The Impact of the Economic Crisis on the Job Market
One of the most significant problems resulting from the global crisis is the rise in unemployment, due to low demands , a decline in private consumption, closing of factories, and staff cuts by employers. All of these have an immediate effect on the job market. Not only is the number of unemployed rising, but so is the decline in the number of jobs available... Put differently, once a worker is laid off, it is harder to find a new job, which prolongs the unemployment period. Some of the unemployed are completely eliminated from the job market and stop looking for a job altogether because they have given up hope of find a job.
On September 26, 2011, the heads of the Organization for Economic Cooperation and Development (OECD) and the International Labor Organization (ILO) published a joint statement in which they expressed their concern over the seriousness of the jobs crisis, where “200 million people are out of work worldwide.” [76] They also warned that “The job shortfall [in Europe] may increase [from 20 million] to even 40 million by the end of 2012.”
In the U.S., the unemployment rate has only recently declined below the 9% threshold but is still very high [77]. In Europe, and especially among the PIIGS countries (Portugal, Italy, Ireland, Greece and Spain), unemployment is at its peak and in the double digits, with the exception of Italy.
Unemployment is at its worst among the young. According to an ILO report titled, World of Work Report 2011: Making Markets Work for Jobs, “Among countries with recently available data, more than one in five youth, i.e. 20 per cent, were unemployed as of the first quarter of 2011.” [78] According to unemployment statistics from Eurostat, youth unemployment is rising dangerously high with rates of 21.4% in the euro area, the highest being in Spain (48.9%) and in Greece (45.1%) [79].
This report also emphasizes that the state of the job market poses an imminent risk to the political and social stability of many countries around the world. “As the recovery derails, social discontent is now becoming more widespread. ...In 40 per cent of the 119 countries for which estimates could be performed, the risk of social unrest has increased significantly since 2010. Similarly, 58 per cent of countries show an increase in the percentage of people who report a worsening of standards of living. And confidence in the ability of national governments to address the situation has weakened in half the countries.
“The Report shows that the trends in social discontent are associated with both the employment developments and perceptions that the burden of the crisis is shared unevenly. Social discontent has increased in advanced economies, Middle-East and North Africa.” [80]
Indeed, we have already seen the impact of economic crises on societies and governments in countries such as Egypt, Yemen, Libya, or—to a lesser extent—Spain and Italy, and even in the U.S. with the Occupy Movement, and Israel, with the protests in the summer of 2011.
In addition to the growing tension in many countries, the traditional fiscal and monetary solutions to the crises in general, and to the unemployment in particular, seem ineffective as the national debt of many countries has bloated to perilous proportions. This threatens the solvency of many countries, as well as hinders governments’ abilities to cope with social problems such as unemployment. In such a state, unemployment is expected to rise much higher, distress to worsen, and social unrest to break out at intensities that may well pose an imminent threat to the stability of governments and the entire international system.
[76] “G20 Labour Ministerial: Joint Statement by OECD Secretary-General Angel Gurría and ILO Director-General Juan Somavia,” OECD, (September 26, 2011), http://www.oecd.org/document/17/0,3746,en_21571361_44315115_48753169_1_1_1_1,00.html
[77] “United States Unemployment Rate,” Trading Economics, http://www.tradingeconomics.com/united-states/unemployment-rate
[78] World of Work Report 2011: making markets work for jobs (International Institute for Labour Studies, 2011), ISBN, 978-92-9014-975-0, http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_166021.pdf, p 7
[79] “Unemployment statistics,” European Commission, Eurostat, http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Unemployment_statistics
[80] World of Work Report 2011: making markets work for jobs (International Institute for Labour Studies, 2011), ISBN, 978-92-9014-975-0, http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_166021.pdf, p viii