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EMPLOYMENT

Young hit hardest as global jobless rate continues to rise

PUBLISHED : Wednesday, 22 January, 2014, 12:54am
UPDATED : Wednesday, 22 January, 2014, 12:54am

The world could face years of jobless economic recovery, with young people set to be hit the hardest as global unemployment continues to rise this year, the International Labour Organisation said in a report.

The United Nations agency highlighted a "potentially dangerous gap between profits and people", forecasting that millions more people will join the ranks of the unemployed as companies choose to increase payouts to shareholders rather than invest their burgeoning profits in new workers.

The ILO's Global Employment Trends report forecasts that world unemployment will rise to 6.1 per cent this year from 6 per cent last year and will remain well above its pre-crisis rate of 5.5 per cent for several years.

It puts the youth unemployment rate at 13.1 per cent, more than double that for the whole workforce and almost three times the adult rate of 4.6 per cent - putting the ratio of youth to adult unemployment at a record.

The World Economic Forum kicks off in the Swiss town of Davos today with a focus on rising inequality.

Guy Ryder, the ILO's director-general, also highlighted rising inequality as wages fail to pick up, long-term unemployment problems intensify and progress stalls on cutting working poverty.

"Corporate profits are up and global equity markets are looking forward to another year of plenty, while at the same time unemployment and household incomes stand still," Ryder said.

"The modest economic recovery has not translated into an improvement in the labour market in most countries.

"Businesses have been sitting on cash or buying back their own stocks, rather than investing in productive capacity and job creation."

His comments follow a report by Oxfam that the world's richest 85 people control as much wealth as the poorest half of the global population put together. Released on the eve of the Davos meeting, the report found the world's richest 85 share a combined wealth of US$1 trillion, as much as the poorest 3.5 billion.

Ryder warned of the economic and social consequences of rising inequality as labour market problems looked set to worsen this year.

"If we fail to act, if we fail to tackle the youth jobs crisis, long-term unemployment, high drop-out rates and other pressing labour market issues, we will be destroying hopes for sustainable growth - and sowing the seeds of further, and perhaps deeper social unrest," he said.

The ILO said 5 million more people became unemployed last year, taking the global total to 202 million. That is forecast to rise to 215 million jobseekers by 2018 as employment growth fails to keep pace with the 42.6 million people expected to enter the labour market every year.

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