OSLO (Reuters) -- The International Labour Organization said Sunday it is too early to start withdrawing fiscal stimulus worldwide and recovery policy should focus on jobs and restoring lending to job-intensive small companies.
The ILO said 30 million jobs have been lost since 2008, even with new public spending plans having saved or created some 23 million jobs -- albeit at the cost of fast-growing state debt.
“There has been too much focus on how much further we are going into debt, when the question is how much more we should invest to get the real economy going,” ILO Director General Juan Somavia told Reuters in an interview.
The ILO, a United Nations agency which promotes social justice and labor rights, believes stimulus withdrawal was “going too soon, too fast” to underpin a still “fragile” global economic recovery from the 2008-2009 crisis, Somavia said.
But he said fiscal consolidation in the long term was “absolutely necessary and nobody opposes this.”
The ILO and the International Monetary Fund co-host a conference about labor markets during the global recovery in Norway Monday, which will be attended by the prime ministers of Spain and Greece, as well as the finance minister of France, among others.
Somavia said bank rescue packages and expansive monetary policy have meant lenders have access to easy money, but have not passed on the savings to their main job-creating clients -- small and mid-sized enterprises.
“The key bottleneck is credit to small enterprises,” he said. “The banks saved by public money should make their own contribution to making sure the real economy picks up.”
He said that prematurely cancelling stimulus budgets enacted after the 2008 financial meltdown could hobble growth and condemn millions to long-term unemployment.
He declined to point a finger at Britain, where Prime Minister David Cameron has begun aggressively slashing the budget, but praised U.S. President Barack Obama’s $50 billion jobs program, announced last week.
“We can’t simply celebrate that we’ve gotten out of the crisis and accept that jobs will take a long time to come back,” he said, noting that U.S. unemployment has been stuck above 9 percent while in Spain it has soared to more than 20 percent.
Complacency in a coordinated policy focus on jobs, he said, would cause a repeat of “the crisis before the crisis,” in which he believes corporate profits flowed disproportionately to the rich instead of workers, inflating the financial bubble.
And with 440 million people set to enter the global labor market in the next 10 years, the stakes are high.
“The danger is that we will have a lost generation of young people,” said Somavia.
Editing by David Holmes