The employment-to-population ratio provides information on the ability of an economy to create employment; for many countries the indicator is often more insightful than the unemployment rate. Although a high overall ratio is typically considered as positive, the indicator alone is not sufficient for assessing the level of decent work or decent work deficits. Additional indicators are required to assess such issues as earnings, hours of work, informal sector employment, underemployment and working conditions. In fact, the ratio could be high for reasons that are not necessarily positive – for example, where education options are limited, young people tend to take up any work available rather than staying in school to build their human capital. For these reasons, it is strongly advised that indicators should be reviewed collectively in any evaluation of country-specific labour market policies.
The notion that employment – specifically, access to decent work – is central to poverty reduction was firmly acknowledged in the framework of the Millennium Development Goals (MDGs) with the adoption of an employment-based target under the goal of halving the share of the world’s population living in extreme poverty. The employment-to-population ratio was adopted as one of four indicators to measure progress towards target 1b on “achieving full and productive employment and decent work for all, including women and young people”. After the MDGs came to an end in 2015, the crucial role of decent work in poverty reduction was reinforced in the Sustainable Development Goals (SDGs). In fact, the eighth SDG constitutes the goal of “promoting inclusive and sustainable economic growth, employment and decent work for all”.
Employment-to-population ratios are becoming increasingly common as a basis for labour market comparisons across countries or groups of countries. Employment numbers alone are inadequate for purposes of comparison unless expressed as a share of the population who could be working. One might assume that a country employing 30 million persons is better off than a country employing 3 million persons, whereas the addition of the working-age population component would show another picture; if there are 3 million persons employed in Country A out of a possible 5 million persons (60 per cent employment-to-population ratio) and 30 million persons employed in Country B out of a possible 70 million (43 per cent employment-to-population ratio), then the employment-generating capacity of Country A is superior to that of Country B. The use of a ratio helps determine how much of the population of a country – or group of countries – is contributing to the production of goods and services.
Employment-to-population ratios are of particular interest when broken down by sex, as the ratios for men and women can provide information on gender differences in labour markets. However, it should also be emphasized that this indicator has a gender bias insofar as there is a tendency to under-count women who do not consider their work as “employment” or are not perceived by others as “working”. Women are often the primary child caretakers and responsible for various tasks at home, which can prohibit them from seeking paid employment, particularly if they are not supported by socio-cultural attitudes and/or family-friendly policies and programmes that allow them to balance work and family responsibilities.