Slow growth in advanced economies risks transforming high long-term unemployment rates into structural unemployment, a group of international economic organisations warned on Monday. According to a study by the International Labour Organisation and the Organisation for Economic Co-operation and Development, "the large increase in long-term unemployment is of particular concern because of the increased risk that many workers will become structurally unemployed."
"In previous recessions, this was the main channel through which a cyclical increase in unemployment in many advanced countries was transformed into persistently high unemployment rates that took many years to unwind," it warned. The study showed that in the first quarter of 2011 around 40 percent of the unemployed in France, Spain and Japan had been jobless for over a year. The figure stood at 47.3 percent for Germany, 50 percent for Italy, and 68.3 for South Africa.
It also said that among G20 countries where data is available, long-term unemployment increased the most rapidly in Canada, Spain and Britain, but without giving figures. In the United States, it said, "the share of long-term unemployment tripled to reach an historical high in early 2011."
Long-term unemployment, it warned "is associated with an increased risk of poverty, health problems and school failure for children of the affected individuals," adding that the number of unemployed was higher by 20 million in G20 countries than at the beginning of the current economic crisis in 2008.
The study added that annual employment growth in G20 economies would have to be at least 1.3 percent per year to return to the pre-crisis employment rate by 2015. "This would generate some 21 million additional jobs per year, recover the jobs lost since 2008 and absorb the increase in the working age population," it said.
Although such objectives are feasible, it said that "employment growth of less than one percent cannot be excluded given the slowdown of the world economy and the anaemic growth foreseen in several G20 countries." "Should employment grow at a rate of 0.8 per cent until end 2012, now a distinct possibility, then the shortfall in employment would increase by some 20 million to a total of 40 million in G20 countries." Although the report gave few policy proposals, ILO Director-General Juan Somavia urged G20 leaders to invest in job-creation schemes in a press release. "Employment creation has to become a top macroeconomic priority," he said.
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