European governments are spending a lot of energy to calm the financial markets and bail out the banks while employment remains a second-class objective. In about six months, the slowdown in the global economy will begin to show its effects on the labor market and the problems that could arise from it should not be underestimated. This is what we read in the latest report of the International Labor Institute (ILO) (download it in English here).
The austerity measures, put into practice by many advanced countries, will force a downsizing of state programs to support employment which until now had partially alleviated the problems associated with unemployment. The reduction in employment is a phenomenon that is already starting to materialize, even in emerging countries. In the next two years – in order to restore pre-crisis levels – they will be necessary 80 million jobs more but the world economy will not be able to create more than half. According to the ILO, the main ones consequences of this increase in unemployment will be two:
INCREASING SOCIAL DISCONTENT – It is a phenomenon that is already taking shape in many areas of the world (see graph in the photo). Since 2010, the risk of social unrest has grown considerably and of the 119 countries taken into consideration, 58% show signs of a worsening of living conditions.
FURTHER SLOWDOWN OF THE ECONOMIC RECOVERY – Through a mechanism for reducing demand and investment which would lead to a vicious circle from which it would be difficult to get out.
In advanced countries, and above all in the EU, too much attention is being paid to trying to calm the financial markets and too little attention being paid to restoring the real economy. Employment is still seen as a second-rate target. The Ilo proposes some job-friendly policies to stimulate global growth again:
RECONSIDER WAGE MODERATION POLICIES – Aligning profitability levels with wages is a way to support investment and stimulate growth.
GIVING BACK CREDIT TO SMALL BUSINESSES – In the European Union, about a fifth of small companies have complained of inadequate access to credit and allowing companies to invest again is the basis of growth.
PRO-EMPLOYMENT APPROACH IN REFORMS – Many countries, in order to restore public finances, have chosen to cut income support plans. This choice could have, in the long run, many negative indirect effects (poverty and lower consumption for example), even if in the short term they allow for cost savings.
RETURNING EMPLOYMENT TO THE CENTER OF THE GLOBAL AGENDA – Starting with job-friendly social protection programs, up to well-structured minimum wages and labor market regulation and a productive dialogue between social partners must be implemented especially in the euro area, where the signs of the economic slowdown are strongest.
INTERNATIONAL POLICY COORDINATION – In an increasingly globalized world, the effects of a crisis in one area of the world necessarily lead to negative effects in other regions of the globe as well.
Download the ILO report in English (click here)
