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20 million more will be rendered jobless: UN

GENEVA: The global financial crisis will raise world unemployment to 210 million people by the end of next year, its highest rate in the past decade, the UN labour agency has said.

That figure will include at least 20 million who lose their jobs between now and the end of 2009, said officials of the International Labor Organization (ILO).

That will be the first time in a decade of record keeping that the global total has been above 200 million people, said officials of the International Labor Organization.

Also on Monday, the President of the UN General Assembly said in New York he would establish a high-level task force to suggest steps to reform the global financial system to reflect 21st century economic realities — including greater clout for developing countries.

Miguel d’Escoto Brockmann said there is growing recognition that the financial turmoil cannot be solved through piecemeal responses at the national and regional level but requires coordinated global efforts that are best led by the United Nations.

He announced that Nobel Prize-winning economist Joseph Stiglitz of the U.S. would chair the task force and take part in a panel on the financial crisis at UN headquarters on Oct. 30.

In Geneva, Juan Somavia, Director-General of the ILO, told reporters that global leaders need to focus on the impact on individuals rather than just financial institutions when they devise rescue plans.

“We thought it was not good to talk about the financial crisis exclusively in financial terms,” said Mr. Somavia. “We have to talk about the financial crisis in terms of what happens to people and in terms of what happens to jobs and enterprises.”

He said it was already clear that people were going to be hurt by the financial crisis and that measures should be taken to provide unemployment compensation and other social protection.

“If we have enough resources to pump into the financial system, this is not the moment to say, ‘Yes, but we don’t have the resources to care about people,”’ said Mr. Somavia.

He said the first step in a global rescue plan remains getting out of “the credit paralysis”. “Hopefully, the decisions that have been taken are going to work,” he said, adding that all measures should be taken to contain as much as possible the fall of the real economy and reduce the recession possibilities as much as possible.

But then attention should turn to “taking care of those enterprises that produce the most jobs,” said Mr. Somavia. “Those tend to be the small enterprises”.

“The financial system has to go back to its fundamental function,” he said, meaning providing credit to people with entrepreneurial spirit to set up a company that would produce goods and services and create jobs.

Another issue is protecting pensions, especially for those whose funds are invested in the stock market, he said.

“You better give enough credit to the pension systems so they don’t have to sell [shares] in a battered market,” said Mr. Somavia, noting that the U.S. Congress had passed a $700-billion rescue plan for financial institutions.

“Make sure some of that money goes to the pension systems so that they can pay pensions,” he added. “People are very afraid all over the world.”

The ILO based its unemployment projection in part on the latest forecast by the IMFthat the economies of the U.S. and Europe would virtually stop growing and that Japan would have only 0.5 per cent growth, said Mr. Somavia.

The agency also factored in data from the UN and from countries that have produced recent statistics, he said. “The estimate that we are now making is that as compared with January 2008 to December 2009 we are probably going to have about 20 million jobs lost, and this may be underestimated,” said Mr. Somavia. He said the agency had yet to break the forecast down by region or country.

“But it is clear that certain sectors are going to be affected — the construction sector and the full real estate field, financial services, of course, services in general, automotive most probably.” — AP

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