Global unemployment could rise by 50 million
Updated
A new report suggests unemployment could rise by up to 50 million worldwide and by up to 27 million people in the Asia Pacific.
The Global Employment Trends report was released by the International Labour Office and calls for more 'decisive and coordinated' international action to avert a global social recession.
Presenter: Sen Lam
Speaker: Steve Kapsos, regional economist with the International Labour Office, in Bangkok
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LAM: Your report suggests unemployment could rise by up to 50 million worldwide and in the Asia Pacific alone it could be up to 27-million people. These are quite alarming predications, do you really expect that it will get that bad?
KAPSOS: Well unfortunately, the data coming in it's starting to look like the situation is moving toward our more pessimistic scenarios. We had a range of 18 to 51 million for an increase in global unemployment. The 18 million was actually based on the previous IMF gdp growth forecasts, and as your report just showed, those growth forecasts have now come down. So we're looking at now our most likely scenario at about 30 million additional unemployed in 2009 versus 007.
LAM: Well the region - South Asia, Southeast Asia, East Asia accounted for most of the world's job growth last year. Would that offer some kind of buffer, any kind of protection against this downturn?
KAPSOS: A lot of that job growth in Asia is really demographics at play. Asia's a very young region, particularly the developing economies in Asia, so a lot of it is just demographics, population growth, labour force growth. The question there is really what types of jobs are being created? Are they high value added jobs, high productivity, well-paid, or are they basically subsistence jobs, and in Asia there's quite a few millions of jobs that are at the subsistence level.
LAM: And Steve which industries are most vulnerable?
KAPSOS: Well the export oriented industries right now are being hard hit. Those economies in Asia, such as Singapore that are very export dependent were the ones to really be hit first by this crisis. But it's moving into other industries as well. Indonesia's growth is coming down now even though Indonesia has a very large domestic market. So it's moving through the economy.
LAM: The ILO has called for more decisive and coordinated international action to avert a global social recession. What needs to be done Steve?
KAPSOS: Well we've seen an unprecedented response by governments. First they tried to stop the bleeding; they tried to keep the patient alive by freeing up the credit environment. Now we're moving to the monetary and fiscal packages, and what we really want to focus on are the fiscal packages, making sure that they have an explicit jobs component. We need to support aggregate demand, that means investing in infrastructure, that means supporting low income workers through unemployment benefits and the like. So really ensuring that we can foster a sustainable recovery.
LAM: There is a G20 meeting scheduled for April. What policies would you like to see come out of that meeting?
KAPSOS: Really global coordination, making sure that the package that comes out of the United States in terms of the fiscal stimulus is going to have knock-on effects in other economies. Packages out of Japan, out of Australia will impact other economies. We need more coordination among countries in this regard.
