(By Balachander) Eurozone could lose a further 4.5 million jobs by 2016 if there are no changes in policy direction, warns the International Labor Organization (ILO).
According to ILO, unemployment in the in the 17-nation bloc threatens to reach 22 million over the next four years from 17.4 million, or 11 percent, in April 2012.
All evidence points to the risk of a prolonged labor market recession, threatening the sustainability of the single currency, ILO said.
"It's not only the Eurozone that's in trouble, the entire global economy is at risk of contagion," said ILO Director-General Juan Somavia.
The agency said a concerted policy shift towards job creation is required to reverse the heavy unemployment crisis affecting the single-currency area.
According to the report, 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.
To move out of the austerity trap, ILO recommends that making shareholders pay for the bailouts would reduce the need for taxpayers money or further austerity measures.
ILO called for major non-Eurozone global players to contribute to the job-friendly recovery. In particular, large emerging economies need to rebalance growth.
Ensuring that labor incomes grow in line with productivity, boosting investment in the rural sectors and building solid social protection, consistent with their economic possibilities, would help, ILO suggested.
Raising efforts to implement core labor standards would also help achieve more equitable outcomes in all countries. There is therefore a strong case for concerted global action, the agency said.