Unemployment to rise as leading economies struggle

DUBLIN // Unemployment in leading industrialised countries is poised to rise by eight million in the next two years as rich economies battle their worst recessions in 25 years, according to an OECD report. "Jobless numbers could rise to 42 million by 2010 from 34 million currently," the OECD said in the report released yesterday, forecasting the unemployment rate to climb from 5.5 per cent early this year to 7.25 per cent in 2010.

The figures are for the 30-nation OECD, which includes North America, most of Europe and leading industrialised Asian and Pacific nations. "Historical experience suggests that youth, immigrants, low-skilled and older workers are more likely to bear the brunt of rising unemployment," the OECD said in a statement released with its biannual Economic Outlook report. "Workers holding temporary contracts are also particularly vulnerable to an economic downturn," it added, highlighting the car and construction industries as sectors that were shedding jobs.

The rise in unemployment is likely to be most pronounced in countries which have been hit hardest by the financial crisis. By the end of next year, the unemployment rate was forecast to be at least two percentage points higher than at the end of last year in the US, the UK, Iceland, Ireland, New Zealand and Spain. The rate would rise by between one and two percentage points in nine other OECD countries, including France, Italy, Canada and Australia.

In the US, the world's biggest economy, the unemployment rate has steadily increased to hit 6.5 per cent last month, and an estimated 2.8 million people lost their jobs in the past 12 months. The US unemployment rate was forecast to peak at 7.6 per cent in the first quarter of 2010, while the figure for the euro zone would reach a maximum 9.1 per cent in the same period. Unemployment in Japan was forecast to rise from 4.1 per cent this year to about 4.4 per cent for next year and 2010.

In the report, the OECD warned that many leading industrialised nations faced their worst economic downturn for 25 years, with the US, European and Japanese economies set to shrink next year. House prices will continue to fall in many countries and there is a risk the financial crisis has further to run, with fragile banks exposed to new bad debts. "Many OECD economies are in or are on the verge of a protracted recession of a magnitude not experienced since the early 1980s," said Klaus Schmidt-Hebbel, the OECD chief economist.

* with AFP