Economy

Low employment, high pressure

The world economy, marked by signs of recession in Europe, adds more pressure on the labour market in view of the need to create employment in order to face a growing workforce.


Mario Esquivel

Figures from the International Labour Organization (ILO) for 2012 confirm the complexity of what is going on, with countries urged to create at least 600 million jobs within the next ten years.

According to the ILO this is the minimum amount required to assimilate nearly 200 million people who are currently out of work, together with 40 million people that join the economically active population every year.

According to experts this task presents an urgent challenge, since solutions based on Gross Domestic Product (GDP) growth in the Eurozone could lead to an even more adverse situation.

The International Monetary Fund (IMF) has moderated its forecasts of world economic growth for 2012 as a consequence of the negative effects that have been created by the sovereign debt crisis in Europe.

The multilateral body has predicted a 3.3% growth in the global GDP, down by 0.7% from the previous forecast. Also for 2013 a 3.9% growth has been predicted, which represents a slowing of economic growth by 0.6%.

Meanwhile in Latin America a 3.6% growth has been predicted for this year, with a projected contraction of 0.4% compared with previous forecasts.

The main problems are in the Eurozone, as the IMF has predicted that the economies of the 17 countries linked to the common currency are set to shrink by 0.5%.

In this respect the IMF has admitted that in 2012 the European economy will enter into a moderate recession due to the impact of additional fiscal policies and the increase in the premiums of sovereign risk.

So with an average world expansion rate down by 2%, by the end of 2012 we are set to see 204 million people unemployed and 209 million in the next financial year.

On the other hand, if there is any recovery this year it would cut the predicted number of unemployed (200 million) by only one million, which means that the unemployment rate would remain at around 6%.

The ILO said that the recovery which began in 2009 was only brief, because in reality there were 27 million more unemployed compared with the figures reported at the beginning of the crisis.

Add to that the fact that, according to experts, the active population has shrunk by 29 million people, whom they said to be disheartened with their search for work. On becoming unemployed these people will increase the worldwide rate of unemployment from 6 to 6.9% as an average.

In this category are those who have decided to give up looking for work because they feel that they have no chance of finding any and therefore they are not counted among the unemployed.

This also applies to young people who are carrying on their studies for longer than they had intended and are putting their job searches on hold because of lack of opportunities.

Last year the number of young people between 15 and 24 years of age out of work was estimated at 74.8 million, an increase of more than 4 million since 2007.

On a global scale, young people are three times more likely than adults to be out of work and the worldwide rate of unemployment in that age sector is 12.7%, one percentage point above the level before a crisis.

Another challenge to be faced is that of quality of work, since ILO figures mention the need to extend this concept to 900 million workers who live with their families under the $2 per day poverty line.

The number of people in vulnerable employment worldwide in 2011 was estimated at around 1.52 billion, an increase of 136 million since the year 2000 and 23 million higher than in 2009.

This issue affects mainly women, 50.5% of which are in vulnerable work, with 48.2% of men in the same situation.

The gap in labour productivity between industrialised ($72,900 per worker) and developing countries ($13,600 per worker) also continued to persist in 2011.

Figures for 2012, according to the ILO, “are a reflection of growing inequality and continuing exclusion that millions of working people and their families around the world have to go through.”

The ILO also warned that austerity policies will without doubt increase the problems in the labour market, since experience shows that it is important to invest in creating jobs and stimulate investment.

(Translated by: José Stovell)

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