By Daniel Hunter

Despite signs that economic growth has resumed in some regions, the global employment situation is alarming and shows no sign of recovery in the near future, says the International Labour Organization (ILO).

The ILO’s “World of Work Report 2012: Better Jobs for a Better Economy” says that around 50 million jobs are still missing compared to the situation that existed before the crisis. It also warns that a new and more problematic phase of the global jobs crisis is emerging.

First, this is due to the fact that many governments, especially in advanced economies, have shifted their priority to a combination of fiscal austerity and tough labour market reforms. The report says such measures are having devastating consequences on labour markets in general and job creation in particular. They have also mostly failed to reduce fiscal deficits.

The narrow focus of many Eurozone countries on fiscal austerity is deepening the jobs crisis and could even lead to another recession in Europe”, said Mr. Raymond Torres, Director of the ILO Institute for International Labour Studies and lead author of the report.

Countries that have chosen job-centred macroeconomic policies have achieved better economic and social outcomes”, added Mr. Torres. “Many of them have also become more competitive and have weathered the crisis better than those that followed the austerity path. We can look carefully at the experience of those countries and draw lessons.”

Second, in advanced economies, many jobseekers are demoralized and are losing skills, something which is affecting their chances of finding a new job. Also, small companies have limited access to credit, which in turn is depressing investment and preventing employment creation. In these countries, especially in Europe, job recovery is not expected before the end of 2016 — unless there is a dramatic shift in policy direction.

Third, in most advanced economies, many of the new jobs are precarious. Non-standard forms of employment are on the rise in 26 out of the 50 economies with available information.

There are, however, a few countries that managed to generate jobs while improving the quality of employment, or at least one aspect of it. For example, in Brazil, Indonesia and Uruguay employment rates have increased while the incidence of informal employment has declined. This was mainly due to the introduction of well-designed employment and social policies.

Fourth, the social climate has aggravated in many parts of the world and may entail further social unrest. According to the report’s Social Unrest Index, 57 out of 106 countries with available information showed a risk of increased social unrest in 2011 compared to 2010. The two regions with the largest increases are Sub-Saharan Africa and the Middle East and North Africa.

The report says that fiscal austerity combined with labour market deregulation will not promote employment prospects in the short term. In general, there is no clear link between labour market reforms and higher employment levels. Moreover, some recent reforms — especially in Europe — have reduced job stability and exacerbated inequalities while failing to create jobs.

However, the report argues that if a job-friendly policy-mix of taxation and increased expenditure in public investment and social benefits is put in place, approximately 2 million jobs could be created over the next year in advanced economies.

Join us on
Follow @freshbusiness