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Europe's austerity measures worsen jobs crisis, ILO report says

People stand in line to enter a government-run employment office in Madrid April 27, 2012.


In a scorching indictment of debt-driven austerity, the International Labour Organization says government cuts are sending global joblessness higher and threatening much of Europe with a return to recession.

The Geneva-based United Nations agency said the ranks of the world's unemployed will hit 202 million this year, up from 196 million at the end of 2011, and rise again in 2013 – an outlook it characterizes as "alarming."

There are still 50 million fewer jobs than when the financial crisis hit in 2008, and the global economy isn't growing quickly enough to replace those jobs and absorb the roughly 80 million workers entering the labour market over the next two years, according to the ILO's 128-page World of Work 2012 report.

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"This is not a normal employment slowdown," the report concludes. "Four years into the global crisis, labour market imbalances are becoming more structural, and therefore more difficult to eradicate."

The unemployment rate has risen in two-thirds of euro zone countries since 2010, the report notes, and job growth has stalled in other advanced countries, including the United States and Japan.

"The global employment situation is alarming and shows no signs of recovery in the near future," the ILO said.

The global unemployment rate is expected to reach 6.1 per cent this year and 6.2 per cent in 2013, up from an estimated 3 per cent for 2011, according to ILO forecasts.

Raymond Torres, the report's lead author, reserved his harshest criticism for Europe, where he said cutting deficits "at all costs" to appease financial markets is making the jobs crisis worse.

"Austerity has not produced more economic growth," he told reporters in Geneva.

Fiscal austerity combined with labour market reforms have had "devastating consequences" for employment while mostly failing to cut deficits, according to the report.

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Governments risk fuelling social unrest unless they combine austerity with job creation, said Mr. Torres, a French economist and director of the ILO's International Institute for Labour Studies.

"The austerity and regulation strategy was expected to lead to more growth, which is not happening," he said. "The strategy of austerity actually has been counterproductive from the point of view of its very objective of supporting confidence and supporting the reduction of budget deficits."

The early evidence suggests that lower deficits haven't led to greater private investment and growth, as many experts had predicted.

The ILO pointed out that even in countries such as Canada, where the job market has largely rebounded from the recession, employment is becoming "more unstable and precarious."

As in many advanced countries, Canada is seeing workers forced into part-time and temporary jobs because nothing else is available, as well as rising rates of self-employment.

This job instability is both a "human tragedy" for workers and their families and a squandering of productive capacity that could have enduring effects, the ILO said.

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"More job instability means weaker productivity gains in the future and less room for prospering and moving up the career ladder," the report says.

The report also points out that Canada is among countries where poverty, income inequality, and non-standard employment have risen since 2007.

The ILO report recommends an alternative policy approach, including linking wage gains to productivity; higher minimum wages; taxes on companies that do not reinvest their profits; and a better balance between austerity and job creation.

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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