Published at ILO, 23 February 2009
GENEVA (ILO News) – More than 100 senior representatives of governments, workers’ and employers’ organizations, gather here on 24-25 February to discuss the impact of the economic crisis on the more than 20 million people employed in the financial sector worldwide.
A new ILO report prepared for the meeting says jobs in financial services around the world have been strongly affected, with announced layoffs exceeding 325,000 between August 2007 and 12 February 2009.
With close to 40 per cent of the above losses, or 130,000 lost jobs, announced from October 2008 to 12 February 2009, the report also sees a rapid acceleration in financial services job cuts over recent months.
“These figures almost certainly understate the real situation in a sector which has been at the epicentre of the financial and economic crisis”, said Elizabeth Tinoco, Chief of the ILO’s Sectoral Activities Branch. “As the global economy sinks further into recession, and financial institutions’ assets experience even greater impairment, the industry’s job losses can be expected to rise even faster.”
The report defines the financial sector as being comprised of employees in the banking industry (retail banking and wholesale banking acting on national, regional or global financial markets); the insurance industry and re-insurance; and other financial intermediaries (e.g. hedge funds, mutual funds, wealth management firms, insurance agents and financial advisors, etc.).
While the world economy as a whole will feel the fallout from the crisis, financial centres like New York and London are projected to bear the immediate brunt, the report says.
The meeting will also discuss measures that help workers cope with the crisis in the banking and insurance sectors. These include adequate, well-designed unemployment benefits and social protection, activation policies and effective public employment services.
According to the report, such measures would not only support the income of affected workers, but also facilitate transition to new jobs and reduce the risk of long-term unemployment and inactivity. It also recommends re-training programmes targeted at finance sector workers, given the likely cut in total employment in the sector.
The report also considers measures that encourage moving towards a more effective finance sector that focuses on the needs of the real economy. One of the proposed options is to adopt incentives that encourage the sector to shift to less risky activities through an improved corporate governance structure, including aligning executive pay and dividend policies with long-term outcomes.
According to the report, social dialogue among governments, employers and trade unions in the sector can facilitate the adoption of effective measures. It would also ensure that sector-specific measures are well designed.
“Impact of the Financial Crisis on Finance Sector Workers”, Issues paper for discussion at the Global Dialogue Forum on the Impact of the Financial Crisis on Finance Sector Workers, Geneva, 24-25 February 2009, International Labour Office, Geneva, 2009.
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