tries in Africa, Asia, the Americas and Eastern Europe as being “highly vulnerable” to the adverse effects of the global recession in 20092.
The collapse in world trade is driving the global recession, with coun- tries dependent on export markets experiencing the largest falls in GDP. This is essentially due to the decline in global demand, rather than the introduction of trade restrictions. Any attempt to reduce wages to main- tain competitiveness runs the risk of further reducing global demand and contributing to general deflation and must be resisted. The correct response is effective coordinated international action aimed at expanding demand – not ‘beggar thy neighbour policies’.
10 Labour markets are at the vortex of the crisis. Unemployment has continued to surge and rates are projected to rise to double figures for the OECD as a whole by the end of the year and to remain at this level during 2010 and 2011. Youth, in particular, are being hit with youth unemploy- ment rates of over 20 percent in many G20 countries. It is likely that those young people who left schools and colleges this summer risks will be condemned to economic inactivity.
Lessons from past financial crises show that labour markets lag behind economic recovery. They also show that significant increases in, particu- larly long-term, unemployment are extremely difficult to reverse. These point to the risk of prolonged labour market recession. The ILO estimates that unemployment could increase by up to 59 million worldwide by the end of 20093. Over 200 million workers could be pushed into extreme povert , mostly in developing and emerging countries where there are no social safety nets, meaning that the number of working poor, earning below 2 USD per day for each family member, may rise to 1.4 billion. This will disproportionately affect women, who constitute 60 percent of the world’s poor.
12 Given the spectre of a persistent jobs crisis there is an urgent need for a far more coherent and internationally co-ordinated jobs-orientated recovery strategy than that which has been put on the table so far. The global trade union movement is gravely concerned that fiscal stimulus packages to date are inadequate in size, imbalanced geographicall , insufficiently focused on labour issues and are being implemented too slowly4. According to OECD and ILO reviews of responses to the crisis in over 40 countries, the fiscal stimulus measures still do not sufficiently focus on employment and social protection. Moreover, they have failed to tackle the lack of social protection and the dramatic decline in individual wealth held in pensions. The effects of the crisis are being felt most by those whose pensions fall under un-protected ‘defined contribution’ schemes that provide no pension security at the age of retirement5.
13 Furthermore, the quality of jobs created matters. The expansion of precarious forms of work and deregulation of the labour market are not the answer to the employment crisis – the insecurity of working people over
2 3 4 5
IMF, The Implications of the Global Financial Crisis for Low-Income Countries, 2009. ILO, Global Employment Trends Update, May 2009. ILO-IILS (ed.), The Financial and Economic Crisis: A Decent Work Response, Geneva 2009, p. 8. OECD, Private Pensions Outlook 2008.