Financial crisis to add 20 million jobless: ILO

Twenty million more people will lose jobs by the end of 2009 taking the figure of unemployed from 190 million in 2007 to 210 million in late 2009, as a result of the  worst financial crisis.

According to the ILO, the number of those people having to exist on less than $1 a day could rise by 40 million and those at $2 dollars by more than 100 million.

Talking to reporters, ILO director general Juan Somavia said that according to estimates based on IMF projections for the world economy, the global unemployment would mark the "first time in history that we pass 210 million."

According to the ILO's estimate, the job losses would effect ordinary working people and would hit all sectors of the economy such as financial services, construction, auto sector, tourism, services and real estate.

Somavia said the ILO, which brings governments, employers and workers together, wanted to push discussions to resolving the crisis towards job creation and other steps to promote the "real economy."

He said that global leaders need to focus on the impact on individuals rather than just financial institutions when they devise rescue plans.

He added that the projections could prove to be underestimates if the effects of the current economic contraction and looming recession are not addressed fast. "It would be tragic to respond to a sub-prime crisis with sub-prime policies," he said.

Wall Street has seen the loss of thousands of jobs and the same is with other financial centres as banks and financial institutions collapse or are forced to merge due to the credit crunch.

He said that the US financial crisis has spread to other financial markets around the globe, "This is not simply a crisis on Wall Street, this is a crisis on all streets. We need an economic rescue plan for working families and the real economy, with rules and policies that deliver decent jobs."

He added that "prompt and coordinated government actions to avert a social crisis", and said he welcomed calls for "better financial regulation and a global surveillance system of checks and balances."

"If we have enough resources to pump into the financial system, this is not the moment to say, 'Yes, but we don't have the resources to care about people,' " Somavia said.

He said the first step in a global rescue plan remains getting out of "the credit paralysis."

"Hopefully, the decisions that have been taken are going to work," he said, adding that all measures should be taken to contain as much as possible the fall of the real economy and reduce the recession possibilities as much as possible.

But then attention should turn to "taking care of those enterprises that produce the most jobs," Somavia said. "Those tend to be the small enterprises."

Citing China as an example, he said that the country's has vast domestic market and does not rely on exports only which accounts for 11 per cent of the economy, hence it is in a better position to weather the crisis better than most countries.

He was also alarmed that global unemployment had remained stagnant in spite of the strong economic growth between 2002 and 2007.

He said capital should be pumped into the economy concentrating on employment-intensive sectors including small enterprises, "The financial system has to go back to its fundamental function," he said.

The financial sector whose primary function among other things is to lend money to entrepreneurs and small businesses, have steered away and focused on lucrative financial transactions, "So this system began to siphon off resources from the real economy process," he said.