FACTBOX-IMF views on fixing "dire" global labour markets

OSLO, Sept 13 (BestGrowthStock) – Following are main points from an
International Monetary Fund paper on reducing the human cost of
recession, presented in the Norwegian capital on Monday at a
joint conference with the International Labour Organisation.

* “Labour markets are in a dire state” with over 200
million people around the world unemployed. Nearly
three-fourths of the increase in the number of unemployed
during the global recession has occured in advanced,
high-income economies.

* The problem is most severe in the United States, where
unemployment has increased by 7.5 million people since 2007.
The U.S. jobless rate has risen to 9.6 percent, while Spain’s
has topped 20 percent.

* “A recovery in aggregate demand is the single best cure
for unemployment. Hence as a strategy, most advanced economies
should not tighten fiscal policies before 2011, because
tightening sooner could undermine the recovery.”

* Consolidation plans for the most advanced countries imply
an average tightening of 1.25 percentage points of GDP in 2011.
“A more severe consolidation would stifle still-weak domestic
demand”, although circumstances differ from country to country.

* “Monetary conditions can remain accommodative for the
foreseeable future in most advanced economies” with inflation
pressures subdued at around 1.25-1.5 percent in 2010 and 2011.

* “As recovery takes hold, subsidies to short-term work
could be phased out over the coming year.” Provision of
unemployment insurance benefits should be tied to requiring job
training and social work, so that the unemployed maintain some
attachment to the labour force.

* “The potential costs and inefficiencies of hiring
subsidies are arguably less severe than the costs of persistent
unemployment.” Specific targeting strategies should spur hiring
for groups that are most adversely affected and least likely to
be rehired in the absence of subsidies.

* “Over the remainder of this year and next” the strategies
of 1) supporting aggregate demand through fiscal and monetary
stimulus, 2) easing the pain in labour markets through
short-term work programmes and 3) provision of unemployment
insurance benefits “should remain in place.”

(Reporting by Wojciech Moskwa)

FACTBOX-IMF views on fixing "dire" global labour markets