OECD warns of fully blown social crisis

March 30, 2009
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, ROME, Mar 30 – The Organisation for Economic Cooperation and Development warned Monday of a "fully blown social crisis" and said restoring global economic growth was a moral responsibility.

"Restoring global growth is an economic and political priority, but also an ethical, moral, social and human imperative," OECD chief Angel Gurria told a Group of Eight "social summit" on the human cost of the world financial crisis.

Warning of a "fully blown social crisis with scarring effects on vulnerable workers and low-income households," Gurria urged "quick and decisive action" by leading economies to boost social protection.

"For we can no longer think we will save ourselves without saving the others," Gurria said.

Also Monday, Gurria warned that the OECD economies may shrink 4.3 percent this year, an OECD spokesman told AFP.

Labour Minister Maurizio Sacconi, for his part, said social protection policies can spur economic recovery.

"Action is needed in terms of protection of people who are hurt by the crisis," he said on the second day of the meeting of labour and social ministers of the G8 rich nations plus those of six emerging nations.

"Social policies are therefore essential… they can be the driver of economic recovery, especially because the commitment is to restore people\’s confidence in the future," Sacconi said.

The three-day Rome meeting comes amid dire warnings of social unrest and follows protests in several European cities ahead of a summit of the Group of 20 developed and developing nations on the financial crisis, set for Thursday in London.

Sacconi singled out the plight of workers who lose their jobs in their prime, women "who already suffer from discrimination," and young people in temporary work situations.

"To consign these people to joblessness is a grave injustice," he said.

From Monday, the meeting of the so-called "Group of 14" includes the labour and social ministers of emerging giants China, India and Brazil as well as Mexico, South Africa and Egypt.

Gurria criticised stimulus packages introduced so far for earmarking too little for social protection.

"The bad news is that these additional funds are rather limited, accounting for about eight to 10 percent of total expenditures in the United States and France and less in most of the other countries," he said.

"This may turn into a missed opportunity."

Many developing countries do not have the kind of safety nets that help to soften the blow of rising unemployment in industrialised countries, Gurria said.

"Only about one quarter of vulnerable developing countries have the ability to finance job creation or safety-net programmes," he said.

US Labour Secretary Hilda Solis said some 4.4 million jobs have evaporated in the United States since December 2007.

While average national unemployment stands at 8.1 percent, the rate is far higher in certain areas and for "communities of colour and young people," whose jobless rates exceed 20 percent, she said.

"As labour ministers we understand that these are not just numbers," Solis said at her first G8 appearance. "These are families with mortgages to pay, children to care for, and retirements to plan. These are workers that deserve economic security."

Gurria described the outlook for the short-term labour market as "gloomy," citing an OECD forecast of unemployment rates nearing "double digits" in the OECD area except Japan by 2010, compared with the recent low of 5.6 percent in 2007.

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