Income, poverty and employment

SIDS moving gradually to higher income levels

In recent years, SIDSsmall island developing States (SIDS) were recognized as a distinct group of developing countries at the Earth Summit in Rio de Janeiro in June 1992.
More information on UNCTAD official page. have been moving from lower to higher income levels. The -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- classification places countries into income groups based on their GNIGross national income (GNI) is equal to GDP less primary incomes payable to non-resident units plus primary incomes receivable from non-resident units. In other words, GNI is equal to GDP less taxes (less subsidies) on production and imports, compensation of employees and property income payable to the rest of the world, plus the corresponding items receivable from the rest of the world. -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- per capita. GNI measures the overall economic condition of a country . According to the World Bank classification -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-, most SIDS belonged to the middle income category, with 11 SIDS in the upper middle income and eight SIDS in the lower middle income category, while the remaining nine were classified as high income economies (see table 1). Haiti and Guinea-Bissau were classified as low income countries.

Most high income SIDS are Caribbean, while lower middle income SIDS are found mainly in the Pacific, Atlantic and Indian Oceans. The high income islands of Mauritius and Seychelles are exceptions to this rule – both located along the African coastline. The high income Pacific islands, Palau and Nauru also confound the generalisation.

Poverty declining in SIDS

In the last 10 years, the percentage of the population living below the poverty linePoverty line is an income level that is considered minimally sufficient to sustain a family in terms of food, housing, clothing, medical needs, and so on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-. The international poverty line is set at $1.90 using 2011 prices -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-. of US$1.90 has decreased in SIDS. Although the availability and timeliness of data vary for SIDS, a downward trend can be identified for all countries, especially for Saint Lucia. In 1995, 34.7 per cent of Saint Lucia’s population lived below the poverty line, whereas by 2016 the rate had decreased to 4.6 per cent. The situation across SIDS remains somewhat polarized: in 60 per cent of SIDS (with data), less than 5 per cent of the population lived below the poverty line, while in the rest, the share living in poverty was more than 10 per cent (see table 2). The timeliness of data varies from 1992 to 2017 depending on country. The situation is likely to have evolved notably over the years making country comparisons challenging.

To give some context, in 2017, 9.3 per cent of the world’s population lived below the poverty line. Globally too progress has been visible compared to the level of 31.3 per cent in 1995. With a country average of 8.6 per cent of population living below the poverty line in SIDS, the situation is better than in lower middle income countries (16.9 per cent), but worse than in upper middle income countries (1.5 per cent). It should be noted that data are not available for many Caribbean SIDS belonging to higher income groups. In most SIDS, there is still some way to go before reaching SDGSustainable Development Goals (SDG) target 1.1, “the eradication of extreme poverty for all people everywhere by 2030”.

Table 2. Share of population living with less than US$1.90 a day in SIDS

(Percentage of population)

Country/Region	%	Reference year
Atlantic and Indian Oceans SIDS:
Sao Tome and Principe	35.6	2017
Comoros	19.1	2014
Cabo Verde	3.4	2015
Seychelles	0.5	2018
Mauritius	0.2	2017
Maldives	0	2016
Caribbean SIDS:
Saint Lucia	4.6	2016
Trinidad and Tobago	3.2	1992
Jamaica	1.7	2004
Pacific SIDS:
Solomon Islands	24.7	2012
Timor-Leste	22	2014
Micronesia, Federated States of	15.4	2013
Vanuatu	13.2	2010
Kiribati	12.9	2006
Tuvalu	3.3	2010
Samoa	1.1	2013
Tonga	1	2015
Nauru	0.9	2012
Low income countries	45.6	2017
Lower middle income	16.9	2014
Upper middle income	1.5	2019
High income countries	0.6	2019
World	9.2	2017

Source: -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Note: Based on World Bank’s poverty headcount ratio at US$1.90 a day (2011 PPPPurchasing power parity (PPP)).

