WASHINGTON, D.C. (April 11, 2014) — A massive global jobs gap that opened at the height of the financial crisis is not closing. In fact, the gap will widen unless the global economy steps up the pace of growth to generate the jobs needed, says International Labor Organization Director-General Guy Ryder.
In a statement delivered to the 2014 spring meetings of the IMF and World Bank, Ryder said that if pre-crisis trends in employment growth had continued, 62 million more women and men would have been working in 2013 when global unemployment reached 202 million. Unless growth picks up, the jobs gap will widen to 75 million by 2018.
“The global economy is not yet on a path to strong sustainable and balanced growth,” Ryder said, adding, “Weak global demand is holding back job creation, wages and recovery even further and one consequence is a slowing of the pace of poverty reduction in the developing world.”
In 2013, the number of workers in extreme poverty declined by only 2.7 per cent globally, one of the lowest rates of reduction ever seen over the past decade.
Ryder noted that income inequalities have also widened and the wage share in GDP has fallen in many countries, including the world’s largest economies where wages have lagged behind growth in productivity for over 20 years.
This trend was masked by unfettered household borrowing before the crisis and temporarily offset by financial market innovations that proved to be unsustainable. These long-term structural problems now weigh heavily on demand and slow down recovery.
The global economy must create many more jobs. Investment in infrastructure, support to small enterprises and boosting skills development, and restoring household purchasing power, particularly at the lowest income levels are essential to avoid falling into a low-growth trap, Ryder says.
He welcomed the G20 Finance Ministers’ aim to lift GDP by 2 per cent or more over five years, but called for an integrated strategy for both the demand and supply side of labour markets that would lift growth and create the jobs needed for a full and sustainable recovery.