Unemployment could hit 210million by 2009

The International Labour Organisation said last Monday that preliminary estimates suggested that global unemployment could rise from 290million in 2007 to 210million in 2009 due to the financial crisis we are currently facing.

Juan Somavia, ILO director-general, said the forthcoming summit on the financial crisis called by US President George W. Bush and French President Nicolas Sarkozy should focus on “protecting and promoting sustainable enterprises and decent work opportunities”.

“We welcome the current calls for better financial regulation and a global surveillance system of checks and balances, but we must reach beyond the financial system,” he said. “We must return to the basic function of finance, which is to promote the real economy.”

The number of working people living on less then a dollar a day is also estimated to increase by 40million and those on less then $2 a day by 100million said the UN labour agency.

Mr. Somavia will join the Un secretary-general along with other heads of UN agencies next weekend in New York to discuss what can be done to improve these estimates.

“We need prompt and co-ordinated government actions to avert a social crisis that could be severe, long-lasting and global,” he warned.

Sectors such as construction, car industries, tourism, finance, services and real estate are likely to have the highest job losses said the ILO.

UK jobless rise confirms grim outlook

Important data was released today underlying the weakening British economy. This data showed the biggest one-month jump in unemployment for more than 17 years. The news follows a spate of data over the past two weeks that showed falling house prices, decreasing car sales and rising inflation.

The latest data from the Office for National Statistics demostrated a 0.5% increase in unemployment, to 5.7 per cent, for the three months to the end of August.

This rise is mostly due to the crisis in the financial markets which has forced companies to reduce their workforce. The total number of people employed fell by 122,000 to 29.41m in the second quarter of 2008, the biggest fall since 1993.

“These data are grim,” said Alan Clarke, economist at BNP Paribas. “Employment is falling off a cliff and it is still early days in this slowdown.” He continued by saying that this data suported the need to further reduce interest rates by the Bank of England’s monetary policy committee, despite the sharp rise in CPI.

Michael Saunders, an economist at Citi, said the latest jobs data worried the rapidly decreasing UK housing market. This is because rising unemployment will make it more difficult for homeowners to keep up mortgage payments. Household consumption is at 60% to 65% of UK GDP, a sharp rise in unemployment would only make things worse.

“This is yet another reason for UK house prices to go on falling and for consumer spending to fall off a cliff,” Mr Saunders said. “It’s part of the vicious cycle on the way down.”


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Swiss Unemployment Rises

Switzerland saw its unemployment rate increase from 2.5% in August to 2.6% in September for the first time in the past 5 years.

Companies are doing everything they can to decrease costs due to the crisis, as manufacturing was also decrease for the first time in 3 years. The International Monetary Fund said that the global economy is headed for a recession in 2009.

"We're feeling the full impact of the global turmoil,'' said David Marmet, an economist at Zuercher Kantonalbank in Zurich. "It's a crisis of trust given current uncertainties. Companies will curb investment and thus economic growth.''

Europe’s biggest maker of lathes for the watch industry, Tornos SA, is adjusting to the decreased demand by reducing working hours from the auto industry wanes. Zurich based UBS is the European bank that suffered the worst from the credit crisis and is now planning reduce its workforce by about 25,000 until the end of the year.

The number of people looking for jobs rose 2,388 last month to 145,937. Companies had 14,132 open jobs in September, up 369 from the previous month.

UBS to cut more jobs

UBS has announced its decision on cutting another 10% of its investment banking worforce. The Swiss bank currently has a global workforce of 19,000 employees but this figure will decrease between 1,900 and 2,000 until the end of this year.

This announcement came after a cut of its total workforce from 23,000 to its current 19,000 since the beginning of the crisis.

Of the latest reductions, 550 could come from the fixed income division, with a further 300 or more being taken from the corporate finance and advisory businesses. UBS's equity franchises will contribute with at least 250 reductions. The remaining cuts will come from back-office and support functions.

The bank's troubled fortunes are though to be on the turn.

“There’s a sense that the light at the end of tunnel may not be an oncoming train,” said one UBS employee on Wednesday.

The Swiss giant has forecasted a net profit of SFr755m (€478m) after writedowns of SFr3.3billion in the third quarter of 2008. Since last October, UBS has announced $43billion of writedowns.