Global economic turbulence to spur unemployment increase, says new ILO report

The new ILO Global Employment Trends 2008 report says market turmoil, rising oil prices and credit uncertainty could leave 5 million more unemployed this year.

Date issued: 24 January 2008 | Size/duration: 00:03:26 (5.29 MB)
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In contrast to 2007, a year that saw sound global growth in GDP of more than five percent and more people in work in stable labour markets, this year’s global jobs picture is an uncertain one.

Jose Manuel Xirinachs-Salazar, ILO Executive Director, Employment

The basic question as we look forward is whether the turbulence stemming from the crisis in the US housing sector, rising oil prices and consumer uncertainty will slow GDP growth and put labour markets worldwide at risk. We predict that net employment creation in 2008 would be around 40 million and that unemployment could increase by five million people in 2008. This scenario would usually be worse than estimated in the report that you have if global growth in 2008 turns out to be less than the predicted 4.8 per cent or if growth in other regions does not compensate for slower growth in the industrialized countries.

Slower growth means less jobs created, even shed as companies struggle to cope with less demand for goods and services. But there is room for hope.

Dorothea Schmidt, ILO Employment Expert

So far, Asia was strong enough to take away some of the impact off of what happens in the United States and in the developed economies overall. We say in the Report we don't know what is going to happen in 2008, but the signs are not all negative because it could really be we don't know, it could really be that Asia will continue to grow and even if we talk about a reduction in growth in Asia, we still talk about growth rates of far beyond five per cent . So far, I haven't seen any revision even getting close to the five per cent and with five per cent growth, we still see that employment is created and we still see that labour market indicator can improve. That of course, doesn't help any of the people who lose their jobs in the developed economies and that's really the people we have to worry about.

Lawrence Johnson, ILO Employment expert

In many countries in the developing world, people simply can't not afford to be unemployed. Therefore, they have to do something to survive. In that context, what we are fearful of is that the number of unemployed is concentrated in developed economies but the working poor figures are with the developed world.

But even with growth, the worldwide deficit in decent jobs, especially for the poor is massive. Five out of ten workers are in vulnerable or unprotected jobs. They are the most at risk if growth slows and economies fluctuate.

Jose Manuel Xirinachs-Salazar

The period of historically high rates of economic growth world wide was the time to redouble efforts in effectively putting employment and decent work at the centre of economic and social policies under an approach that makes an explicit effort to increase the employment content of that growth.

With prospects for a downward revision in growth estimates for 2008, the need to create jobs with growth has never been more urgent.