The G20 group of leading economies could face a shortfall of 40 million jobs next year, with worse to come, without international co-operation to boost employment, the International Labour Organisation warned yesterday.
The ILO made its forecast as markets remained volatile over fears about a Greek default and a global economic slowdown. Pimco, one of the world's most powerful investment funds, added to the sense of crisis by predicting that developed economies would grind to a halt in coming months.
The ILO said employment in the G20 would need to grow by at least 1.3 per cent a year by 2015 to recover the 20 million jobs lost since 2008. However, the slowdown in the global economy and already anaemic growth in many G20 countries suggests employment growth could be less than 1 per cent a year, the ILO said in a paper to be presented to G20 employment ministers meeting in Paris.
Job creation of 0.8 per cent a year is "a distinct possibility" and would double the jobs shortfall from the start of the crisis to 40 million by the end of this year, with a far bigger shortage to come by 2015, the ILO said in a study compiled with the Organisation for Economic Cooperation and Development.
The ILO's director general, Juan Somavia, said: "We must act now to reverse the slowdown in employment growth and make up for the jobs lost. It's absolutely essential to give priority to decent work, and to investment in the real economy, and for this to happen we need determined global co-operation."
He called for a return to pledges made at G20 summits in Pittsburgh and Seoul in 2009 and 2010 to boost job creation. The ILO said unemployment stood at 200 million worldwide and that job creation was up against increases in the working-age population. It warned that the longer the crisis went on the greater would be the damage caused by youth unemployment and long-term exclusion from the workforce.
The ILO's warning came as Pimco, the world's biggest bond fund, forecast that developed economies would stagnate over the next year with reduced activity in once-booming emerging markets.
The fund's influential chief executive, Mohamed El-Erian, told Bloomberg: "For the next 12 months the global economy will slow materially, with advanced economies struggling to grow much above zero."
Markets gyrated wildly yesterday as traders digested news from the weekend's meeting of G20 finance ministers in Washington.
Gold, for so long a haven for the fearful, fell heavily as investors put their money into cash in preparation for turbulence that would follow a Greek default. Platinum fell by more than 3 per cent to its lowest level since May last year, while palladium, which is also used in the manufacture of catalytic converters, fell to its lowest since last October.
Crude oil and base metals also fell in early trading but oil prices recovered later in the day along with European share prices after a German survey of business sentiment was more upbeat than expected.
The FTSE 100 rose 0.45 per cent, while the Euro Stoxx index gained 2.8 per cent. Shortly after midday in New York, the Dow Jones Industrial Average was up 1.4 per cent.Reuse content