Most SIDS exceed the world average labour force participation rate

As figure 1 shows, among SIDS, the Solomon Islands have the highest labour force participation rateLabour force participation rate is defined as the ratio of the labour force to the working age population. It is a measure of the extent of an economy’s working-age population that is economically active. It provides an indication of the relative size of the supply of labour available to produce goods and services. The breakdown of the labour force by sex and age group gives a profile of the distribution of the economically active population within a country. -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- for both men and women, followed by Bahamas, Marshall Islands and Antigua and Barbuda¹. Men participate in labour more than women in all SIDS, but the genderGender refers to the roles, behaviours, activities, and attributes that a given society at a given time considers appropriate for women and men. In addition to the social attributes and opportunities associated with being male and female and the relationships between women and men and girls and boys, gender also refers to the relations between women and those between men. These attributes, opportunities and relationships are socially constructed and are learned through socialization processes. They are context/ time-specific and changeable. Gender determines what is expected, allowed and valued in a woman or a man in a given context. -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- gap in labour force participation is smaller for SIDS (19 percentage points) than the world average gap (27 percentage points). Maldives and Fiji have the largest gap between men’s and women’s participation in the labour force, at 44 and 38 percentage points respectively. Samoa, Comoros and Kiribati show the lowest labour force participation among SIDS. In total , 16 SIDS exceed the world average labour force participation rate of 60.5 per cent for both sexes.

Figure 1. Labour force participation rate, 2020

(Percentage of the working age population)

Source: UNCTAD calculations based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- and national sources.
Note: Labour force survey data for: Kiribati referring to 2015, the Federated States of Micronesia 2014, Nauru 2013, Palau 2014, Seychelles 2019 and Tuvalu 2016. Data from national sources for Antigua and Barbuda referring to 2015; Dominica 2011; Grenada 2017; and the Marshall Islands 2012. For others, ILOInternational Labour Organization (ILO) modelled estimates for 2020.

Women are more often unemployed than men

In 2019, the Marshall Islands had the highest unemployment rateUnemployment rate (as defined by the ILO for international comparison) measures the proportion of the labour force that does not have a job, is available to work and is actively looking for work. The labour force is the sum of the total persons employed and unemployed. The overall unemployment rate for a country is a widely used measure of its unutilized labour supply. -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- for women and men, followed by Grenada and Saint Vincent and the Grenadines (see figure 2). The widest gender gaps in unemployment were found in the Marshall Islands, Sao Tome and Principe, and Tuvalu. In all three, women’s unemployment was higher than for men. Women’s unemployment rate was lower than men’s in seven SIDS – Kiribati and Saint Vincent and the Grenadines recorded the largest differences, 6.2 and 3.5 percentage points, respectively. SIDS’ lowest unemployment rates were found in Solomon Islands, Palau, Vanuatu, Seychelles and Tonga. Trinidad and Tobago, Fiji and Timor-Leste were below the world average of 5.4 per cent for both sexes.

Figure 2. Unemployment rate by sex, 2019

(Percentage of the labour force)

Source: UNCTAD calculations based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- and national sources.
Note: Labour force survey data for: Kiribati referring to 2015, Federated States of Micronesia 2014, Nauru 2013, Palau 2014, Seychelles 2019 and Tuvalu 2016. Data from national sources for Antigua and Barbuda referring to 2015; Dominica 2011; Grenada 2017; and Marshall Islands 2012. Data refer to 2013 for Nauru, 2014 for Palau and the Federated States of Micronesia, 2015 for Kiribati and 2016 for Tuvalu. For others ILO modelled estimates by sex for 2019.

