The world needs to create 50 million new jobs to get back to pre-crisis levels says the International Labor Organization's World of Work Report 2012, which gives the world advice on how to move past the "austerity trap."
"Policy-makers need to understand that the current approach has been counterproductive by all measures," said Steven Tobin, one of the authors of the report. "What we need now is a shift in the policy agenda."
The ILO report comes on the heels of public rejection of austerity measures, particularly in southern Europe and France, where voters recently swept socialist Francois Hollande into office over incumbant Sarkozy who implemented cost-cutting measures, in just one example of a global rejection of what the ILO calls "fiscally irresponsible" policy.
Under-employment, specifically in the developed world, is a big concern, and fears that cuts masquerading as fiscal responsibility will further hobble the economy to a point that it may not recover fully at all. As it is, says Tobin, Europe is ripe for a double-dip recession in 2012 and in two thirds of the countries, the unemployment rate has increased since 2010.
"The austerity and regulation strategy was expected to lead to more growth, which is not happening," Raymond Torres, director of the ILO's Institute for International Labor Studies, according to the Wall Street Journal.
Policy-makers around the world should be focusing on un- and underemployed workers, specifically young ones. Unemployment for workers under 30 have increased in 80 percent of advanced economies, fueling social unrest.
According to the report, "In 57 out of 106 countries, the Social Unrest Index increased in 2011 compared to 2010. Sub-Saharan Africa and the Middle East and North Africa show the most heightened risk of social unrest. In several countries in Asia and Latin America – where there has been employment recovery and, in some cases, improved job quality – have experienced a decline in the risk of social unrest between 2010 and 2011."
So what are the answers?
Marva Corley, another of the senior researchers and authors of the report, describes a three-pronged approach the world's economies will be able to find success with.
First, moving away from austerity. The measures supported by Germany and the IMF have the opposite of intended effects. Production is at a standstill, social programs are crumbling, and taxes are lower, all while the unemployment rate is rising with every new class of college graduates.
Second, there needs to be an improvement in the business environment. The report finds a disturbing trend across all regions, which is that "investment in small firms has been impacted disproportionately by the global crisis. This is crucial since small firms are key engines of job creation." An increase in investment would be spur jobs, and buoy spending power.
The last suggestion is to strengthen labor market institutions (known as unions to people who aren't economists). Corley, in a video on the ILO website, uses Brazil – an emerging economic power – as an example of the success of implementing these programs. "Brazil, which has increased expenditures on social benefits and increased minimum wages, has seen an improvement in terms of employment and economic growth."
For more on labor issues, see GlobalPost's 'Special Report' titled "Worked Over: The Global Decline of Labor Rights."