In its annual Global Employment Trends report, the ILO estimates that global unemployment hit 197 million last year, the equivalent of 6% of the labour force. That means 27 million more people are out of work since the start of the financial crisis more than three years ago – and it’s likely to remain stuck at that number until 2016.
The agency warns that the situation is an ‘urgent challenge’ and says another 600 million jobs need to be created over the next 10 years if the recovery is get back on track. The forecast is ‘much more pessimistic than last year’, the organisation says, after three consecutive years of crisis conditions. The EU is the worst off: joblessness in the region is expected to reach 43.6 million, or 8.5%, and could rise to 9% next year – the highest rate it’s ever been. But emerging economies in South America and Asia are faring slightly better when it comes to job creation.
As the UK statistics showed last week, young people are continuing to feel the brunt of the global downturn. They are nearly three times as likely as adults to be unemployed, and the youth unemployment rate worldwide now stands at 12.7%. Even so, that’s far lower than the UK unemployment rate of people aged between 16 and 24. The latest ONS unemployment figures published last Wednesday show 1.04 million young people are now out of work in the UK, or 22.3%.
The ILO says countries need to focus on boosting business confidence, as a mixture of high unemployment and stagnant wages is reducing demand for goods and services, creating a cycle of low economic growth. It recommends work-sharing programmes, wage subsidies, enhanced public employment services, and incentives to encourage entrepreneurship as ways to help the private sector pick up again.
These are hardly new initiatives, but governments haven’t exactly been quick to implement them. It looks like we’re in for a period of Schumpeter’s ‘creative destruction’. The old guard will have to make way for the newer ideas, new businesses and new jobs – and that’s bound to mean some short-term pain in the meantime.