Global unemployment to rise by 3.4m in 2017 as economies struggle

13th January 2017

By: Megan van Wyngaardt

Creamer Media Contributing Editor Online

     

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Global unemployment is expected to rise by 3.4-million this year, spurred by deteriorating labour market conditions in emerging countries, the International Labour Organisation (ILO) has said.

In its latest ‘World Employment and Social Outlook – Trends 2017’ report, the organisation outlined that the global unemployment rate is expected to rise modestly to 5.8% this year, from 5.7% in 2016.

This would bring the number of unemployed people globally to just over 201-million. The global unemployment rate is expected to hold relatively steady in 2018, but the pace of labour force growth will continue to outstrip job creation, resulting in an additional 2.7-million unemployed people globally.

The increase in unemployment levels was also the result of several deep recessions in 2016. Last year, global gross domestic product growth hit a six-year low, at 3.1%, well below the rate projected in the previous year.

Looking ahead, global economic growth is expected to pick up modestly to 3.4% this year. “However, the forecasts for growth have continually been revised downwards over recent years and there is persistent elevated uncertainty about the global economy,” the ILO stated.

In fact, the number of unemployed people in emerging countries is expected to increase by about 3.6-million between 2016 and 2017, during which time the unemployment rate in emerging countries is expected to climb to 5.7%, compared with 5.6% last year.

“Of notable concern are developments in Latin America and the Caribbean, where the unemployment rate is expected to rise by 0.3 percentage points in 2017, to reach 8.4% – largely driven by rising unemployment in Brazil,” the report pointed out.

In contrast, unemployment is expected to fall by 670 000 in developed countries this year, bringing the rate down to 6.2%. In Europe, notably northern, southern and western Europe, unemployment levels and rates are expected to continue to fall, but the pace of improvement will slow, and there are signs that structural unemployment is worsening.

The same applies to Canada and the US. “For example, in both Europe and Northern America, long-term unemployment remains elevated in comparison to precrisis levels and, in the case of Europe, it increased recently, despite reductions in the unemployment rate.

“In fact, in the EU-28, the share of unemployed people who had been looking for a job for 12 months or longer reached 47.8% in the second quarter of 2016, up from 44.5% for the same quarter of 2012,” the report said.

Further, in the second quarter of 2016, more than two-thirds of this group – a total of six-million people – had been unemployed for over two years.

Unemployment levels in developing countries are also expected to increase by 450 000 this year, with unemployment rates hovering at around 5.5% in 2017 and 2018. For many developing and emerging countries, however, chronic poor-quality employment – as represented by high shares of own-account workers and contributing family workers and working poverty – takes centre stage.

“Achieving the right policy mix is essential. Accordingly, policies that address both the root causes of secular stagnation and structural impediments to growth need to be incorporated into macroeconomic policies and placed at the forefront of the policy agenda,” the report suggested.

The ILO estimated that a coordinated effort to provide fiscal stimulus – an increase in public investment – that takes into account each country’s fiscal space, would provide an immediate jumpstart to the global economy.

“This could lower global unemployment, relative to the baseline, by 700 000 in 2017 and 1.9-million by 2018. In the medium-term, such efforts might also remove fears of low growth and, thereby, raise investment demand,” it said.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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