The global
financial crisis has sharply increased unemployment across the world
to more than 210m people, an increase of over 30m
since 2007, hitting advanced economies especially hard and having
long-term social repercussions, including on health and the children
of those laid off, the IMF says.
The International Monetary Fund and the International Labour
Organization (ILO) issued the stark assessment of the outlook for
employment in the wake of the global financial crisis, saying that
the world faces major challenges in creating enough quality jobs to
sustain growth and development.
The two organizations issued a
background document ahead of a joint high-level IMF-ILO
conference on September 13 in Oslo, hosted by Norwegian Prime
Minister Jens Stoltenberg, to explore new ways of forging a
sustainable, job-rich economic recovery. The one-day conference on
“The Challenges of Growth, Employment and Social Cohesion” will
bring together political, labour, and business leaders, as well as
leading academics.
In many advanced economies, unemployment remains at very high
levels, with little sign of an early fall, while in emerging and
developing countries the economic shock hit jobs in export sectors
hard, but these are now recovering, in part as exporters have
diversified their markets to rely less on those of the advanced
economies.
The 2007–09 slowdown also hit the large informal economies of the
developing world. Informal employment has increased, and the numbers
of working women and men who cannot earn enough to keep themselves
and their families out of poverty have risen.
Painful legacy
Lead speakers at the conference include President Ellen Johnson
Sirleaf of Liberia, Prime Minister George Papandreou of Greece,
Prime Minister José Luis Rodríguez Zapatero of Spain, Finance
Minister Christine Lagarde of France, UK Secretary of State for
Work and Pensions Iain Duncan Smith, and International Trade Union Confederation
General Secretary Sharan Burrow. The conference will be chaired by
IMF Managing Director Dominique Strauss-Kahn and ILO Director
General Juan Somavia.
“The Great Recession has created a painful legacy of
unemployment,” said Strauss-Kahn, “and this devastation threatens
the livelihood, security, and dignity ofms of people across
the world. The international community must rise to meet this
challenge. Now is the time for our collective action.”
The unemployment rate has increased by 3%age points in
advanced countries since 2007 and by a ¼ percentage point in
emerging markets. Within the advanced economies, some of the largest
increases in the unemployment rate have occurred in Spain - - where the
rate increased by nearly 10 percentage points - -the United States, and
New Zealand. In contrast, in Germany and Norway, the unemployment
rate barely budged.
Youth (ages 15–24) currently represent one-quarter of the world’s
labour force, at 619m. Despite a number of years of rapid
economic growth, youth unemployment has remained stubbornly high,
rising to 13% in 2009, or 81m.
If the effects of past recessions are any guide, the cost to
those who become unemployed could be a persistent loss in earnings,
reduced life expectancy, and lower academic achievement and earnings
for their children. And unemployment is likely to affect attitudes
in a manner that reduces social cohesion, a cost that all will bear.
Evolving three-part strategy
The IMF said that, to their credit, most countries mounted a
strong three-part policy response to try to minimize these costs:
-
To support aggregate demand through monetary and fiscal policy
actions.
-
To ease the pain in
labour markets through short-term work
programs and provision of unemployment insurance benefits.
-
To accelerate jobs recovery through the provision of subsidies
of various kinds.
In 2009, in response to the crisis, mechanisms to stimulate
labour
demand were widely used in many advanced countries. In particular,
subsidies (direct job subsidies, wage subsidies, or reductions in
payroll taxes) were targeted at specific groups in the labour force
that are most vulnerable to joblessness: the long-term unemployed
and/or youth.
Over the remainder of 2010 and throughout 2011, the IMF says
fiscal policy should remain supportive of recovery. But clearly, the
room for public spending varies across countries, and the three-part
strategy should be adapted to country budgets and specific
circumstances.
More jobs needed
In the 10 years to 2009, global employment grew from 2.74bn
to 3.21bn, with well over half of the world’s workers (56.3%) located in Asia. Global unemployment, which had been over
6% for several years before decreasing between 2004 and 2007,
increased dramatically in 2009. Now in 2010, around 210m are
unemployed—a rise of over 30m since 2007.
With annual labour force growth of 1.6% adding more than
45m job seekers per year to the global labour force, the
challenges exacerbated by the crisis are unlikely to diminish. In
the next 10 years, more than 440m new jobs will be needed to
absorb new entrants into the labour force, and still more to reverse
the unemployment caused by the crisis. In addition, developing
countries need to grow rapidly to absorb their expanding labour force
and to meet the demand for jobs from migrants leaving rural areas.
