ILO warns of global employment crisis

These are the conclusions in the International Labour Organisation’s report Global Employment Trends 2012. Ideally 600 million new jobs should be created over the next decade to secure sustainable growth and to maintain social cohesion. 900 million people will be living with their families on less than the $2 a day global poverty line. 

The numbers are always big in ILO’s reports. Today’s global unemployment figures reach 200 million people, or six percent of the total global workforce.

Youth hardest hit

Youth are the worst hit, with an average global unemployment rate of 12.7 percent. That is one percent up on pre-crisis figures. Youths are three times as likely to end up unemployed as adults.

Another three million people are expected to become unemployed in 2012, as many countries are cutting their budgets. Simultaneous budget cuts across all countries create a downward spiral. It is impossible for all to rely on exports to get out of the crisis.  

Even though many European countries struggle to secure loans, there are still large economies which have room to stimulate both their own economy and the global economy. These include Germany, the US and China, according to the ILO. These countries now need to coordinate their policies.

The organisation also points to ways of stimulating domestic economies without upsetting budgets. You can still have rising demand in one country if taxes are increased in order to invest in new jobs. Demand would increase because just a limited amount of the extra tax revenue would otherwise be put back into the economy. Purchasing power would therefore fall by less than what the state invests in order to stimulate the economy. 

Wants financial reform

The ILO also advocates financial reform to regain trust in the banking system. Banks which have been bailed out with public money have also been forced to buy up public sector deb. Now these banks are under pressure because for many countries the level of interest is unsustainable.  

Major businesses protect themselves against the uncertain times by building up large cash reserves, while small and medium-sized businesses struggle to secure loans. These businesses create 70 percent of all new jobs.

“An encompassing reform of financial markets, including larger safety margins in the domestic banking sector and stricter rules regarding international financial flows, would help the labour market and could add up to half a percentage point in employment growth,” says the ILO.