Continued economic stimulus measures key for job creation – UN report

Ironworkers at work erecting the steel frame of a new building. Photo: Paul Keheler

7 December 2009 – A premature withdrawal of national economic stimulus packages could delay a jobs recovery boon for years and throw 40 million more people worldwide on to welfare, a new United Nations report warned today.

The International Labour Organization (ILO) report also noted that most of the failures of the financial system which lie at the root of the current crisis remain in place, strengthening the argument for continued government economic support.

“Despite some initial signs of economic upturn and because of the significant rise in unemployment and in part time work, support measures should not be withdrawn too early,” said Raymond Torres, an ILO Director and lead author of the World of Work Report 2009: The Global Jobs Crisis and Beyond.

“The global jobs crisis is not over,” said Mr. Torres. “The economic upturn will remain both fragile and incomplete as long as the jobs crisis continues.”

Unless adequate measures are adopted and in some cases continued more than 40 million people could drop out of the labour market, including the long-term unemployed who simply stop looking for a job and new entrants who shift directly to social assistance.

The annual ILO study noted that bringing people back into productive employment sooner would take less out of government coffers than delaying action on job creation, adding that a continuation of fiscal stimulus measures would raise employment by seven per cent compared to an early exit situation.

Employment in countries with high gross domestic product (GDP) per-capita may not return to pre-crisis levels before 2013 unless more decisive measures to fuel job creation, while in emerging and developing countries employment levels may reach pre-crisis levels in 2011, according to the report.

In addition to unemployment, the report found that businesses have retained millions of workers on shorter hours, partial unemployment or involuntary part time with help from government funding, and warned that an estimated 5 million workers are at risk of losing their jobs if that support is taken away.

“Clearly, what we have on our hands is a situation that could become critical in the long–term unless we concentrate on promoting jobs and helping those who have lost theirs,” said Mr. Torres.

The report also analyzes the challenges and opportunities of moving to a greener economy, as well as the risks associated with the increasingly important role of financial markets in the operation of the non-financial sector.

In an analysis of the effects of moving to a “greener economy,” the report suggested that by imposing a levy on carbon dioxide emissions – a measure under discussion at the UN climate conference in Copenhagen – and using the resulting revenues to cut labour taxes, global employment would rise by 0.5 per cent, or 14.3 million new jobs, by 2014.


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