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Tags: Eurozone | Unemployment | jobs | labor

Report: Eurozone Unemployment Could Soar to 22 Million People

By    |   Wednesday, 11 July 2012 10:36 AM EDT

The International Labor Organization (ILO) warned European leaders to invest in their economies and make job creation a top priority or unemployment in the region could reach nearly 22 million during the next four years.

The report warned eurozone unemployment now stood at 11 percent, representing a total 17.4 million people. It warned a further 4.5 million were at risk.

“This would risk further feeding social unrest and eroding citizen’s confidence in national governments, the financial system and European institutions,” the report stated.

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown

The window of opportunity to address the societal effects of the crisis is closing, according to the report.

“It’s not only the eurozone that’s in trouble, the entire global economy is at risk of contagion,” said Juan Somavia, ILO’s director-general.

Overall unemployment was 11 percent at the end of April, representing 17.4 million individuals. Unemployment rates have reached historical highs in the three “program countries” — Greece, Ireland and Portugal, while Germany and Malta are the only countries in the area where the unemployment rates are lower than they were in 2008.

Unemployment has increased in more than half of the 17 countries in the eurozone since 2010, with youth being particularly impacted. The unemployment rate for individuals aged 15 to 24 years was 22 percent. In Greece and Spain, the rate of unemployment for youth was more than 50 percent.

The report noted that there is increasing awareness that while fiscal austerity will affect employment, it will fail to cut fiscal deficits significantly.

Fiscal austerity included sharp cuts in public investment and in pro-employment programs, thereby decreasing domestic demand. However, this decline in demand has not been met by the expected increase in exports to help stimulate growth, The Wall Street Journal reported.

"The austerity approach has sidelined the much-needed reform of the financial system, the epicenter of the crisis. Indeed, action on this front has proceeded slowly," the report stated.

The report called for a move from the austerity trap and recommended promoting investment and supporting jobseekers, repairing the financial system conditional on resuming credit to small firms and addressing differences in competitiveness between eurozone countries.

“Unless targeted measures are taken to increase real economy investments, the economic crisis will deepen and the employment recovery will never take off,” Somavia noted. “We also need a global consensus on a new path for job-intensive growth and globalization. This is a major leadership responsibility of the United Nations, the Bretton Woods system and the G-20.”

While there is greater coordination among the EU countries following the eurozone summit last month and the European Commission’s proposed Action for Stability, Growth and Jobs and the Employment Package, these need to be followed by solid policy action.

“It is not easy to agree on such a concerted strategy, given the different country positions,” said Raymond Torres, head of the ILO’s International Institute for Labor Studies and lead author of the report.

“However, without a prompt policy turn to regain the trust and support of workers and enterprises, it will be difficult to implement the reforms necessary to put the eurozone back on a path of stability and growth.”

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown

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Wednesday, 11 July 2012 10:36 AM
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