With record debt issuance funding record share buybacks and record wage disparity for executives, the “fruits of the rebound” in global asset markets (read – central-bank-inspired liquidity douche) have passed over a whole generation. As Bloomberg’s Niraj Shah notes, the risk of young people facing long-term unemployment is rising as firms increase payouts to shareholders and executives rather than invest in new workers, the ILO has warned. Structurally high unemployment is the second-biggest concern this year, according to the World Economic Forum’s global risks 2014 report.
Via Bloomberg’s Niraj Shah ( @economistniraj )
Global Unemployment to Climb
Global unemployment rose by 5 million to 202 million last year, according to the ILO. That figure is forecast to rise to 215 million by 2018 as employment growth, at 40 million new jobs a year, fails to match the 42.6 million people predicted to be eligible for employment every year. Government spending cuts as well as a failure of firms to invest in new workers may be contributing to rising unemployment.
Youth Unemployment at Record Levels
Young people account for 40 percent of the world’s unemployed, the ILO says. About 74.5 million people under the age of 25 are unemployed, giving a global youth unemployment rate of 13.1 percent. That compares with an overall global unemployment rate of 4.5 percent. More than half the youth population is unemployed in Greece and Spain. About 357.7 million youth globally were not in education, employment, or training in 2010.
Rising Wage Disparity
Wage disparity between the U.K.’s top earners and other workers is rising to levels last seen in the 1940s, according to the research group, the High Pay Centre. Average wages have increased about 300 percent since 1980, while average executive pay soared more than 4,000 percent over the same period. In 1980, the head of Barclays earned 16 times the average wage, compared with 160 times the average worker’s salary in 2011.
Lengthening Periods of Unemployment
Periods of unemployment are lengthening. A third of Europe’s jobless citizens have been without work for more than a year, according to the ILO. That damages job prospects as work skills are lost. The average American jobseeker found work after six months in 2012, compared with three months prior to 2008. In Spain, the unemployment duration increased to eight months in 2012 from five months in 2008.