Social Risks Ahead If Jobs Crisis Is Not Addressed-IMF

• Author: International Monetary Fund

Reiterating concerns he first voiced in a speech at the Bundesbank in Germany on September 4, Strauss-Kahn said he was concerned about the "third phase of this crisis," namely high unemployment. The IMF is expecting unemployment to continue rising through next year, as economic growth falls short of potential.

What follows below is an edited and shortened version of a video interview Strauss-Kahn gave on September 11, 2009 to the IMF's Archana Kumar.

IMF Survey online: What will it take for a firm recovery to take hold?

Strauss-Kahn: Our forecast is that a global recovery will take place during the first half of 2010. There are some good figures which have been released during the last few months so it may happen even a little sooner than that.

But if we have in mind that the global economy will only fully recover when unemployment goes down, then it will take more time. Because as everybody knows, there is some delay between the time when growth comes back and the time when the employment situation improves.

IMF Survey online: What do you see as potential risks from the rising levels of unemployment all around the world?

Strauss-Kahn: Well, problems arise when governments tell the public that things are getting better when, at the same time, people are losing their jobs. For somebody who loses his job in October, the crisis is not over, it is in front of him.

"As everybody knows, there is some delay between the time when growth comes back and the time when the employment situation improves."

And that's a big risk because it's a social risk. It can also, in some countries, become a risk to democracy if the man in the street finally says: "My government is saying that things are improving, but I don't feel it." It's not easy to manage this transition and it will not be easy for the millions of people who will still be unemployed next year.

IMF Survey online: Following the economic crisis, there have been repeated calls for tighter regulation of the financial system. What progress has been made on that front?

Strauss-Kahn: Much progress, but not enough. A lot has been done-analyzing the causes of the crisis, and trying to find solutions. Last week at the G-20 finance ministers meeting in London, there was broad consensus on what should be done. Now, to get from here to establishing new regulations and implementing reforms in each and every country, there are a lot of things still to do.

For instance, in Europe and elsewhere, there has been a...