Over 130,000 financial job cuts announced since October: UN
There have been over 325,000 announced layoffs in the financial sector since August 2007, the International Labour Organization said, noting that 40 percent of those cuts, or about 130,000 jobs, were made since October of last year.business Updated: Feb 23, 2009 21:59 IST
There have been over 325,000 announced layoffs in the financial sector since August 2007, the International Labour Organization said on Monday, noting that 40 percent of those cuts, or about 130,000 jobs, were made since October of last year.
More job cuts in the financial sector were to be expected as the full extent of the economic crisis became clear, the ILO said. The numbers did not include independent contractors and subcontractors.
Some of the largest announced cuts have come from US-based banks including Bank of America and Citigroup, together making up over 35 percent of global job cuts. The Swiss bank UBS, the largest wealth manager in the world, also announced 11,000 layoffs.
In a report released ahead of a two day conference set to begin on Tuesday about the future of the 20 million jobs in the global financial sector, the ILO said that while the entire world's economy would feel the fallout, centres like New York and London were to bear the immediate brunt of these layoffs.
"The impact will be major, considering that jobs in New York City's finance, insurance and real estate sectors account for one-third of personal income earned in the city," the report said. "The combined New York metropolitan area alone is expected to lose up to 100,000 financial services jobs."
The impact on London and other hubs would be similar.
Moreover, for each financial sector job lost, one to two other layoffs would be expected, feeding a vicious cycle of economic downturn.
In the US, some 4.1 million people worked in the sector while in Europe, in 2006, 5.6 million people were employed in finance.
The report proposed several possible ways out of the crisis, including government-backed moves to restore confidence in the markets and stimulus plans. Also, it called for states to prop up social tools, such as unemployment benefits, job training and health care.
The ILO also suggested changes to business models, including realigning executive pay and improving corporate governance.
The report traced the start of the financial crisis to August 2007, with the collapse of the sub-prime market, but blamed central bank and governmental policies in the early part of the decade which made loans cheap and encouraged companies to become heavily leveraged.
This was compounded by the subsequent invention of the mortgage-backed securities and similar creations, which eventually fell through.
More than 100 representatives of governments and workers' and employers' organisations were expected to attend the two-day conference in Geneva.