Global economy on brink of new recession, warns ILO
The global economy is on the verge of “a new and deeper jobs recession” that will further delay the global economic recovery and may ignite more social unrest in scores of countries, the International Labor Organization (ILO) warned on Monday.
In its “World of Work Report 2011,” the ILO said the stalled global economic recovery had begun to “dramatically affect” labor markets and, if current trends continue, it will take at least five years to return employment in advanced economies to pre-crisis levels, one year later than projected in last year’s report.
“We have reached the moment of truth. We have a brief window of opportunity to avoid a major double dip in employment,” said Raymond Torres, director of the ILO International Institute for Labor Studies that issued the report.
The report indicated that 80 million jobs need to be created over the next two years to return to pre-crisis employment levels.
However, the recent slowdown in growth suggests that the world economy is likely to create only half of the jobs needed, it said.
The study also said the belief that wage moderation leads to jobs creation “is a myth” and called for a comprehensive income-led recovery strategy to stimulate investment while reducing excessive income inequalities.
The report said that in over 45 of the 118 countries examined, the risk of social unrest was rising.
This was specially the case in advanced economies, notably the European Union, the Arab region and to a lesser extent, Asia, the report said.
“Out of 118 countries with available data, 69 countries showed an increase in the percentage of people reporting a worsening of living standards in 2010 compared to 2006,” the report said.
“Respondents in half of 99 countries surveyed say they do not have confidence in their national governments,” it added.
By contrast, there was a stagnant or lower risk of social unrest in Sub-Saharan Africa and Latin America, it said.
“The study also showed that nearly two-thirds of advanced economies and half of emerging and developing economies with recent available data were once again experiencing a slowdown in employment,” the ILO said in a statement.
“This comes on top of an already precarious employment situation in which global unemployment is at its highest point ever, surpassing 200 million worldwide,” it said.
The report also noted that food price volatility doubled during the period 2006-2010 compared to the preceding five years, “affecting decent work prospects in developing countries.”
Financial investors benefit more from price volatility than food producers, especially small ones, it added.
The report called for maintaining and in some cases strengthening pro-employment programs, warning that efforts to reduce public debt and deficits have often disproportionately focused on labor market and social measures.
For example, it shows that increasing active labor market spending by only half a percent of gross domestic product would increase employment by between 0.4 percent and 0.8 percent, depending on the country, it said.
