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No recovery in sight for Labour markets

This is the view of the global employment situation according to the International Labour Organisation (ILO), in its World of Work Report 2012: Better Jobs for a Better Economy”. The report says that there are still 50 million less jobs available than were there before the global crisis, and warned that an even more problematic job phase was emerging.

The global jobs outlook is getting worse

The first reason for this was that many governments, especially in advanced economies, have shifted their priority to a combination of fiscal austerity and tough labour market reforms. The report says that this has had devastating consequences on labour markets in general and job creation in particular, whilst mostly having failed to reduce fiscal deficits as well.

“The narrow focus of many Eurozone countries on fiscal austerity is deepening the jobs crisis and could even lead to another recession in Europe”, said Raymond Torres, Director of the ILO and lead author of the report.

He went on to say: “Countries that have chosen job-centred macroeconomic policies have achieved much better economic and social outcomes. Many of them have also become more competitive and have weathered the crisis better than those that followed the austerity path.”

The second concern expressed was that in advanced economies, many jobseekers are demoralised and are losing skills. Added to this small companies are being starved of credit which in turn is keeping investment depressed and preventing job creation. Job recovery is not expected in these countries, especially in Europe, before the end of 2016, unless there are dramatic shifts in policy.

Thirdly, in most advanced countries, many of the new jobs are precarious, as they involve part-time and temporary employment which workers are being forced to accept, as full-time jobs are not available.

Finally, the report notes that the social climate has deteriorated in many parts of the world, particularly in Sub-Saharan Africa, the Middle East and North Africa.

The main conclusion is that fiscal austerity combined with labour market deregulation will not raise job prospects in the short term. It claims that there is no clear link between labour market reforms and higher employment levels. On top of this, the report notes that some recent reforms, especially in Europe, have reduced job stability and increased inequality without creating jobs.

But, the report argues that if a job-friendly policy-mix of taxation and increased expenditure in public investment and social benefits is put in place, approximately 2 million jobs could be created over the next year in advanced economies.

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Posted in International Labour Organisation, US economy

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