Act now on the global jobs crisis, or risk a lost decade

PUBLISHED : Tuesday, 01 November, 2011, 12:00am
UPDATED : Tuesday, 01 November, 2011, 12:00am


The world employment outlook is dire. Unemployment stands at more than 200 million and is rising. The current rate of global jobs growth, at 1 per cent or less per year, will not replace the 30 million jobs lost since the financial crisis began in 2008.

Yet unemployment numbers are only part of the story. They mask the fact that millions of workers have part-time jobs for lack of a better alternative, are postponing entry into the labour market or have given up looking for work altogether.

Even before the crisis, half of total employment outside agriculture was in the informal economy and two workers in five worldwide lived below the poverty threshold of US$2 per day. Young people are hardest hit; youth unemployment hovers just below 80 million, at two to three times the adult rate.

Continuing protests around the world share a common denominator: unemployment and income inequality. What is more, millions have jobs but lack the basic elements of dignity: rights, social protection and voice.

The situation could get worse. With the slowdown in the global economy, we are on the edge of a global jobs recession that could last a whole decade. And if we ignore the widespread aspiration for a fair chance at a decent job, the social and political consequences could be catastrophic.

With G20 leaders meeting in Cannes this week, their biggest challenge will be connecting with their citizens and addressing the growing global discontent. They will seek to calm financial markets and give them confidence that first the euro zone, then the US and ultimately Japan will manage their sovereign debt crises well.

Dousing financial fires with emergency measures and regulations is urgent. Yet, to retain political legitimacy, the G20 must tackle with equal vigour the tragedy of the millions of unemployed and insecure workers who are paying the price for a crisis they had no responsibility in bringing about.

Leaders can put global economic recovery efforts on the path to decent work, based on strong public-private partnerships. Four concrete measures in particular have proved their worth.

First, investment in infrastructure for jobs needs to be raised from the current 5-6 per cent of gross domestic product to 8-10 per cent during the coming five years. China and Indonesia have shown that such investments play a key role in sustaining employment during a slowdown.

Second, ensure small and medium-sized enterprises, the main source of job creation, have access to bank financing and management support systems with SME credit outlays growing at least at the same rate as total outlays. Brazil and Russia have done that.

Third, focus on jobs for young people, through effective apprenticeships, orientation services and entrepreneurship training, to help the transition from school to jobs. Economies that follow this route, such as Australia, Germany and Singapore, enjoy lower youth unemployment rates.

Finally, we must build universal social protection floors in countries with low coverage. This could be done at a cost of between 1 and 2 per cent of GDP, depending on each country. Publicly financed social-protection schemes in Argentina, Brazil, India, Mexico and South Africa are lifting millions out of poverty.

If countries concentrate on these areas, while laying out credible and socially responsible plans to finance sovereign debt and consolidate fiscal balances, the recovery will be stronger. These measures, if adopted widely, would push the global employment growth rate to 1.3 per cent, thereby recovering by 2015 the pre-crisis rate of employment to the working-age population.

The world is facing a serious equity challenge. The perception that, while some banks are too big to fail, some people are too small to matter and that financial interests override social cohesion, undermines people's confidence in the possibility of having a fair chance at a decent job.

Juan Somavia is director-general of the International Labour Organisation