The International Labour Organisation (ILO) has warned that unemployment in the eurozone could increase by 4.6 million to 22 million unless European governments come together to focus on jobs rather than cuts.
The ILO says that even countries such as Germany, Austria, Belgium and Malta, that have seen an increase in job creation since 2008 could be affected.
The ILO report says: “without a shift in policy direction all countries in the Eurozone – both those currently under stress and their healthier counterparts – will suffer.”
Its report entitled, “Eurozone job crisis: trends and policy responses” also warns that if the 17-country eurozone suffers then it will impact on the rest of the global economy.
The ILO recommends that shareholders should fund bank bailouts and that any financial support to the banks should be given on the condition that banks lend to small businesses.
The ILO believes individual European countries need to focus on job creation but that it is not just down to European leaders to take measures. The report calls on the G-20 bloc and the International Monetary Fund (IMF) to show leadership in focusing on “a new path for job-intensive growth and globalization.”
Raymond Torres, lead author of the report acknowledged the difficulties of getting an agreement between different countries but warned, "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.”
ILO director-general Juan Somavia said: "Unless targeted measures are taken to increase real economy investments, the economic crisis will deepen and the employment recovery will never take off."
The report emphasizes the damage being done to young people across the continent by the lack of jobs. Youth unemployment for 16-24-year-olds has increased by 50 per cent in Europe since 2008, up from a rate of 15 per cent to 22.4 per cent to reach 5.5 million.
The ILO says that all unemployed young people should be given training, education or work placements.
The report warns that more than one-third of people of working age are either unemployed or excluded from the labour market in the eurozone and that long-term unemployment is rising. Total unemployment in the eurozone has reached 17.56 million, the highest level since records began in 1995.
The ILO believes unemployment levels could be worse but many companies are holding on to experienced workers so that they are ready to capitalise when the recovery comes. However, the ILO says, “If their expectations don’t come true, worker retention may become unsustainable, leading to significant jobs losses.”
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