United Nations: The Eurozone, grappling with a severe financial crisis, may lose over four million jobs in the next four years if prompt action is not taken to reform the financial systems, the United Nations has warned.
A report produced by the International Labour Organisation (ILO) titled 'Eurozone job crisis: Trends and policy responses' said there is "mounting evidence" that a prolonged labour market recession may be in the making, with labour markets in Europe not having yet recovered from the global crisis that hit the world economy in late 2008.
"If current economic policies do not change quickly, the Eurozone may lose 4.5 million jobs over the next four years," the report said.
The job losses would increase the risk of social unrest and would further erode citizen's confidence in their governments, the financial system and European institutions, the report warned.
"Without a prompt policy turn, to address the crisis and to regain the trust and support of workers and enterprises, it will be difficult to implement the reforms necessary to put the Eurozone back onto a path of stability and growth," the report said.
The report described fiscal austerity measures as being detrimental to employment.
"In a depressed macroeconomic context, these reforms are likely to lead to increased numbers of layoffs without any boost to job creation at least until economic recovery gathers momentum," it said.
Recovery is still possible within a single-currency setting by embracing a Eurozone growth strategy with jobs at its core.
However it is important that austerity approaches need to be abandoned and countries must urgently reform their financial systems.
"Repairing the financial system, promoting productive investment, reinforcing effective employment programmes, maintaining social protection, fostering social dialogue and undertaking job-friendly fiscal plans would bring the Eurozone out of the austerity trap and pave the way for a sustainable recovery with social cohesion," the report said.
New regulation to prevent inappropriate financial practices is also needed, it added.
Total employment in the Eurozone remains 3.5 million lower than before the crisis. Employment has fallen since the start of the year in half of the zone's countries, resulting in a total of 17.4 million people looking for jobs in the region.
Young people are particularly at risk, with the current youth unemployment rate at 22 percent in the Eurozone, especially in southern countries such as Italy, Portugal, Greece and Spain, with the last two having youth unemployment exceeding 50 percent.
First Published: Wednesday, July 11, 2012, 23:23