By Nick Mann | 1 May 2012

Around 50 million jobs have gone ‘missing’ since the start of the global economic crisis in 2008 and the deficit is unlikely to be closed in the near future, according to the International Labour Organisation.

The UN agency said yesterday that moving towards a ‘growth and jobs-orientated’ strategy would help to address the gap. In advanced economies, a job-friendly mix of increased public spending and taxation could create between 1.8 million and 2.1 million jobs within one or two years.

In World of work report 2012: better jobs for a better economy, the ILO said the recent shift made by towards fiscal austerity and tough labour market reforms was actually making the situation worse.

Lower public investment has had a negative impact on the economy and jobs which cannot be compensated for by private sector investment, it explained.

‘Austerity has, in fact, resulted in weaker economic growth, increased volatility and a worsening of banks’ balance sheets, leading to a further contraction of credit, lower investment and, consequently, more job losses,’ the report said.

‘Ironically, this has adversely affected government budgets, thus increasing the demands for further austerity. It is a fact that there has been little improvement in fiscal deficits in countries actively pursuing austerity policies.’

Raymond Torres, the director of the ILO Institute for International Labour Studies and author of the report, added: ‘The narrow focus of many eurozone countries on fiscal austerity is deepening the jobs crisis and could even lead to another recession in Europe.’

Emerging and developing world countries should focus on measures to reduce poverty and income inequality as well as stimulating demand, while advanced economies should focus on giving unemployed people support to find new jobs, the report said.

According to the ILO, jobseekers in advanced economies are ‘demoralised’ and losing skills while small companies cannot access the credit they need to create jobs. As it stands, job recovery in these countries – and Europe in particular – is not expected before the end of 2016.

Many of the new jobs currently being created in these countries are precarious, it added, with non-standard forms of employment on the rise in 26 out of the 50 countries covered by the report.

Mr Torres said: ‘Countries that have chosen job-centred macroeconomic policies have achieved better economic and social outcomes.

‘Many of them have also become more competitive and have weathered the crisis better than those that followed the austerity path. We can look carefully at the experience of those countries and draw lessons.’