The Great Recession and the jobs crisis

The global financial and economic crisis triggered sharp output contractions in almost all industrialized economies in 2009 for the first time in the post-Second World War era. Besides the direct impacts of this contraction in developed economies, subsequent declines in cross-border trade and the rising cost of finance had serious negative effects on emerging and developing economies. In particular, as businesses cut production in response to lower aggregate demand, workers were shed in large numbers, sharply increasing unemployment worldwide. Between 2007 and the end of 2009 there was an unprecedented increase in the numbers unemployed (International Monetary Fund and International Labour Organization, 2010). This reported increase in unemployment most likely underestimates the true depth of the problem, since job loss figures are based on official labour statistics, which in many developing countries only covers employment in the formal economy, mainly in urban areas.