January 27, 2015

Global unemployment to rise over next five years

The number of people out of work will continue to rise over the next five years, according to a new report.

The International Labour Organisation’s (ILO) latest World Employment and Social Outlook Trends report estimates that, by 2019, the number of unemployed people globally will have risen from 201m to 212m.

Employment prospects are improving in the United States and Japan, but most other advanced economies, in Europe for example, are facing further stagnation.

Young workers aged 15-24 were particularly affected by the economic crisis, while older workers have fared relatively well. The global youth unemployment rate stands at around 13%, and this is set to increase in the near future.

The report cites inequality and uncertain prospects for enterprise investment as the main barriers preventing countries from recovering from the economic crisis. It notes that the declining labor supply caused by aging populations has also impacted upon global growth.

The ILO’s director-general Guy Ryder has commented: "If low wages lead people to consume less, and investment remains subdued, this obviously has a negative impact on growth. Income inequality in some advanced economies now approaches levels observed among emerging economies."

Writing for IZA World of Labor, Edward P. Lazear says that policy responses to unemployment should depend on specific causal factors. While cyclical unemployment is likely to respond well to monetary policies, structural unemployment requires more targeted economic tools.

Meanwhile, Robert Moffitt writes about how to design unemployment benefits. He discusses how such programs can stabilize economies during recessions, by helping to maintain consumption rates and encouraging workers to take important jobs.

Read the report here.