2009 world unemployment could rise by 40 million, says UN

The global economic downturn could see 40 million more people lose their jobs by the end of the year, taking the unemployment rate to its highest in a decade, the U.N. labor agency said Wednesday.

The number of unemployed in 2009 will largely depend on how effective governments' economic stimulus measures are, the International Labor Organization cautioned.

Worldwide unemployment by the end of the year will range between 210 million and 230 million people, the agency said in its annual Global Employment Trends report.

That is a marked increase on the 179 million who were unemployed at the end of 2007 and the estimated 190 million at the end of 2008, the ILO said.

The worst case scenario assumes growth slows rapidly and that an economic recovery will be delayed into 2010.

This would boost the global unemployment rate to 7.1 per cent, a decade high and well above the 2007 rate of 5.7 per cent and estimates for a 2008 rate of 6 per cent. Over the last ten years, the rate has ranged from 5.7 per cent to a peak of 6.3 in 2003 and 2004.

ILO Director-General Juan Somavia said that although many governments have started to support their economies, ``more decisive and coordinated international action is needed to avert a global social recession.''

``Progress in poverty reduction is unraveling and middle classes worldwide are weakening,'' he said.

The latest predictions are based on an economic growth forecast of 2.2 per cent, published by the International Monetary Fund in November and expected to be adjusted downwards.

``Unemployment will rise with a downward revision, but I believe it will still fall within the range,'' said Lawrence J. Johnson, who heads the ILO's employment trends unit.

The report had originally forecast world unemployment would range between 198 million and 230 million people, but Somavia said the lowest estimate has probably been overtaken by events.

If the worst case scenario materializes, around 200 million more people would become working poor, unable to earn more than $2 per person a day.

In this outlook, the total number of working poor would be 812 million, or 26.8 per cent of the world's work force, the report said, using poverty estimates by the World Bank.

In 2007, some 609.5 million were working poor, 20.6 per cent of the world's work force at the time.

In addition to fiscal and monetary interventions, the world economy also needs creative measures improving the social situation of workers, the report said.

``There is a need to focus measures on vulnerable groups in the labor market, such as youth and women, who are most likely to be pushed into poverty and find themselves trapped there for many years,'' it said.

Governments should give special attention to small and medium companies because they provide the bulk of jobs and are most affected by the financial crisis, the report said.

Agencies

World jobless total could rise by 25 million?

The global economic crisis will push up unemployment by up to 25 million by 2010, the OECD head forecast on a 'truly scandalous failure' of regulatory supervision.

"We're heading for a loss of between eight and 10 million jobs in the OECD area... and 20 to 25 million in the world as a whole between now and 2010," Angel Gurria said on France's BFM radio.

The International Labour Organisation earlier forecast that the number of global unemployed could go up by 20 million to reach a record high point of 210 million people by the end of 2009.

The Organisation for Economic Co-operation and Development in Paris brings together 30 countries, including all the world's industrialised economies. The group conducts research and publishes economic forecasts.

Gurria also said that European countries should spend more in stimulus plans to kickstart their economies and suggested that the European Central Bank should lower interest rates because of falling inflation.

The European Union should "go beyond" the fiscal stimulus plans already announced, equivalent to around 1.4 percent of GDP, since "all the other major countries are going beyond that," Gurria said.

He also said that the OECD economies were in recession in the current quarter and would remain so for at least the first two quarters of 2009, with many countries being in recession for most of 2009.

"We predict a recovery at the end of 2009 and weak growth in 2010" he said.

Commenting on the build-up to the crisis, Gurria said there had been "a truly scandalous failure of regulation... and supervision", and poor risk management and corporate governance by companies.

Meanwhile there was fresh movement to stop the meltdown, with a decision by US president-elect Barack Obama to add 500,000 jobs to a 2.5-million-job creation goal to kickstart the world's biggest and ailing economy.

Vice president-elect Joseph Biden also confirmed the Obama team was working on a second economic stimulus package. According to US media, they want to craft a package worth between 675 and 775 billion dollars over two years.

In Europe, the Irish government said it was injecting 5.5 billion euros (7.6 billion dollars) to recapitalise three major banks: Anglo Irish Bank, Bank of Ireland and Allied Irish Banks.

British Prime Minister Gordon Brown promised to create at least 100,000 new jobs through a 10-billion-pound investment in infrastructure, in a newspaper interview.

The Bank of England's deputy governor John Gieve said in an interview with BBC television that the bank under-estimated how serious the credit crunch would be even though it knew that "crazy borrowing" was taking place.

Gieve said the Bank of England had predicted a correction as far back as two years ago but he added: "We didn't think it was going to be anything like as severe as it turned out to be."

Source: Economic Times