Monday 16 February 2009

Unemployment surges worldwide

Global job losses could hit 50 million by the end of 2009, says the ILO

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Guanyu said...

Unemployment surges worldwide

Global job losses could hit 50 million by the end of 2009, says the ILO

New York Times
16 February 2009

(PARIS) From lawyers in Paris to factory workers in China and bodyguards in Colombia, the ranks of the jobless are swelling rapidly across the globe.

Worldwide job losses from the recession that started in the United States in December 2007 could hit a staggering 50 million by the end of 2009, according to the International Labor Organization (ILO), a UN agency. The slowdown has already claimed 3.6 million American jobs.

High unemployment rates, especially among young workers, have led to protests in countries as varied as Latvia, Chile, Greece, Bulgaria and Iceland, and have contributed to strikes in Britain and France.

Last month, the government of Iceland, whose economy is expected to contract 10 per cent this year, collapsed, and the prime minister moved up national elections after weeks of protests by Icelanders angered by soaring unemployment and rising prices.

Just last week, the new US director of national intelligence, Dennis Blair, told Congress that instability caused by the global economic crisis had become the biggest security threat facing the US, outpacing terrorism.

The synchronised slowdown of so many economies was among the issues that global finance ministers took up at the Group of Seven meeting in Rome on Saturday.

‘Nearly everybody has been caught by surprise at the speed in which unemployment is increasing, and are groping for a response,’ said Nicolas Veron, a fellow at Bruegel, a research centre in Brussels, Belgium, that focuses on Europe’s role in the global economy.

In emerging economies such as those in Eastern Europe, there are fears that growing joblessness might encourage a move away from free-market, pro- Western policies; while in developed countries, unemployment could bolster efforts to protect local industries at the expense of global trade.

Indeed, some European stimulus packages include protections for domestic companies, increasing the likelihood of protectionist trade battles.

While the number of jobs in the US has been falling since the end of 2007, the pace of layoffs in Europe, Asia and the developing world has caught up only recently as companies that resisted deep cuts in the past follow the lead of their American counterparts.

The International Monetary Fund (IMF) said that it expects that by the end of the year, global economic growth will reach its lowest point since the Depression, according to Charles Collyns, deputy director of the fund’s research department. The fund said that growth had come to ‘a virtual halt’, with developed economies expected to shrink by 2 per cent in 2009.

‘This is the worst we’ve had since 1929,’ said Laurent Wauquiez, France’s employment minister. ‘The thing that is new is that it is global, and we are always talking about that. It is in every country, and it makes the whole difference.’

In Asia, any smugness at having escaped losses on American sub-prime debt has been erased by growing despair over a plunge in sales among major exporters.

Last Thursday, Pioneer of Japan said that it would abandon the flat-screen television business and cut 10,000 jobs worldwide in response to sagging demand for consumer electronics.

Millions of migrant workers in mainland China are searching for jobs but finding that factories are shutting down.

Though not as large as the disturbances in Greece or the Baltics, there have been dozens of protests at individual factories in China and Indonesia where workers were laid off with little or no notice.

The breadth of the problem is also becoming apparent in Taiwan, where exports were down 42.9 per cent last month, compared with a year ago, the steepest plunge in Asia.

Calls for protectionism have resonated among a fearful public. In Britain, refinery and power plant employees walked off the job last month to protest the use of workers from Italy and Portugal at a construction project on the coast.

Some held up signs highlighting Prime Minister Gordon Brown’s earlier promise of ‘British jobs for British workers’.

Unemployment in Britain is expected to rise to 9.5 per cent by the middle of 2010, from 6.3 per cent now, according to Peter Dixon, an economist with Commerzbank in London.

Germany’s jobless rate could rise to 10.5 per cent from 7.8 per cent, he added.

Even India, whose startling rise to the forefront of the global economy was portrayed in the hit movie Slumdog Millionaire, has hit a wall.

About 500,000 people lost jobs between October and December 2008, according to one recent analysis.

The ripples from the slowdown in Europe, North America and Asia are also being felt in Africa as migrant workers abroad lose their jobs and find themselves unable to send money home.

Since his last temporary job as a metalworker in Paris ended three months ago, Ignace Abdul has halted the monthly 200 euro (S$390) payments he had been sending to his wife and three children back in Senegal.

‘Between 2004 and 2008, I worked nonstop,’ Mr. Abdul, 30, said in an interview in a bleak Paris unemployment office. ‘Right now, there is nothing.’