Austerity versus employment

Unemployment is on the rise in most of the world and will continue rising in the short-term, fueled by in-vogue economic policies like austerity and labor market reform, according to an annual UN report.

The International Labor Organization (ILO) released its "World of Work Report 2012" on Monday, with lead author Raymond Torres telling journalists in Geneva that spending cuts and labor reforms were increasing unemployment while largely failing to reduce countries' deficits.

"The narrow focus of many eurozone countries on fiscal austerity is deepening the jobs crisis and could even lead to another recession in Europe," Torres said, adding that this trend could spill over into developing countries.

The report predicted a 2012 global unemployment rate of 6.1 percent or 202 million people. That would constitute a 3-percent increase from 2011's estimated unemployment total of 196 million. The ILO report also forecast that a further five million people would join the world's unemployed in 2013.

Drastic cuts, marginal results

Unemployment rates are particularly high among the young, with the report saying this had led to a higher chance of social unrest in Sub-Saharan Africa, the Middle East and North Africa, advanced economies and Central and South Eastern Europe.

"This is not surprising given that good jobs remain scarce and income inequality is rising," Torres said.

Torres also pointed to a higher proportion of long-term unemployment, saying an average of 40 percent of jobseekers worldwide had been out of work for a year or more.

Only six advanced economies could boost improved employment figures since 2007, before the onset of the recent recession often called the financial crisis. Austria, Germany, Israel, Luxembourg, Malta and Poland were those overachievers, with Germany particularly notable because it had also marked a reduction in "low quality" employment - usually seasonal or otherwise temporary work.

Lead author Torres was most critical of what he called "ill-conceived" policies like fiscal austerity in Europe, saying that they had also largely failed to reduce government debt.

"For example in Spain, the deficit was reduced from a little over 9 percent of gross domestic product in 2010 to 8.5 percent of GDP in 2011, a very small reduction after a drastic austerity program," he said.

Unemployment in Spain reached record highs of almost one-in-four last month, with over half of 18-25 year-olds out of work.

"At the ILO we understand that fiscal deficits cannot remain high for long. It is important to have a medium-term fiscal consolidation strategy. But it is a question of pace and of content of fiscal consolidation. The pace has to be realistic," Torres concluded.

msh/ccp (AFP, dpa, Reuters)