From International Labour Organization
World of Work Report 2010
from one crisis to the next?
This new report by the research arm of the
International Labour Organization (ILO) says a long “labour market
recession” is worsening the social outlook in many countries.
The new study entitled “World of Work Report 2010 – from one
crisis to the next?” acknowledges that three years into the crisis,
the global economy has resumed growing, with some countries witnessing
encouraging signs of employment recovery – significantly in emerging
economies in Asia and Latin America.
However, the report by the ILO’s International Institute for Labour
Studies also warns that “despite these significant gains ... new clouds
have emerged on the employment horizon and the prospects have worsened
significantly in many countries”.
The ILO study says that, if current policies persist, a recovery in
employment to pre-crisis levels will be delayed until 2015 in advanced
economies, instead of 2013 as it projected one year ago.
At the same time, the report says, while employment in the emerging and
developing countries has resumed growing, over 8 million new jobs are still
needed to return to pre-crisis levels in those countries.
“The longer the labour market recession, the greater the difficulties
for jobseekers to obtain new employment,” the ILO report says. “In the
35 countries for which data exists, nearly 40 per cent of jobseekers have
been without work for more than one year and therefore run significant risks
of demoralisation, loss of self-esteem and mental health problems.
Importantly, young people are disproportionately hit by unemployment.”
“Fairness must be the compass guiding us out of the crisis,” said ILO
Director-General Juan Somavia. “People can understand and accept difficult
choices, if they perceive that all share in the burden of pain. Governments
should not have to choose between the demands of financial markets and the
needs of their citizens. Financial and social stability must come together.
Otherwise, not only the global economy but also social cohesion will be at
Editorial - Contents - Cover
The first reason behind the deteriorated outlook is that fiscal stimulus measures,
which were critical in kick-starting a recovery, are being withdrawn. Governments
are worried about larger public deficits in view of investors’ reluctance to fund
these deficits. In the majority of countries analysed in the Report, fiscal policy has
shifted to austerity which, if badly designed, will prolong the job crisis.
A second, more fundamental factor is that the root causes of the crisis have not been
The coexistence of debt-led growth in certain developed countries
with export-led growth in large emerging economies has proved to be the Achilles’
heel of the world economy. Before the start of the financial crisis, real labour
incomes grew less than justified by productivity gains, thereby leading to growing
income inequalities. In certain advanced economies such as the US and several EU
countries, this situation pushed households to borrow in order to fund their housing
and consumption plans –which was possible because of a dysfunctional financial
In other advanced economies like Germany and emerging countries such
as China, growing inequalities translated into relatively modest domestic demand
growth. But this was outweighed by higher exports to high-spending, debt-led
economies. The private-debt bubble exploded with the onset of the global financial
crisis and for a while was replaced with public debt as an engine of growth.
However, there is a limit as to how much public debt can increase in order to
stimulate the economy.
For a sustainable exit from the crisis, it is therefore crucial to address both the
income imbalances and the dysfunctional financial system.
Chapter 1. World of work
outlook: The challenge of job-rich recovery
Chapter 2. Global social
climate: Trends and challenges for policy
Chapter 3. Job recovery in
times of constrained public finances
Chapter 4. Rebalancing
global growth: The role of an income-led strategy
Chapter 5. Reforming finance
for more and better jobs