|Guy Ryder, ILO Director-General|
At the Los Cabos Summit earlier this year in Mexico, nine nations - Argentina, Australia, Brazil, Canada, China, Germany, Korea, Russia and the United States – said they would be ready to coordinate and implement additional measures to support demand if the global economic situation deteriorated.
“It is now abundantly clear that such deterioration is under way, and additional measures are urgently needed. The countries that indicated their willingness to join such a coordinated effort account for half of global output and so could have a pronounced effect on global conditions,” Ryder said.
|Latest ILO unemployment estimates|
The ILO chief said that the latest IMF World Economic Outlook recognises that many governments that embarked on austerity measures underestimated the negative impact of these measures. “This means that these austerity measures caused greater damage to the economy than previously thought,” said Ryder.
The way forward
Global unemployment is still 30 million higher than before the crisis started in 2008 and nearly 40 million more people have dropped out of the labour market since then.
At the same time, the IMF estimates that the benefits of earlier stimulus measures taken since the crisis began have been two to three times higher than previously thought.
A more gradual reduction of debt, combined with low interest rates would have substantial multiplier effects. “And if countries embark on this approach simultaneously, we could put the global economy onto a sustainable recovery and growth track,” said Ryder.
New initiatives should focus on four main areas: supporting infrastructure investment, improving access to bank funding for small and medium enterprises, extending the coverage of social protection and investing in jobs for young people.
The ILO chief said that coordinated action by the world’s leading economies can and must prevent a slide into what he described as a political, economic and social quagmire.