Eurozone nations must act now to prevent creating a further 4.5 million unemployed workers in the next four years, the head of the UN’s labor agency warned on Wednesday.
“The eurozone is facing its worst crisis since the creation of the single currency,” International Labour Organization Director-General Juan Somavia told reporters at the launch of a report on the eurozone crisis.
“Unemployment is on the rise in the majority of the 17 members and if policy does not change quickly, it is possible that 4.5 million jobs will be lost in the next four years,” he said.
Somavia said that the ILO had long warned against austerity measures as a way out of financial difficulties.
He added that unless all eurozone members embraced a growth strategy with jobs at its core, even the wealthiest countries would be hit.
“Recovery is still possible within a single currency setting, but the window of opportunity is closing,” he said.
“Unless policies change, all — and I underline all countries in the eurozone — will be hit, both those under stress and their wealthier counterparts,” Somavia added.
The eurozone unemployment rate reached 11 percent in April 2012, with 17.4 million jobseekers, according to the ILO report.
Of particular concern was the level of youth unemployment, at 22 percent overall but 30 percent in Italy, Portugal and Slovakia and 50 percent in Spain and Greece.
Unemployment levels could deteriorate further, the ILO said, if businesses started to lay off workers which they have been holding on to in the expectation of a better economy.
“Despite the fact that we are four years into the (financial) crisis many enterprises have kept workers ... because they thought at some point there would be a recovery,” said Raymond Torres, head of ILO’s Institute for Labour Studies.
“But if the room for opportunity is not used soon these enterprises may reconsider these policies.”
The ILO report called for a series of confidence-boosting measures by eurozone nations and institutions, and collaboration on policies in relation to income, productivity, taxation and investment.
These measures include boosting lending by banks to small businesses, a matter of concern given that the European Investment Bank’s operations increased by 65 percent to counteract the effects of the crisis, but have fallen back to their pre-crisis level in 2012, according to the ILO report.
The ILO report also called for a youth employment initiative at a cost of 21 billion euros ($25.7 billion), the equivalent of 0.5 percent of eurozone government spending.