Informal employment plays a significant role in many SIDS

The informal economy contributes to jobs and income, playing an important role in SIDS as in many other developing economies. According to -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-, informal workers make up nearly half of the global workforce, and 80 per cent of them have suffered massive damage to their capacity to earn a living during the COVID-19Infectious disease caused by the strain of coronavirus SARS-CoV-2 discovered in December 2019. Coronaviruses are a large family of viruses which may cause illness in animals or humans. In humans, several coronaviruses are known to cause respiratory infections ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS). The most recently discovered coronavirus causes a coronavirus disease called COVID-19. pandemic. Many of them work in the hardest-hit sectors, such as tourismTourism refers to the activity of visitors -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-. International tourism expenditure is often approximated by the sum of travel services and transport of passengers, reported under balance of payments statistics (see Trade in services). Transport of passengers not considered, tourism represents a subset of travel, as some travelers, such as border-workers, travel for regular work, as they are holding employment contracts outside their usual residential environment. Activities of border-workers and similar travelers do not belong under tourism. -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-. The share of informal employmentInformal employment comprises persons who in their main or secondary jobs were own-account workers, employers and members of producers’ cooperatives; own-account workers engaged in the production of goods exclusively for own final use by their household; contributing family workers; and employees holding informal jobs. The criteria used are based on employment status, institutional sector, destination of production, bookkeeping, registration, social security contribution, places of work and size. -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- is high in many small island economies. Comoros, Tonga and Timor-Leste exhibit the highest shares of informal employment.

As figure 3 shows, based on data reported for SIDS between 2013 and 2019, the share of informal employment was highest in the Comoros (95 per cent), followed by Tonga and Timor-Leste. Seychelles reported the lowest share of informal employment, at 9 per cent for women and 21 per cent for men. In six out of the nine SIDS with data, men were slightly more often employed in informal jobs than women.

Figure 3. Informal employment

(Percentage of total employment)

Source: UNCTAD calculations based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Note: Data refer to 2019 for Mauritius and Seychelles, 2018 for Tonga, 2017 for Samoa, 2016 for Barbados and Fiji, 2015 for Cabo Verde, 2014 for the Comoros and 2013 for Timor-Leste. Data are sourced from the Labour Force Survey, except for Barbados from Household Income Survey.

Working poverty persists in some SIDS

Even though working poverty is a serious concern for some SIDS, data are scarce. By 2019, some SIDS, including Bahamas, Barbados, Mauritius, Fiji, Trinidad and Tobago and Maldives managed to push working poverty down to almost zero (see figure 4). Jamaica and Cabo Verde are very close to that goal. Working poverty continues to be a challenge in Comoros, Timor-Leste and Solomon Islands. In the Solomon Islands, one in five people who are employed remain below the international poverty line of US$1.90 per day. The rate exceeds 15 per cent in Timor-Leste and 10 per cent in the Comoros. In Timor-Leste and the Solomon Islands, men make up a larger share of the working poor, while in the Comoros women form the larger share.

Figure 4. Working poverty rateWorking poverty rate conveys the percentage of employed persons living in poverty in spite of being employed. Poverty is defined using the international poverty line of US$1.90 per day in PPP. -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-, 2019 (SDG 1.1.1)

(Percentage of employed persons)

Source: UNCTAD calculations based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Note: Refers to employed population, at least 15 years of age.

The COVID-19 pandemic led to a significant loss of working hours

There is considerable variation in the weekly working hours among SIDS (see figure 5). In Maldives, men worked on average almost 55 hours per week (data for 2016). That is almost double the number of men’s weekly working hours in Tuvalu (data for 2016), the Federated States of Micronesia (2014) or Vanuatu (2010). In all SIDS for which data are available, except for Tuvalu and the Federated States of Micronesia, men worked more hours per week than women. The biggest gap between sexes, 16.5 hours per week, was reported in the Maldives. The difference between women and men was smallest in Saint Lucia (2019) - less than one hour.

Figure 5. Weekly hours worked, latest available year

(Hours per week)

Source: UNCTAD calculations based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Note: Data refer to 2019 for Mauritius, Saint Lucia and Seychelles; 2018 for Tonga; 2017 for Samoa; 2016 for Maldives, Timor-Leste and Tuvalu; 2014 for Comoros, Federated States of Micronesia and Palau; 2013 for Nauru and Solomon Islands; and 2010 for Vanuatu.

