Jobless rate alarming as austerity bites, ILO says

Jobless rate alarming as austerity bites, ILO says

GENEVA - Agence France-Presse
Jobless rate alarming as austerity bites, ILO says

Job seekers line-up to give their resumes to a representative of an employment agency at a job fair at a Holiday Inn on April 18 in New York City. REUTERS photo

The International Labor Organization (ILO) warned yesterday that austerity measures are hurting job markets worldwide and predicted global unemployment of 202 million people in 2012, up six million from last year.

The ILO’s World of Work Report 2012 said fiscal austerity and labor market reforms had had “devastating consequences” for employment while mostly failing to cut deficits, and warned that governments risked fueling unrest unless they combined tighter spending with job creation.

“The austerity and regulation strategy was expected to lead to more growth, which is not happening,” Raymond Torres, director of the ILO’s Institute for International Labor Studies, told journalists in Geneva.

“The strategy of austerity actually has been counterproductive from the point of view of its very objective of supporting confidence and supporting the reduction of budget deficits,” AFP quoted him as saying.

The report said some 50 million jobs had disappeared since the 2008 financial crisis. It predicted a global unemployment rate of 6.1 percent in 2012 --202 million people, up three percent from the provisional estimate of 196 million for 2011.

 It forecast a rise to 6.2 percent in 2013 as another five million people become unemployed.
“It is unlikely that the world economy will grow at a sufficient pace over the next couple of years to both close the existing jobs deficit and provide employment for the over 80 million people expected to enter the labor market,” the report said.

 It warned that trends were especially worrying in Europe, where nearly two-thirds of countries had seen unemployment go up since 2010.

It said labor market recovery had also stalled in major economies such as Japan and the United States.

Concerns over developed economies

“The rise in unemployment is more pronounced in advanced economies where the slowdown in growth takes its toll on the labor market. The unemployment rate in these economies is projected to surge from 8.5 per cent in 2011 to 9.1 per cent in 2012, and 9.4 percent in 2013,” it said.

A growing and better-educated workforce was meanwhile struggling to find enough good jobs in places such as China, while workers still faced acute job shortfalls in the Arab world and Africa, it added.

Torres, the report’s lead author, accused Europe of “ill-conceived” fiscal austerity. “The narrow focus of many eurozone countries on fiscal austerity is deepening the jobs crisis and could even lead to another recession in Europe,” he said.

The report also said: “Austerity measures are hampering economic growth as they are implemented across the board, without regard to high adverse multiplier effects. In particular, cutting down labour market spending – whether active or passive – has shown to have strong negative effects on the employment recovery. At the very has a band range of a decline in Eurozone credit of between 1.7 per cent and 4 percent.”

Torres meanwhile singled out Latin America for praise, saying the region had seen an employment recovery and, in some cases, rising job quality. The report found the risk of social unrest had gone down on average in Latin America as job prospects improved. But worldwide, the risk of unrest had increased in most countries, it said.

“Elevated oil and commodity prices pose an additional challenge to global growth and job prospects,” it also said.

EY, euro crisis,