Monday, September 13, 2010

IMF Says "Annus Horribilis", More Stimulus Needed to Fix Dire Labor Market

At a conference co-hosted by the IMF today, the entity says that the world's rich countries need to extend fiscal stimulus to "fix a dire" labor market that could threaten entire societies.

According to the IMF said more and more workers worldwide are unable to find jobs for longer periods, weakening social cohesion and raising risks of unrest and even undermining democracy.

Dominique Strauss-Kahn, IMF's Managing Director, said that "The labor market is in dire straits," adding that the Great Recession had left a "wasteland of joblessness." "We must acknowledge that the crisis will not be over until unemployment declines significantly," "growth and jobs the "most urgent problems."

European Commissioner for Employment and Social Affairs Laszlo Andor said 2010 had been an "annus horribilis" for unemployment. "If we fail to act ... 2011 may still turn out to be the annus horriblis for social cohesion."

Reuters: "The IMF said that extended fiscal stimulus was worth the additional debt if it helped cut long-term unemployment, which poses an even costlier burden on society as workers get discouraged, lose lifetime earnings or leave the labor market.

The IMF said that due to the deep crisis, it now backs schemes to extend unemployment benefits to help maintain demand and morale, and to give short-term incentives to companies to retain more workers but at reduced hours and wages".

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