G20 warns employment to struggle without coordinated response
Some of the world's most powerful economic bodies are demanding tough action from G20 leaders to avoid a global unemployment crisis.
Employment ministers from the world's richest economies are meeting in Melbourne this week ahead of the November G20 meeting in Brisbane.
The World Bank, the OECD and the International Labour Organisation are warning that high unemployment and low wages will persist unless governments can find ways to create more jobs.
The organisations have released a report on the worrying state of the global labour market.
Sandra Polaski, a deputy director general of the International Labour Organization in Switzerland, says that unemployment remains too high, despite a rebound in economic growth in many G20 nations since the depths of the global financial crisis.
"They're also facing some longer term underlying challenges that have, in part, not been as easy to address because of the lack of current demand," she said.
"So one of our strong messages to the ministers is that there is really no room for complacency about the labour markets of the G20."
Employment and labour ministers from the G20 economies have begun three days talks in Melbourne to find ways to boost jobs growth by stimulating overall global economic activity.
Wage rises needed to break 'cycle' of declining demand
However, Sandra Polaski warns that is unlikely to be a straightforward task.
"Currently we're in a self-reinforcing cycle where we have slow growth which leads to slow employment creation; stagnant wages or, in some G20 countries, even declining wages, that means households can't spend as much," she explained.
"Firms don't see the reason to invest in productive capacity because they don't see the source of demand. So we're in a bit of a negative reinforcing cycle and we have to find points to break out of that cycle."
The ILO argues there is much that G20 governments can do to help boost employment growth, in the same way those governments acted in a coordinated way to avert financial catastrophe and stimulate the world economy during the peak of the global financial crisis.
"If they were to agree that an emphasis on stimulating job creation and, in particular, emphasising the need to buttress wage growth - which has been stagnant in the advanced economies or declining - through policies like minimum wages, through policies like strengthening collective bargaining, through social protection systems that protect the very low income vulnerable households," added Sandra Polaski.
"These contribute to consumer demand which then contributes to firms wanting to invest and expand their operations, their business and services, and that's how you get back on an upwards cycle as opposed to the currently self-reinforcing downwards [cycle]."
Europe introducing youth jobs guarantee
Somebody who well understands the need to take decisive action on jobs is the European Commissioner for employment, Laszlo Andor.
Employment conditions are improving in some European economies, but the overall jobless rate in the eurozone remains at almost 12 per cent.
"The EU is now implementing a youth guarantee program. We'll ensure that young people are not allowed to remain unemployed for longer than four months, but they would get a quality offer of a job apprenticeship, a traineeship, or a learning opportunity," Mr Andor said.
"For making this happen many of our member states need to implement serious reforms because they may not have a tradition of apprenticeships or they may not have sufficiently strong, well-prepared modern public employment services which are all important ingredients to ensure that the young people quickly find their first job."
How exactly G20 leaders propose to address the world's employment problem will become clear when the agreements from this week's meetings are announced on Thursday.
Australian jobs update
Also announced tomorrow are Australia's latest unemployment figures for August.
Economists are hopeful Australia's unemployment rate will edge down from a 12-year high of 6.4 per cent in July that caught almost all analysts off guard.
Deutsche Bank senior economist Phil O'Donoghue see last month's spike in the jobless rate as something of a statistical anomaly.
"When we see these big blips up we tend to see them correct at least partially back the other way in the subsequent months, so that's what we're expecting to see tomorrow," he said.
"Our pick is for an unemployment rate around 6.2 per cent."
