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World’s leading economies warned over ‘global jobs crisis’

Thursday, 11. September 2014 - 17:20

The world’s largest economies are still failing to create enough jobs and too many of those that are being produced are too low quality to generate a meaningful boost to global growth, three leading international institutions warned on Tuesday. In a joint report prepared for the G20 labour and employment ministers meeting in Australia this week, the International Labor Organisation, the OECD and the World Bank warned that more needed to be done to create good quality jobs across both advanced and emerging economies. The risk of not doing so, they said, was many more years ahead of weak economic growth and a “vicious cycle” that would prove hard to break out of.

“There is little doubt there is a global jobs crisis,” said Nigel Twose, the World Bank’s senior director for jobs. “There is a shortage of jobs and especially quality jobs.” The lack of employment and stagnant wages were contributing to rising inequality as well as holding back consumer spending and therefore growth in advanced economies, the World Bank and ILO economists wrote. That would make it difficult for the G20 to meet its goal of boosting global output by more than 2 per cent by 2018. “There is really no room for complacency. More jobs with better pay contribute to household incomes, which in turn boost consumer demand. When firms see demand picking up they will invest, so creating a virtuous circle,” said Sandra Polaski, deputy director-general for policy at the ILO. The report points to significant structural challenges facing governments across the G20.

Youth unemployment in the grouping’s advanced economies remains at historic highs. By 2012 the portion of long-term jobless on unemployment rolls in rich economies had also risen to almost a third, from about a fifth on the eve of the global financial crisis, raising the possibility of long-term “scarring” in labour markets.

Despite the significant poverty reduction seen in recent decades, there was also clear evidence that too many workers in emerging economies were part of a new working poor rather than rising into the middle classes. The 400m people still below the World Bank’s $2/day line for “moderate poverty” in the G20’s emerging members in 2013 was half the number in 1991. Yet, taking a broader reading, more than half the workforce in those economies – 837m people – were still living either below, or just above, the poverty line last year, according to the report. “Far too many people in emerging economies today are the working poor,” Mr Twose said, pointing to what remained a “significant and widespread challenge” for countries such as Brazil, China, India, Indonesia and South Africa.

The report said G20 members had recognised the problem and launched special employment programmes. But those plans still needed to be put in place in a co-ordinated fashion to give the global economy a badly needed boost that would also generate the jobs needed.

Shawn Donnan and Sarah O’Connor

Source: 
www.ft.com
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employment
global economy
jobs crisis