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Financial crisis could cost 20 million jobs by end 2009

business Updated: Oct 20, 2008 20:15 IST

AFP
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The financial crisis could lead to record global unemployment with 20 million more people out of work by the end of 2009, International Labour Organization chief Juan Somavia warned Monday.

Estimates from the ILO indicate that the "number of unemployed could rise from 190 million in 2007 to 210 million in late 2009," said Somavia, marking the "first time in history that we pass 210 million."

The population of working poor living on less than a dollar a day could grow by 40 million and those on two dollars a day by over 100 million, added the ILO.

But Somavia said these projections "could prove to be underestimates if the effects of the current economic contraction and looming recession are not quickly confronted."

Thousands of jobs have already been slashed on Wall Street and other financial centres as banks collapse or are forced to merge due to the credit crunch.

But the ILO said the axe was likely to reach ordinary working people, with sectors including construction, the automotive industry, tourism, services and real estate bearing the brunt of the financial storm.

Somavia, who had earlier urged greater protection for workers in the crisis, said: "This is not simply a crisis on Wall Street, this is a crisis on all streets. We need an economic rescue plan for working families and the real economy, with rules and policies that deliver decent jobs."

Most vulnerable are the poor, stressed the ILO, echoing the results of a report on income inequalities it released last week that warned that the gap between rich and poor could widen due to the financial crisis.

"The gap between richer and poorer households widened since the 1990s," said Raymond Torres, director of the ILO's research arm which produced its "World of Work Report 2008."

"The present global financial crisis is bound to make matters worse unless long-term structural reforms are adopted," he added last Thursday.

Global unemployment stands at 6.1 percent, but many countries are seeing jobless rates nudging up.

Hong Kong earlier Monday said its jobless rate rose to 3.4 percent for the three months to September, compared to 3.2 percent in the three months to August.

Meanwhile, the United States reported earlier this month that it had lost 159,000 jobs in September.

Somavia called for "prompt and coordinated government actions to avert a social crisis" and said he welcomed calls for "better financial regulation and a global surveillance system of checks and balances."

"We must return to the basic function of finance, which is to promote the real economy. To lend so that entrepreneurs can invest, innovate, produce jobs and goods and services," he said.

The crisis offered an "opportunity" to re-balance globalisation which had grown "unfair, unsustainable and unbalanced," he added.