In 2020, the COVID-19 crisis caused a loss of working hours in practically every country in the world. The world average loss, according to -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- was estimated at 8.8 per cent in 2020, while for SIDS it was 8.4 per cent. Among SIDS, the loss was more than 10 per cent in Bahamas, Cabo Verde, Maldives, Trinidad and Tobago, Jamaica and Barbados (see figure 6). Countries with high working hour losses also faced substantial losses in labour income. So far, Timor-Leste and the Solomon Islands have had the mildest effect from the COVID-19 pandemic on working hours. In the pessimistic scenario, the -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- estimates that working hours will remain 4.6 per cent lower globally in 2021 relative to pre-pandemic times i.e., the fourth quarter of 2019. In their optimistic scenario, employment is expected to recover in the course of 2021, while working hours will remain 1.3 per cent lower than pre-pandemic levels.

Figure 6. Working hours lost due to the COVID-19 crisis, 2020

(Percentage)

Source: UNCTAD calculations based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Note: ILO modelled estimates for 2020.

Income inequality high in many SIDS

In each 11 SIDS for which data are available, the average monthly earnings of employeesMonthly earnings of employees relate to the gross remuneration in cash and in kind paid to employees, at regular intervals, for time worked or work done together with remuneration for time not worked, such as annual vacation, other type of paid leave or holidays -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-. were below the global median of US$1 600 (in 2017 PPPs). The earnings were highest in Seychelles, at US$1 455 (in 2018), and in Jamaica, at US$1 320 (in 2013). In Mauritius, Barbados, Fiji and Maldives, employees’ monthly earnings hovered around US$1 200. By contrast, Timor-Leste, Samoa and Cabo Verde reported monthly average earnings lower than US$ 800. In the Comoros and Vanuatu, they were below US$ 400.

By economic activity, the highest monthly earnings were paid to employees in financial and insurance activities, averaging US$1 620 per month, followed by earnings just above US$1 300 in education, professional, scientific and technical activities and in the energy sector. Information and communication activities and the public sector also provided relatively high salaries, while jobs in household activities, retail trade, accommodation and restaurants often provided somewhat lower monthly pay.

Figure 7. Mean monthly earnings of employees, latest available year

(US$, 2017 PPPs)

Source: UNCTAD calculations based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Note: Data are provided in US$ using 2017 PPP to allow for international comparisons, taking account of the differences in price levels between countries. Data refer to 2018 for Mauritius and Seychelles; 2017 for Samoa; 2016 for Timor-Leste, Maldives, Fiji and Barbados; 2015 for Cabo Verde; 2014 for the Comoros; 2013 for Jamaica; and 2010 for Vanuatu.

The pandemic is expected to lead to increased income inequality in 2020 and 2021 across all countries, especially those hit hardest by the economic consequences of the lockdowns and travel restrictions. Among SIDS, income equality was lowest in Timor-Leste, where the Gini indexGini index measures the extent to which the distribution of a variable over a population deviates from a perfectly equal distribution. A Gini index of zero represents perfect equality and 100, perfect inequality. -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—- valued 28.7 (data for 2014), and highest in Sao Tome and Principe, with an index value of 56.3 (in 2017) (see figure 8). To put these numbers in perspective, among the 150 countries that have data, the Gini index varied from 24.2 in Slovenia to 63.0 in South Africa, the median being 36.1. All SIDS, except Maldives and Timor-Leste, exceeded the global median.

Figure 8. Gini index in SIDS, latest available year

Source: UNCTAD calculations based on -—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—--—
– ‒
- –
—-.
Note: Data refer to 2017 for Mauritius and Sao Tome and Principe; 2016 for Maldives and Saint Lucia; 2015 for Cabo Verde and Tonga; 2014 for Comoros and Timor-Leste; 2013 for Fiji, Federated States of Micronesia, Samoa, Seychelles and Solomon Islands; 2010 for Tuvalu and Vanuatu; 2006 for Kiribati; and 2004 for Jamaica.