Job Market Remains the Major Challenge

Signs are once again pointing to a recovery of the world economy. But this is of limited validity for the job market. In its "World of Work Report 2012" presented in Geneva at the beginning of May 2012, the International Labour Organisation (ILO) predicts that employment in industrialised nations will only recover to the pre-crisis level in 2016 – assuming that the growth trend does not weaken.

The 2008 banking crisis had a significant impact on the job market. Gaining a foothold in the job market has therefore become more challenging for youth in most countries. Long-term unemployment has increased virtually everywhere as well. As a result of the crisis, the gap between rich and poor is also widening in half of the industrialised nations and one-third of developing countries. According to an index developed by the ILO, this results in a higher risk of social unrest – especially in Africa and the Middle East. On the other hand, this risk fell in countries that were not only successful with employment policies in quantitative terms but were also able to improve the quality of jobs, at least in part. According to the ILO, this was the case in several Asian and Latin American countries in particular.

Increases in the employment rate varied between countries. Here the report highlights the success of Poland, Brazil, Indonesia, Austria and Germany in particular. But this praise is not without reservations. In many cases, new jobs were only created for a limited time or on an involuntary part-time basis. Job market success due to strong exports is acknowledged for Germany, but the downsides of the growing low-wage sector and the increase in atypical employment relationships are also clearly identified. As a short-term measure to counteract recession tendencies, the ILO demands that productivity improvements which are achieved also need to be reflected in the development of wages.

Raymond Torres, Director of the ILO Research Institute and author of the report, is especially concerned about the risk of slipping into another recession. He identifies the one-sided emphasis on cost reduction measures in the Eurozone as the cause for a possible renewed employment crisis. On the other hand, he praises economic policies that promote employment: "Countries that decided in favour of an employment-oriented economic policy have achieved better economic as well as social results. We need to look at these countries in detail and learn from them."

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