UNEMPLOYMENT is likely to worsen over the next few years even if governments manage to dig the world out of the recession, two leading economists warned yesterday.
There are good reasons for believing that the green shoots of economic recovery are real and will stabilise the world's financial position but jobs will continue to be lost while few jobs will be created, US economist Jamie Galbraith and Portuguese economist Maria Rodriques said in lecture hosted by Tasc, an Irish think-tank which seeks to encourage debate on economic equality.
"The level of employment and unemployment is of far greater importance than gross domestic product," said Professor Galbraith, a former adviser to the US and Chinese governments and son of economist John K Galbraith. "We're looking at a period that can only be a profound disappointment."
Unemployment is rising across the US and Europe even as economies show sighs of stabilising. Ireland lost 350 jobs a day last month while the jobless figure jumped 166pc in the past year. The US has shed 600,000 jobs a month so far this year.
Prof Galbraith declined to comment directly on the Irish economy, noting that he did not know Ireland well, but criticised bank bailouts, saying that some banks should be allowed to fail and would yet fail because the bailouts discouraged new management and honest asset valuations.
The entire sector "is thoroughly infected by fraud", he told an audience at the Royal Irish Academy which included Labour finance spokeswoman Joan Burton and trade union leaders Des Geraghty and David Begg.
Prof Rodriques, who served as a cabinet minister in Portugal, said the recession "started as a financial crisis, turned into an economic crisis and is becoming an employment crisis."
She criticised governments, such as Ireland, which are slashing spending and raising taxes. "Public spending will be more effective than tax cuts," she said.
She called on the EU to agree to the creation of euro bonds to reduce the cost of financing debt for smaller European countries.