World faces a 600 million jobs challenge - while austerity measures threaten to further harm labour markets, warns ILO

On the eve of the World Economic Forum in Davos and a week before the EU Summit on 30 January 2012 in Brussels, the International Labour Organization (ILO) publishes its annual flagship report on global employment: “Global Employment Trends 2012: Preventing a deeper jobs crisis”.

Press release | 13 December 2011
  • According to the report the world faces the “urgent challenge” of creating 600 million productive jobs over the next decade in order to generate sustainable growth and maintain social cohesion. It warns that after three years of continuous crisis conditions in global labour markets and against the prospect of a further deterioration of economic activity, there is a backlog of global unemployment of 200 million. Moreover, the report says more than 400 million new jobs will be needed over the next decade to absorb the estimated 40 million growth of the labour force each year.
  • Overly tight fiscal policies are weighing on the aggregate demand, warns the report. In Developed Economies and the European Union, the exclusive focus on austerity measures threatens to further harm labour markets and increase long-term costs of the crisis.
  • In Developed Economies and the European Union, the crisis particularly hit younger people and jobseekers, who remain unemployed for longer periods of time. Many of those long-term jobseekers have given up looking for employment.
  • Policy-makers must act in a coordinated fashion to reduce the uncertainty that is hindering private investment so that the private sector can restart the main engine of global job creation, says the report.
  • It also warns that in times of faltering demand, further stimulus is important and this can be done in a way that does not put the sustainability of public finances at risk. Fiscal consolidation efforts have to be carried out in a socially responsible manner, with growth and employment prospects as guiding principles.
  • Finally the report calls for a more substantial repair and regulation of the financial system.

GENEVA (ILO News) – The world faces the “urgent challenge” of creating 600 million productive jobs over the next decade in order to generate sustainable growth and maintain social cohesion, according to the annual report on global employment by the International Labour Organization (ILO), published on the eve of the World Economic Forum in Davos and a week before the EU Summit on 30 January 2012 in Brussels.

“After three years of continuous crisis conditions in global labour markets and against the prospect of a further deterioration of economic activity, there is a backlog of global unemployment of 200 million,” says the ILO in its annual report titled “Global Employment Trends 2012: Preventing a deeper jobs crisis”. Moreover, the report says more than 400 million new jobs will be needed over the next decade to absorb the estimated 40 million growth of the labour force each year.

The Global Employment Trends Report also said the world faces the additional challenge of creating decent jobs for the estimated 900 million workers living with their families below the US$ 2 a day poverty line, mostly in developing countries.

“Despite strenuous government efforts, the jobs crisis continues unabated, with one in three workers worldwide – or an estimated 1.1 billion people – either unemployed or living in poverty”, said ILO Director-General Juan Somavia. “What is needed is that job creation in the real economy must become our number one priority”.

The report paints three scenarios for the employment situation in the future. The baseline projection shows an additional 3 million unemployed for 2012, rising to 206 million by 2016. If global growth rates fall below 2 per cent, then unemployment would rise to 204 million in 2012. In a more benign scenario, assuming a quick resolution of the euro debt crisis, global unemployment would be around 1 million lower in 2012.

Young people continue to be among the hardest hit by the jobs crisis. Judging by the present course, the report says, there is little hope for a substantial improvement in their near-term employment prospects. Global Employment Trends 2012 says 74.8 million youth aged 15-24 were unemployed in 2011, an increase of more than 4 million since 2007.

The report warns that overly tight fiscal policies weigh on the aggregate demand. In order to address concerns about the sustainability of government budget positions and rising sovereign debt risk premiums, many countries have started implementing substantial spending cuts which are likely to depress activity further and leading to worsening growth and public finances.

The report’s main findings for the Developed Economies and the European Union include:

  • The macroeconomic situation deteriorated substantially over the summer months of 2011 and weakened growth. Job losses during the crisis and the ensuing slow recovery resulted in a widening of unemployment gaps in Developed Economies and the European Union to historically high levels, reaching 45 million unemployed in 2010.
  • The crisis particularly hit younger people and jobseekers, who remain unemployed for longer periods of time. Many of those long-term jobseekers have given up looking for employment.
  • Part of the weak recovery prospects in the Developed Economies and the European Union has to do with a trend decline in productivity growth. This decline has gone hand-in-hand with a slowdown in investment, further depressing job growth.
  • The system failures in the financial sector combined with weak growth have forced several European countries into early austerity measures. This move towards austerity policies and across-the-board cuts in public spending programmes that are observed in the region are unwarranted and are likely to compound the problems in the labour market.

The report calls for targeted measures to support job growth in the real economy, and warns that additional public support measures alone will not be enough to foster a sustainable recovery.

“Policy-makers must act decisively and in a coordinated fashion to reduce the fear and uncertainty that is hindering private investment so that the private sector can restart the main engine of global job creation”, says the report.

The report claims that a more substantial repair and regulation of the financial system would restore credibility and confidence, allowing banks to overcome the credit risk that has dogged this crisis. All firms would gain from this, but especially SMEs, which not only need the credit more, but also end up creating more than 70 per cent of jobs. An encompassing reform of financial markets, including larger safety margins in the domestic banking sector, would substantially help the labour market and could add up to half a percentage point in employment growth, depending on country circumstances, the report states.

It also warns that in times of faltering demand further stimulus is important and this can be done in a way that does not put the sustainability of public finances at risk. The report calls for fiscal consolidation efforts to be carried out in a socially responsible manner, with growth and employment prospects as guiding principles.

For more information, please contact the ILO Department of Communication and Public Information on +41 22 799 7912, communication@ilo.org or ILO-Brussels, ilo-brussels-press@ilo.org, +32 (0)2.736.59.42