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Working Paper 135 - International Remittances and Income Inequality in Africa
Substantial slowdown in the progress towards reducing income inequality in Africa is expected as a consequence of the global economic crisis. Indeed, the multiple crises of high food and energy prices first, and the most recent global economic crisis subsequently, have created significant setbacks. Lower government revenue and income per capita will also lead to lower public and private spending on social services, adversely affecting income distribution. In the African Continent, as in other developing countries, the erosion of employment gains accumulated over the period of strong growth in the past few years has gathered further pace, both in terms of the number of jobs lost and the increase in vulnerable employment. In particular, the collapse of commodity prices forced a number of international mining companies to close, underpinning significant job losses for example in the Democratic Republic of the Congo, Zambia, and South Africa. In the Continent, the labor market picture is further compounded by the decline or delay of new construction projects due to credit crunch and international capital withdrawals, causing negative feed-through effects on the manufacturing and service sectors. Thus, unemployment and underemployment are forecast to increase throughout the developing countries in 2009, with any trend reversal depending on a sustained recovery in the developed economies (UNDESA, 2009a).