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Unemployment in the Eurozone could increase by 4.5 million to reach almost 22 million over the next four years, the International Labour Organization (ILO) warned today in a new report. This comes after the EU statistics office said in early July that unemployment in the Euro countries set a new high of 11.1% in May.
The study cautions that without a shift in policy direction all countries in the Eurozone, including those that are faring better, will suffer.
“It’s not only the Eurozone that’s in trouble, the entire global economy is at risk of contagion. Unless targeted measures are taken to increase real economy investments, the economic crisis will deepen and the employment recovery will never take off. We also need a global consensus on a new path for job-intensive growth and globalization,” said ILO Director-General Juan Somavia.
Higher youth unemployment would be an inevitable consequence, the study said, as joblessness has been on the increase in more than half of the Eurozone countries since 2010. Job losses in Southern Europe have been “acute” but even countries where employment has increased over the last four years, including Austria, Belgium, Germany, Luxembourg and Malta, are showing signs of aslowdown, the report argues.
“The jobs destruction could have been even worse, as companies appear to have kept workers in the hope that economic conditions would improve. If their expectations don’t come true, worker retention may become unsustainable, leading to significant jobs losses,” it says.
Hence the ILO proposes several incentives to move out of the austerity trap, such as promoting investment and supporting jobseekers and addressing differences in competitiveness between Eurozone countries.
“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,” said Raymond Torres, head of the ILO’s International Institute for Labour Studies and lead author of the report.