Economic turbulance could create more unemployed

Economic turbulence, mainly stemming from the credit crisis in industrialised countries and rising oil prices, could spur an increase in global unemployment by an estimated 5 million persons in 2008, warned the International Labour Office (ILO).

In its annual Global Employment Trends report, the ILO said that the new projection for 2008 is in contrast to 2007, a watershed year in which sound global GDP growth - of more than 5% - led to a "stabilisation" of global labour markets with more people in work and only a slight increase in the number of people unemployed worldwide.

"This year's global jobs picture is one of contrasts and uncertainty," ILO Director-General Juan Somavia said.

"While global growth is annually producing millions of new jobs, unemployment remains unacceptably high and may go to levels not seen before this year. What's more, though more people are in work than ever before, this doesn't mean that these jobs are decent jobs.

Too many people, if not unemployed, remain among the ranks of the working poor, the vulnerable or the discouraged," he added.

The ILO report noted that the reduction in the growth in developed economies attributed to credit market turmoil and higher oil prices so far had been "compensated for in the rest of the world," especially in Asia, where economic and job growth remained strong. But an expected slowdown in growth during 2008 could increase the global unemployment rate to 6.1%, resulting in an absolute increase of at least 5 million unemployed worldwide.

At a media briefing in Geneva recently, Jose Salazar-Xirinachs, Executive Director of the ILO Employment Sector, said after several years of sustained global growth, the world is facing turbulence and the prospect of slower growth. Significantly, turbulence in the US and Europe has so far not impacted labour markets in other regions, but this is a very important issue and a very strong possibility, he added.

Risks for the global economy in 2008 should be watched carefully, Salazar-Xirinachs said, adding that the important question for the ILO is how labour markets worldwide will react to slower growth or growing uncertainty.

On the outlook for 2008, he said that the basic question is whether the turbulence stemming from the crisis in the US housing sector, rising oil prices and consumer uncertainty will slow GDP growth and put labour markets worldwide at risk.

In response to a question, Salazar-Xirinachs said that the estimates in the ILO report are based on the review done by the IMF in September. It looks like what happened from September to today is obviously not good news.

(The writer is a researcher with the Third World Network.)