While the International Labour Organisation this week issued a warning that the potential for social unrest in European Union countries was higher than anywhere else in the world, Malta and five other countries were singled out for having employment rates in 2012 that exceeded the employment levels before the 2008 global economic crisis.
“In advanced economies, particularly in the euro area, the employment situation is more problematic,” the ILO noted this week in its annual World of Work report. “Among the 37 advanced economies with available information for 2012, only six (Germany, Hungary, Israel, Luxembourg, Malta and Switzerland) had employment rates that exceeded pre-crisis levels.”
Additionally, Malta was one of just seven EU countries (the others being Austria, Germany, Hungary, Luxembourg, Poland and Romania) that have surpassed pre-crisis employment rates, the ILO said.
Those most vulnerable, according to the report, were Cyprus, Czech Republic, Greece, Italy, Portugal, Slovenia and Spain, where the employment rates are below 2007 levels.
“In other words, 5.2 million jobs are needed to restore employment rates to their pre-crisis levels,” the ILO said about the European Union.
The ILO reports that in 35 per cent of advanced countries, employment rates had increased but had not yet reached pre-crisis levels; while rates in almost half of the advanced economies analysed had continued to fall since the beginning of the crisis.
It emphasises how employment rates have fallen by more than three percentage points in the last two years alone in Cyprus, Greece, Portugal and Spain.
Under current growth estimates, the ILO says, employment levels in advanced economies are expected to recover to pre-crisis levels by 2014, but when the growth in the working-age population is taken into account, the employment rate will not recover until 2018.
More broadly speaking, the ILO said social unrest – strikes, work stoppages, street protests and demonstrations – had increased in most countries since the economic and financial crisis that began in 2008.
But the risk, it said: “is highest among the EU-27 countries – it increased from 34 per cent in 2006-07 to 46 per cent in 2011-2012”. However, the risk was not evenly spread and had not grown in at least seven of the member states.
It also pointed out that the risk of social unrest had declined in Belgium, Finland, Germany, Slovakia and Sweden since 2010.
Overall, the risk of unrest in the EU “is likely to be due to the policy responses to the ongoing sovereign debt crisis and their impact on people’s lives and perceptions of well-being”, the United Nations agency said.
“This bleak economic scenario has created a fragile social environment as fewer people see opportunities for obtaining a good job and improving their standard of living.”
The risk of social unrest had also risen in Russia and non-EU countries of the former communist bloc, as well as in South Asia and in advanced economies outside the EU.
But it had declined in Latin America and the Caribbean, where governments had followed employment-boosting policies, in the growing economies of sub-Saharan Africa and in East and in South-East Asia and the Pacific.
The ILO said it had based its findings on correlating economic growth and income levels with inflation, unemployment, debt as a share of economic output or GDP, and income inequality – all factors which influence levels of social tension.
Government austerity policies of the last few years had been accompanied since 2010 by increasing wage inequalities in which middle-income groups’ revenues declined and those of top salary earners began to grow again, it declared.
Across the richer countries, said the ILO, profit margins for larger companies were rising, as reflected in booming stock markets, and were now at levels similar to those of the immediate pre-crisis years.
“But rather than putting these profits to work through productive investment in the real economy, increased revenues have more often been channelled towards higher cash holdings,” the agency said.
5.2 million jobs needed in Europe
Global unemployment rates were also expected to rise, the report said. In the EU and other developed countries the real employment rate, taking into account the growth in the working-age population, was unlikely to return to the level at which it stood before the crisis until 2018.
In Europe, the deteriorating situation on the unemployment front is of particular worry to the ILO. Unemployment has reached a new high in the eurozone, reaching 12.2 per cent in April, according to Eurostat.
Worse still, long-term unemployment is increasing and jobseekers are becoming discouraged, according to the ILO’s analysis. “As of the fourth quarter of 2012, there were 11.7 million long-term unemployed in the EU. This is 1.4 million more than the year before and 5.7 million more than in 2008.”
Job-friendly approach
For Europe, the ILO report recommends a job-friendly approach to restarting economic growth that serves both macroeconomic and employment goals, saying: “This means addressing the structural vulnerabilities behind the crisis, such as the systemic issues in the financial sector”, as well as “unlocking the credit flow to productive enterprises so that they can stimulate growth.”