Jobs Crisis Casts Shadow Over Global Recovery

Think tank event sees employment, equity as building blocks of stability

Many people face social crisis just as serious as financial crisis

Social safety nets, progressive taxation can dampen inequality

Speaking on April 13 at the Brookings Institution alongside Sharan Burrow, General Secretary of the International Trade Union Confederation (ITUC), Strauss-Kahn said that “while recovery is here, growth—at least in the advanced economies—is not creating jobs and is not being shared broadly. Many people in many countries are facing a social crisis that is every bit as serious as the financial crisis.”

What is needed, he said, is “a recovery that is sustainable and balanced among countries, but also one that brings employment and fair distribution.”

Cooperation milestone

The Brookings event, held on the eve of the 2011 IMF–World Bank Spring Meetings, represented a milestone in a nearly four-year effort by the IMF and ITUC to strengthen their cooperation on labor market issues. This effort accelerated in the wake of the 2008 financial crisis as the IMF increasingly began to focus on the severe job loss that accompanied the resulting deep recession.

“The greatest risk now is the unresolved crisis of unemployment and inequity,” Burrow said in her speech. “Unemployment stands currently at over 205 million worldwide, its highest-ever recorded level—and even that is a significant underestimate of its true depth since many millions of people seeking work, particularly women, are not registered.”

Other participants in the Brookings event were George Akerlof, Professor of Economics at the University of California at Berkeley and the 2001 Nobel Prize winner in Economics, and Stephen Pursey, Senior Advisor to the Director-General of the International Labour Organization (ILO). In his remarks, Akerlof underlined the importance of continuing to address the jobs crisis, as it is “a question of human dignity.”

Panelists Dominique Strauss-Kahn (r), George Akerlof address Brookings Institution event on global jobs crisis (IMF photo)

The involvement of the ILO pointed to another area in which the IMF has broadened its institutional cooperation in response to the steep rise of unemployment. In September 2010, the IMF and ILO collaborated on a major conference in Oslo aimed at highlighting the linkages between growth, employment, and social cohesion. That...