Fiscal austerity worsens job situation

The ILO’s ‘World of work report 2012: better jobs for a better economy’, said that nearly 50 million jobs have gone “missing” since the beginning of the world financial crisis in 2008 and that “Austerity has, in fact, resulted in weaker economic growth, increased volatility and a worsening of banks’ balance sheets, leading to a further contraction of credit, lower investment and, consequently, more job losses.”

This highlights the fact that decreased government spending is worsening the jobs situation, governments should be spending their budgets on strategies which will stimulate the economy and hopefully foster job creation rather than just making cuts wherever they can. It needs to be recognised that sometimes the expression of ‘spending money to make money’ is true and especially in our current situation the global market needs proactive strategies that will enable a change in unemployment patterns and not a ‘sit back and hope for the best’ type of approach where it seems some governments are merely observing worsening situations within their countries.

The report recommends adopting a “growth and jobs-oriented” work plan to help reduce the deficit, comprising of increased public spending and taxation. It says that this could result in the creation of 1.8 million-2.1 million jobs in one or two years. Actions such as this proposed strategy will be vital if we stand any chance of creating the necessary 6 million jobs required to account for the global deficit of unemployed people and future labour market participants.

As well as the focus on increased spending to aid job creation the report recommends that developed economies should be supporting their unemployed citizens. It is suggested that unemployed people are becoming demoralised and are losing skills, with many moving from the active employment seeking labour market to the inactive sector. This could be potentially dangerous for economies as it could lead to a decrease in labour market participants and a lessened skill set in those who are participating. If this sector of people are targeted and initiatives are taken to boost job seeking motivation and skill development, it could create a much healthier global labour environment by utilising people who are currently not significantly contributing to the economy.

The UN agency does not expect a turnaround on the job front in Europe and other advanced economies before end-2016 and if no action is taken it could be even longer, leaving Europe in a precarious situation which they say ‘could lead to another recession’.

http://www.egovmonitor.com/node/49817

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