CONTAGION THREAT: Euro contagion to worsen youth joblessness globally

CONTAGION THREAT: Euro contagion to worsen youth joblessness globally

Unemployment among young people is likely to rise globally as the euro crisis hits emerging economies and more discouraged jobless youth drop out of the labour force altogether, the International Labour Organization said on Tuesday.

September 5, 2012 10:07 by Reuters

The ILO said jobless rates among people under 25 worldwide are expected to inch up to 12.9 percent by 2017, up some 0.2 percentage points from forecasts for this year, but youth in developing countries will be worst affected.

“The impact of the euro crisis is expected to expand well beyond Europe, affecting economies in East Asia and Latin America as exports to advanced economies have faltered,” the ILO said in a new report.

Unemployment among young people in developed economies is likely to decline from a record high of 17.5 percent of the potential work force under the age of 25 to 15.6 percent in 2017 but principally because so many discouraged young people would leave the labour market.

Youth joblessness is expected to rise by 2 percentage points in the Middle East and about 1 percentage point in East and Southeast Asia over the next five years.

The gloomy picture is emerging around the globe as the effects of the economic downturn and crisis around the European common currency, the euro, spread from advanced economies to emerging powers that trade heavily with Europe, the ILO said.

In developed economies in 2007, before the financial crisis began in the United States and spread to draw in euro countries, the unemployment rate for young people was only 12.5 percent.

The ILO expects little or no expansion in the overall labour market but rising numbers of NEETs — defined as young people neither in employment, education or training.

NEETS, unregistered as job seekers, are not counted in unemployment statistics.

The ILO and other international bodies have already warned that youths in this category could provide the base for rising social discontent and unrest in richer countries as well as discontent with government and electoral systems.

“Even in countries with early signs of a job recovery and where new vacancies are opening up, many unemployed youths still find it difficult to land a job,” said the ILO report – “Global Labour Outlook: Bleak Labour Market Prospects for Youth.”

The ILO forecast that in East Asia, which includes China and Japan, the rate would grow from 9.5 percent this year to 10.4 percent in 2017. In the Middle East, where over a quarter of youths are unemployed, the rate would climb from 26.4 to 28.4 percent.

Southeast Asia and the Pacific, a region which includes one-time “tiger” economies Malaysia, Thailand and Indonesia as well as Australia and New Zealand, were expected to see a climb in the youth unemployment rate from 13.1 to 14.2 percent.

South Asia, where India is the largest economy, would see a small increase from 9.6 to 9.8 percent. Latin America and the Caribbean would remain around the current level of 14.6 percent, perhaps rising to 14.7 percent.

The picture is slightly brighter for North and sub-Saharan Africa, according to the ILO. North Africa, with a current youth unemployment rate of 27.5 percent, would see it fall to 26.7 percent, while in countries to the south it would decline from 12 percent to 11.8 percent.