Magazine article International Trade Forum

Employment Meltdown

Magazine article International Trade Forum

Employment Meltdown

Article excerpt

The jobs crisis is severe and escalating, threatening increased poverty and prolonged social unrest around the world. But, with a coordinated response from policy-makers, it's within our means to avert it.

We are facing a global jobs crisis. Already, a huge gap is opening up between people with work and without. Unemployment is rising rapidly, and is expected to reach 230 million people worldwide this year. More people are being pushed into the informal sector. Meanwhile, labour forces grow and new people seek to enter the labour market. An estimated 90 million new jobs will be required over the next two years just to keep unemployment at its current level.

The crisis has reversed the trends that recently saw poverty in decline. The number of working poor - people unable to earn enough to lift themselves and their families above the US$2 per person, per day poverty line - may rise by more than 100 million, reaching up to 1.4 billion, or 45% of the world's workers.

The downturn is global and synchronized. As it spreads, no country is immune. World trade is expected to contract significantly in 2009; commodity prices, oil and gas, metals, and even beverages have fallen precipitously. This has dire consequences for economies around the world, especially major exporting economies of Africa, Asia and Latin America. However, food prices have stayed above past trends, affecting the purchasing power of millions oí families, And for the first time in decades, it is likely that migrant remittances will fall, impacting the economic security of many dependent households.

We may be headed for a vast, prolonged and severe jobs crisis, Just as policy-makers have taken bold and swift action to respond to the financial and economic downturn, similar bold action is required to address the jobs crisis, Failure to do so will affect hundreds of millions of people. The human cost of widespread employment loss is very high and can carry great uncertainty, frustration and social instability.

The risk of a social crisis is further aggravated by the weakening oî social protection. We can no longer rely on 'market-solves-it-alT approaches. Private pensions have devalued by around 20%. Millions with no pensions or unemployment benefits have no social protection. Many developing countries lack even a minimal social safety net.

Financial stimulus packages aimed at banks have been five times larger than fiscal stimulus packages aimed at people, according to a recent International Labour Organization (ILO) survey of 40 countries, Such imbalance shows a lack of support for the real economy. Less-developed countries lack the fiscal space to support the workmg poor. …

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