The International Labour Organisation (ILO) has warned that personal finances are set to get even tougher as unemployment is expected to rise all over the globe.
And as a double whammy of bad news, one of the areas expected to be hit the hardest is the Euro Zone.
The ILO said that employment markets all over the world are suffering because of austerity measures being implemented by governments desperate to regain control of their country’s finances. The body said that it believes by the end of the year, global unemployment could reach as high as 202 million people, a hike of 6 million compared to the numbers from 2011.
The stark declaration was revealed in the World of Work Report 2012, published by the ILO, which highlighted the ‘devastating consequences’ the global policies were having on economic growth.
The group warned that in order to avert a full scale unemployment crisis, ministers would have to rethink how they were implementing their deficit reduction plans.
The director of the body, Raymond Torres, said that the austerity measures many countries were currently struggling their way through would normally have been expected to stimulate more growth, but said this was not currently the case. He told journalists in Geneva that the austerity drives were ‘counterproductive’ and destructive for confidence.
According to the ILO report, approximately 50 million jobs around the world have vanished since the onset of the 2008 global credit crunch.
And unless there are significant changes, the ILO believes the next couple of years will continue to be challenging, with unemployment figures set to rise even higher.
It has predicted that the number of jobless will stand at 6.1% by the end of 2012, a total of 202 million and 3% higher than the original forecast for 2011. And 2013 will not see an improvement either, with the ILO claiming that the number will increase to 6.2%, putting a further five million people out of work.
With around 80 million new workers expected to make themselves available to the labour market in the next two years, the ILO said that it was ‘unlikely’ that the global economy will gather enough momentum to not only cover the current shortfall, but also provide for the new individuals looking for jobs.
The report was critical of many parts of the world, pointing to stagnation in the jobless figures in both the US and Japan and highlighting serious shortfalls of employment opportunities in both Africa and the Arab nations.
However, it reserved its most damning comments for Europe, which the main author of the report, Torres, described as having ‘ill-conceived fiscal austerity.’
He went on to say that the ‘narrow focus’ evident in many countries across the Euro Zone was the primary reason why unemployment was rising and growth was faltering. Mr Torres warned that the Euro Zone faced slumping into a deep recession, unless they were able to resolve the current employment crisis it was suffering.
The report went on to suggest that a ‘new and more problematic phase’ could be on the horizon for the employment market. With four in ten workers unemployed for longer than 12 months in advanced economies around the world – including the UK – the ILO said individuals were finding it far more difficult to find a job. And with a simultaneous spike in youth unemployment, the ILO said there could ultimately be a ‘huge economic cost.’ Proving the point being made, France has just announced the 11th consecutive month of rising unemployment.
The report concluded that suffering from such a lack of impetus, with both the young and long term unemployed rising, countries could suffer from ‘increased social strife, riots, illness and so forth.’
Many households in the UK have struggled with rising debts as unemployment for both the younger and older generations puts increased pressure on already overstretched finances. And with as many as 20 jobseekers for every vacant position which arises in some parts of the country, competition to secure new work is fierce.
Whilst the UK is not facing severe a severe debt crisis like Greece or even Spain, the government is battling to reduce the deficit by slashing public spending. However, the focus on the nation’s debts has caused economic growth to suffer – as the ILO predicted – which has resulted in the UK sliding back into a technical double dip recession.
The ILO has urged Britain and other Euro Zone nations to follow the magic formula used in Australia and Uruguay, which it says combined employment and growth strategies to escape from debt. However, with the government intent on continuing to implement its austerity measures, there seems little chance of a change in direction in the UK.
This article was supplied by Baines and Ernst – one of the leading providers of debt advice services in the UK. They help people to get back in control of their finances and get out of debt.