Some 197-million people worldwide did not have a job in 2012 following a deceleration in global growth and a year-on-year increase in unemployment levels in the fifth year after the start of the 2007/8 global financial crisis, according to a report by the International Labour Organisation (ILO).

The Global Unemployment Trends 2013 report stated that some 39-million people had dropped out of the labour market as job prospects proved unattainable, leaving a 67-million global jobs gap since 1997.

It added that, despite a moderate pick-up in output growth expected for 2013 and 2014, the unemployment rate was set to rise again, with the number of unemployed worldwide projected to rise by 5.1-million to more than 202-million in 2013 and by another three-million in 2014.

One-quarter of the four-million unemployed persons added in 2012 were in the advanced economies, while three-quarters had been in other regions, with marked effects in East Asia, South Asia and sub-Saharan Africa.

The ILO noted that recession conditions in Europe had spilled over and caused lower economic activity and job growth in countries that had initially escaped the second wave of the economic crisis.

“In addition, incoherence between monetary and fiscal policies adopted in different countries and a “piece-meal” approach to the financial sector and sovereign debt issues, in particular in the euro area, have led to uncertainty on the global outlook,” the report said.

It added that investment had not yet recovered to precrisis levels in many States, which had reinforced corporate tendencies to increase cash holdings or pay dividends rather than expand capacity and hire new workers.

“The length and depth of the labour market crisis is worsening labour market mismatch, contributing to extended spills of unemployment,” the report stated.

“As the crisis spreads through international trade, occupations concentrated in exporting industries are particularly vulnerable.”

Further, job restructuring was likely before a strong rebound could be expected, the ILO said.

In addition, labour force participation had fallen dramatically, in particular, in advanced economies, masking the true extent of the job crisis, with the problem particularly severe in the European Union, where the labour force was expected to further recede.

“Young people remain particularly stricken by the crisis, with some 73.8-million young people unemployed globally and the economic downturn likely to push another half a million into unemployment by 2014,” the ILO said.

Meanwhile, income growth had come under pressure from rising unemployment, putting downward pressure on real wages in many advanced economies and lowering the support that private consumption could give to economic activity.

Over the medium-term, the report expected the global economy to recover, but noted that growth would not be strong enough to reduce unemployment rapidly.

“Even with an acceleration in growth, the global unemployment rate is expected to remain at 6% up to 2017 – not far from its peak level in 2009. At the same time, the global number of unemployed in expected to rise further to some 210.6-million over the next five years,” the report said.