in employment growth, although the quality of employment was also affected. Youth were doubly affected, being more likely to experience unemployment and reduced wages. Men seemed to have been more severely affected than women. In most countries where data are available, there were no major differences between skilled and unskilled workers or between those living in urban and rural areas. In terms of policy responses, this crisis was characterized by a high prevalence of active interventions in the labor market and the expansion of income protection systems, as well as countercyclical stimulus measures. When timed well and sufficiently large, these stimulus measures were effective in reducing adverse employment effects. Specific sectoral stimulus policies also had beneficial effects when they were well targeted. However, social protection and labor market policy responses were often ad hoc, and not in line with the types of adjustments workers experienced. As a result, these policies and programs were typically biased toward formal sector workers and did not necessarily reach those who needed them the most. In retrospect, there is a sense that developing countries were not well prepared to deal with the effects of the Great Recession, and that the further development of social protection systems is crucial to better protect workers and their families from the next crisis.

'This book documents the impacts of the financial crisis on workers in the developing world, far from Wall Street but affected by it in an increasingly integrated global economy. Analyzing the latest data available, Working through the Crisis details for the first time how the crisis and the Great Recession that followed it drove up unemployment and drove down wages in low- and middle-income nations around the world. It carefully shows how developing countries responded through different policies to try to mitigate these negative consequences and, with a wealth of evidence, assesses what worked and what did not. This study not only documents what happened; it also will help policy makers when the next economic shock reverberates in labor markets around the world.' --Gordon Betcherman, University of Ottawa, and coeditor, East Asian Labor Markets and the Economic Crisis: Impacts, Responses, and Lessons

'This study provides a wealth of information on changes in employment and earnings overall and for specific groups in numerous developing countries. It offers an insightful discussion of policies put into effect in various places. The volume concludes with in-depth chapters on Indonesia, China, and Mexico. The book is a valuable and timely resource on changing labor market conditions and policy responses in the developing world.' --Gary S. Fields, Cornell University, and author of Working Hard, Working Poor