If current economic policies do not change quickly, the Eurozone may lose 4.5 million jobs over the next four years, the United Nations warned in a new report today, adding that this would increase the risk of social unrest and would further erode citizen’s confidence in their governments, the financial system and European institutions.
Produced by the International Labour Organization (ILO), the report – Eurozone job crisis: Trends and policy responses – stresses that there is “mounting evidence” that a prolonged labour market recession may be in the making, with labour markets in Europe not having yet recovered from the global crisis that hit the world economy in late 2008.
“Without a prompt policy turn – to address the crisis and to regain the trust and support of workers and enterprises – it will be difficult to implement the reforms necessary to put the Eurozone back onto a path of stability and growth,” the report states.
The report notes that total employment in the Eurozone remains 3.5 million lower than before the crisis, and that employment has actually fallen since the start of the year in half of the zone’s countries, resulting in a total of 17.4 million people looking for jobs in the region.
Young people are particularly at risk, with the current youth unemployment rate at 22 per cent in the Eurozone, especially in southern countries such as Italy, Portugal, Greece and Spain, with these last two having a youth unemployment rate exceeding 50 per cent.
The publication points to fiscal austerity measures as being detrimental to employment. “In a depressed macroeconomic context, these reforms are likely to lead to increased numbers of layoffs without any boost to job creation at least until economic recovery gathers momentum,” it states.
The report adds that by embracing a Eurozone growth strategy with jobs at its core, a recovery is still possible within a single-currency setting – however, to do this, austerity approaches need to be abandoned and countries must urgently reform their financial systems.
“Repairing the financial system, promoting productive investment, reinforcing effective employment programmes, maintaining social protection, fostering social dialogue and undertaking job-friendly fiscal plans would bring the Eurozone our of the austerity trap and pave the way for a sustainable recover with social cohesion,” the report states, adding that new regulation to prevent inappropriate financial practices is also needed.