ILO says world heading for a new and deeper jobs recession, warns of more social unrest

Respondents in half of 99 countries surveyed say they do not have confidence in their national governments.

logo of the International labour OrganizationGeneva (4 Nov. 2011) – In a grim analysis issued on the eve of the G20 leaders summit, the International Labour Organization (ILO) says 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.

“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 Labour Studies that issued the report.

The new World of Work Report 2011: Making markets work for jobs says a stalled global economic recovery has begun to dramatically affect labour markets. On current trends, 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.

The report indicates that 80 million jobs need to be created over the next two years to return to pre-crisis employment rates. However, the recent slowdown in growth suggests that the world economy is likely to create only half of the jobs needed.

The report also features a new “social unrest” index that shows levels of discontent over the lack of jobs and anger over perceptions that the burden of the crisis is not being shared fairly. It notes that in over 45 of the 119 countries examined, the risk of social unrest is rising. This is especially the case in advanced economies, notably the EU, the Arab region and to a lesser extent Asia.

The report cites three reasons why the ongoing economic slowdown may have a particularly strong impact on the employment panorama: first, compared to the start of the crisis, enterprises are now in a weaker position to retain workers; second, as pressure to adopt fiscal austerity measures mount, governments are less inclined to maintain or adopt new job- and income-support programmes; and third, countries are left to act in isolation due to lack of international policy coordination.

The report’s other main findings include:

  • Out of 118 countries with available data, 69 countries show an increase in the percentage of people reporting a worsening of living standards in 2010 compared to 2006;
  • Respondents in half of 99 countries surveyed say they do not have confidence in their national governments;
  • In 2010, more than 50 per cent of people in developed countries report being dissatisfied with the availability of decent jobs (in countries such as Greece, Italy, Portugal, Slovenia, and Spain, more than 70 per cent of survey respondents reported dissatisfaction);
  • In advanced countries, the growth in corporate profits among non-financial firms was translated into a substantial increase in dividend payouts (from 29 per cent of profits in 2000 to 36 per cent in 2009) and financial investment (from 81.2 per cent of GDP in 1995 to 132.2 per cent in 2007). The crisis reversed slightly these trends, which resumed in 2010; and
  • Food price volatility doubled during the period 2006-2010 relative 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.

The study also calls for supporting investment in the real economy through financial reform and pro-investment measures.

Finally, it says that the adage that wage moderation leads to job creation is a myth, and calls for a comprehensive income-led recovery strategy. This would also help stimulate investment while reducing excessive income inequalities.

More information:

World of Work Report 2011: Making markets work for jobs

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