• by Thalif Deen (united nations)
• Tuesday, December 07, 2010
• Inter Press Service

The global economic recovery is being stymied by a hefty rise in unemployment in industrial economies, including the United States, Japan and Western Europe, according a new U.N. report released here.

The lack of remunerative employment growth - and the loss of at least 30 million jobs between 2007 and 2009 - 'is probably the weakest link in the recovery', it says.

The study, titled 'World Economic Situation and Prospects 2011' (WESP) released by the Department of Economic and Social Affairs (DESA), says only a few developed economies, such as Australia and Germany, have seen a discernable improvement in labour markets.

Rob Vos, director of DESA's Development Policy and Analysis Division, told IPS that unemployment rates in developed countries did not come down in 2010, and in some cases, such as the United States and Japan, actually increased.

'We expect unemployment rates in developed economies to remain high during 2011 and 2012, at best only slightly declining from 2010 levels in the baseline scenario,' he added.

The U.S. Labour Department said last week the outlook for the labour market looks 'bleak'.

In the United States, over 15 million people are out of work - and among them about 6.3 million have been jobless for six months or longer.

In its report released last week, DESA points out the longer term employment consequences of the present financial crisis are already becoming visible. 'Workers have been without a job for more time, and in some countries, youth unemployment has reached alarming heights,' it says.

The global economy will need to create at least another 22 million new jobs in order to return to the pre-crisis level of global employment, according to the study.

Dean Baker, co-director of the Washington-based Center for Economic and Policy Research, told IPS the United States has to create at least 90,000-100,000 jobs a month just to keep the unemployment rate from rising.

It is almost certainly not growing at this rate at present, he said.

In 2011, however, the stimulus will be substantially weakened. In addition, state and local governments are making substantial cutbacks because of serious deficits. And housing prices are beginning to fall again, he pointed out.

'All of these factors will be a drag on growth. So, I expect the unemployment rate to rise somewhat in the year ahead,' Baker predicted.

Still, says Vos, in many developing countries unemployment rates have come down more quickly as a result of a much stronger economic recovery and employment is back up to pre- crisis levels. For example, many jobs lost in manufacturing and construction have since been recovered.

At the same time, he said, many unemployed (or their spouses) sought work in informal activities typically at much less pay and without any job security. So, the employment recovery in developing countries in part took the form of more vulnerable employment.

'The world needs to recover at least another 22 million of the jobs that were lost during the crisis, but at the present speed of job creation (especially with the sluggishness of output growth in developed economies) this may take another four or five years,' he cautioned.

'Hence, as we point out in the WESP, additional measures will need to be taken to strengthen the recovery in particular through measures that more directly will support jobs creation,' Vos declared.

According to the study, some of the developing nations where employment levels were back to pre-crisis levels include Argentina, Brazil, Chile, Colombia, Egypt, Mexico, Peru, the Philippines and Turkey.

With recovery in production, employment has also started to rebound in economies in transition, including Belarus, Russia and Kazakhstan.

In East Asia, the strong economic growth in the first half of 2010 - particularly in the manufacturing, construction and service sectors - was reflected in a visible decline in unemployment rates in that region.

Asked if Brazil, India and China will continue to drive the global recovery next year, as they did in 2010, Vos told IPS, 'Yes, the major emerging economies will continue to drive the global recovery in the near outlook'.

He said growth prospects for India and China in particular remain strong, though their economic rebound will weaken somewhat as the growth recovery in the advanced countries is weakening.

'If tensions in currency markets persist and would escalate, however, also their growth performance may be affected more through greater turbulence in financial markets and possible retreats of countries into greater protectionism,' he warned.

© Inter Press Service (2010) — All Rights Reserved. Original source: Inter Press Service

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