UN: Financial meltdown will cost 20M their jobs

by ALEXANDER G. HIGGINS Associated Press Writer
from FindLaw

GENEVA (AP) – The global financial crisis will add at least 20 million people to the world’s unemployed, bringing the total to 210 million by the end of next year, the U.N. labor agency said Monday.

That will be the first time in a decade of record keeping that the global total has been above 200 million people, said officials of the International Labor Organization.

Also Monday, the president of the U.N. General Assembly said in New York that he would establish a high-level task force to suggest steps to reform the global financial system to reflect 21st century economic realities – including greater clout for developing countries.

Miguel d’Escoto Brockmann said there is growing recognition that the current financial turmoil cannot be solved through piecemeal responses at the national and regional level but requires coordinated global efforts that are best led by the United Nations.

He announced Monday that Nobel Prize-winning economist Joseph Stiglitz of the United States will chair the task force and take part in a panel on the financial crisis at U.N. headquarters on Oct. 30.

In Geneva, Juan Somavia, director-general of the International Labor Organization, told reporters that global leaders need to focus on the impact on individuals rather than just financial institutions when they devise rescue plans.

“We thought it was not good to talk about the financial crisis exclusively in financial terms,” Somavia said. “We have to talk about the financial crisis in terms of what happens to people and in terms of what happens to jobs and enterprises.”

He said it is already clear that people are going to be hurt by the financial crisis and that measures should be taken to provide unemployment compensation and other social protection.

“If we have enough resources to pump into the financial system, this is not the moment to say, ‘Yes, but we don’t have the resources to care about people,’” said Somavia.

He said the first step in a global rescue plan remains getting out of “the credit paralysis.”

“Hopefully, the decisions that have been taken are going to work,” he said, adding that all measures should be taken to contain as much as possible the fall of the real economy and reduce the recession possibilities as much as possible.

But then attention should turn to “taking care of those enterprises that produce the most jobs,” Somavia said. “Those tend to be the small enterprises.”

“The financial system has to go back to its fundamental function,” he said, meaning providing credit to people with entrepreneurial spirit to set up a company that will produce goods and services and create jobs.

Another issue is protecting pensions, especially for those whose funds are invested in the stock market, he said.

“You better give enough credit to the pension systems so they don’t have to sell (shares) in a battered market,” said Somavia, noting that the U.S. Congress had passed a US$700 billion rescue plan for financial institutions.

“Make sure some of that money goes to the pension systems so that they can pay pensions,” he added. “People are very afraid all over the world.”

The ILO based its unemployment projection in part on the latest forecast by the International Monetary Fund that the economies of the United States and Europe would virtually stop growing and that Japan would have only 0.5 percent growth, Somavia said.

The agency also factored in data from the United Nations and from countries that have produced recent statistics, he said.

“The estimate that we are now making is that as compared with January 2008 to December 2009 we are probably going to have about 20 million jobs lost, and this may be underestimated,” Somavia said.

He said the agency had yet to break the forecast down by region or country.

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Associated Press Writers Edith M. Lederer at the United Nations contributed to this report.