Will AFL-CIO’s Trumka, Obama Lecture Us From A French Resort?
The two events seem to crystallize the irony of the global economic moment. The AFL-CIO’s Richard Trumka along with International Labour Organization leaders from around the world are convening alongside Barack Obama and world leaders for the G-20 summit. Where? In the French resort of Cannes, known as a playground for the rich and famous. Here we have elected officials reliant on the people they represent for their income, and who on a weekly, if not daily basis disparage the rich and famous lining up to do just that again. But in Cannes? Really? We’re going to hear all about Wall Street reform, millionaires, and billionaires who are failing the macro economy from the bully pulpit at a French resort?
This at a time when many fear the world is teetering on the edge of another recession? Enough with the rhetoric. Here are some facts to chew on and then wash down with your champagne.
Today, the International Labour Organization warned that the world is on the brink of a new and deeper jobs recession, and that it could take 5 years before employment returns to pre-recession levels.
In a grim analysis issued on the eve of the G20 leaders summit, the International Labour Organization (ILO) says the global economy is on the verge of a new and deeper jobs recession that will further delay the global economic recovery and may ignite more social unrest in scores of countries.
The new “World of Work Report 2011: Making markets work for jobs” says a stalled global economic recovery has begun to dramatically affect labor markets. It will take at least five years to return employment in advanced economies to pre-recession levels, one year later than projected in last year’s report. Key takeaways include.
- Approximately 80 million net new jobs will be needed over the next two years to re-attain pre-crisis employment rates (27 million in advanced economies and the remainder in emerging and developing countries).
- Out of 118 countries with available data, 69 countries show an increase in the percentage of people reporting a worsening of living standards in 2010 compared to 2006.
- Respondents in half of 99 countries surveyed say they do not have confidence in their national governments.
- In 2010, more than 50 per cent of people in developed countries report being dissatisfied with the availability of decent jobs (in countries such as Greece, Italy, Portugal, Slovenia, and Spain, more than 70 per cent of survey respondents reported dissatisfaction).
- The share of profit in GDP increased in 83 per cent of the countries analyzed between 2000 and 2009. Productive investment, however, stagnated globally during the same period.
- In advanced countries, the growth in corporate profits among non-financial firms was translated into a substantial increase in dividend payouts (from 29 per cent of profits in 2000 to 36 per cent in 2009) and financial investment (from 81.2 per cent of GDP in 1995 to 132.2 per cent in 2007). The crisis reversed slightly these trends, which resumed in 2010.
- Food price volatility doubled during the period 2006-2010 relative to the preceding five years, affecting decent work prospects in developing countries. Financial investors benefit more from price volatility than food producers, especially small ones.
- The report features a new “social unrest” index that shows levels of discontent over the lack of jobs and anger over perceptions that the burden of the crisis is not being shared fairly.
- In over 45 of the 119 countries examined, the risk of social unrest is rising. This is especially the case in advanced economies, notably the EU, the Arab region and to a lesser extent Asia.
- There is a stagnant or lower risk of social unrest in Sub-Saharan Africa and Latin America.
- The study shows that nearly two-thirds of advanced economies and half of emerging and developing economies with recent available data are once again experiencing a slowdown in employment.
- Global unemployment is at its highest point ever, surpassing 200 million worldwide.
The report cites three reasons why the ongoing economic slowdown may have a particularly strong impact on employment:
- As compared to the start of the recession, businesses are now in a weaker position to retain workers.
- As pressure to adopt fiscal austerity measures mount, governments are less inclined to maintain or adopt new job and income support programs.
- Countries are left to act in isolation due to lack of international policy coordination.
The report calls for maintaining and in some cases strengthening pro-employment programs, warning that efforts to reduce public debt and deficits have often disproportionately focused on labor market and social measures. For example, it shows that increasing active labor market spending by only half a per cent of GDP would increase employment by between 0.4 per cent and 0.8 per cent, depending on the country.
The study also calls for supporting investment in the real economy through financial reform and pro-investment measures.
Finally, it says that the adage that wage moderation leads to job creation is a myth, and calls for a comprehensive income-led recovery strategy. This would also help stimulate investment while reducing excessive income inequalities.