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THE ISSUE (ON THE LEFT): Closing unemployment gap a daunting task

International Labour Organisation

THE ISSUE (ON THE LEFT): Closing unemployment gap a daunting task

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Is unemployment still a major concern?

The world economy continues to expand at rates well below the trends that preceded the advent of the global crisis in 2008 and is unable to close the significant employment and social gaps that have emerged. That challenge of bringing unemployment and under-employment back to pre-crisis levels now appears as daunting a task as ever, with considerable societal and economic risks associated with this situation. The global employment outlook will deteriorate in the coming five years.

Over 201 million people were unemployed in 2014 around the world, over 31 million more than before the start of the global crisis. And, global unemployment is expected to increased by three per cent in 2015 and by a further eight million in the following four years. The global employment gap, which measures the number of jobs lost since the start of the crisis, currently stands at 61 million. If new labour market entrants over the next five years are taken into account, an additional 280 million jobs need to be created by 2019 to close the global employment gap caused by the crisis.

Youth, especially young women, continue to be disproportionately affected by unemployment. Almost 74 million young people (aged 15 to 24) were looking for work in 2014. The youth unemployment rate is practically three times higher than is the case for their adult counterparts. The heightened youth unemployment situation is common to all regions and is occurring despite the trend towards improvement in educational attainment, thereby fuelling social discontent. There is a reversal across regions in the employment outlook.

Job recovery is proceeding in advanced economies taken as a group – though with significant differences between countries. Unemployment is falling, sometimes retrieving pre-crisis rates, in Japan, the United States of America and some European countries. In southern Europe, unemployment is receding slowly, though from overly high rates. By contrast, after a period of better performance compared to the global average, the situation is deteriorating in a number of middle income developing nations and economies, such as Latin America and the Caribbean, China, the Russian Federation and a number of Arab countries. The employment situation has not improved much in sub-Saharan Africa, despite better economic growth performance until recently.

In most of these countries, under-employment and informal employment are expected to remain stubbornly high over the next five years. Rising inequalities have also undermined trust in government, with a few exceptions. Confidence in government has been declining particularly rapidly in countries in the Middle East and North Africa region, but also in the advanced economies, East Asia and Latin America. Falls of such nagnitude, in particular if they accompany stagnant or declining incomes, can contribute to social unrest.

Social unrest has gradually increased as joblessness persists. Social unrest tended to decline before the global crisis and has increased since then. Countries facing high or rapidly rising youth unemployment are especially vulnerable to social unrest. This turbulent picture can be changed provided that the main underlying weaknesses are tackled.

Aggregate demand and enterprise investment need to be bolstered, including through well designed employment, incomes, enterprise and social policies. Credit systems should be reoriented to support the real economy, notably small entereprises. The weakness in the euro area also needs to be addressed with conviction. And inequalities must be addressed through carefully designed labour market and tax policy.