Global youth unemployment rate at 13 per cent

A UN report said that the lack of employment growth is the weakest link of the economic recovery.
In the report of the World Economic Situation and Prospects 2011 (WESP), the United Nations said that between 2007 and the end of 2009, at least 30 million jobs were lost worldwide as a result of the global financial crisis. "As moregovernments embark on fiscal austerity, the prospects for a fast recovery of employment look even gloomier," it said, adding that worldwide, unemployment and underemployment rates are very high among young people (aged 15 to 24).
"At the end of 2009, with an estimated 81 million unemployed young people, the global youth unemployment rate stood at 13 per cent -- a 0.9 percentage point increase from 2008.
High unemployment will constrain household consumption recovery, which in turn will drag output growth, the WESP said, pointing out that below-potential output growth, in turn, will constrain employment growth. "The longer this vicious cycle lasts, the higher the risk of 'cyclical' unemployment becoming 'structural', further impairing long term economic growth potential.
The UN report also provides evidence that workers in developing countries and economies in transition have also been severely affected by the crisis, though the impact in terms of job losses emerged later and was much more short-lived than in developed countries.
Indeed, employment started to rebound from the second half of 2009 and, by the end of the first quarter of 2010, unemployment rates had already fallen back to pre-crisis levels in a number of developing countries.
Yet, despite the rebound in employment in parts of the world, the global economy still needs to create at least another 22 million new jobs in order to return to the pre-crisis level of global employment. At the current speed of the recovery, this would take at least five years to achieve.
In 2010, employment conditions in the US seemed to be improving earlier in the year, but started to falter later as the recovery decelerated and state and local governments started to lay off workers. The unemployment rate may increase to 10 per cent in early 2011, up from 9.6 per cent in the third quarter of 2010.
In the release of its annual report -- the WESP -- the UN emphasised that the outlook remains uncertain and surrounded by serious downside risks. The cooperative spirit among major economies is waning, which has debilitated the effectiveness of responses to the crisis. "Uncoordinated monetary responses, in particular, have become a source of turbulence and uncertainty in financial markets."
The recovery may suffer further setbacks if some of the downside risks materialise, in which case a double-dip recession is looming for Europe, Japan and the US.
The UN report also provides evidence that workers in developing countries and economies in transition have also been severely affected by the crisis, though the impact in terms of job losses emerged later and was much more short-lived than in developed countries.
The WESP 2011 said that in the short run more fiscal stimulus will be needed to reinvigorate the recovery, but that it will need to be better coordinated with monetary policies and reoriented to provide stronger support to employment generation and facilitate a sustainable rebalancing of the global economy. This cannot be done without better international policy coordination.