The increase in interest rates applied by central banks in general turns into more returns, especially in Western economies. benefits for banking This. And in turn, making the plate debt and shooting unemployment in poor countries. This is the conclusion of the International Labor Organization (ILO) in its latest report, released this Wednesday, and G20 a few months ago.
raise the price moneyIt makes banks charge more fees. credit and thus get more benefits. In Spain, for example, the bank posted its highest profit in 15 years, up 34% last year. Thanks to the rate increase and lower provisions, Spanish enterprises received 19,430 million euros.
This rate increase allows banks to charge more fees from individuals as well as governments that owe them money. What compels them to allocate an increasingly larger portion of their resources to pay off that debt.
The ILO warns that this debt slab narrows the margin of action from the public sphere to combat the effects of the price crisis and what’s left of the pandemic. The agency’s latest report reveals that highly indebted emerging economies are particularly affected by this rise in the cost of money. Two sides of the same coin.
For example, the Swiss bank Mozambique It has nearly $1 billion in bond offerings and syndicated loan debt. Credit SuisseAccording to the agency ‘swissinfo.ch’, the state has requested to finance the tuna fishing industry and strengthen maritime security. Some loans that were later sanctioned by US and UK authorities, as they could prove that some of their interest earnings were diverted to the accounts of Credit Suisse bankers and Mozambican officials.
That’s why the Swiss bank, which was recently sucked out of bankruptcy by its main rival, had to pay $475 million to enter through these two states in addition to its obligation to forgive its $200 million debt to Mozambique.
job gap
public debt of the group of states, 96% of world GDPAccording to the latest report from the ‘Global Debt Monitor’, with data referring to 2021.
States have less money because they have to allocate more resources to pay off their debts to other countries or international organizations and can spend less on public policies to improve the economy. So much so that, as stated by the ILO in its report, states with a high level of indebtedness, employment gaps twice as high as countries with low debt.
What is the employment gap? This new concept in the ILO methodology is both formally unemploymentthat is, they do not have a job and are actively looking for work, in addition to those who are potentially ’employable’ but are not actively looking for work for different reasons. An example would be a person of working age who has to take care of their children at home.
According to figures from the latest ILO study, the employment gap or unemployment rate among debtor countries, 25%compared to a little more 10% among countries with low debt. A gap that has skyrocketed during the current polycrisis (first with the pandemic, now with inflation) and is a significantly more torpedo for women in terms of employability than for men.
” financial restrictions and prosecutors are thwarting their regulatory response, and labor market conditions are getting worse,” and it’s climbing to 60% of all world governments, according to IMF data.
ILO calls for better pensions
All this forced the ILO to review its unemployment forecasts for 2023. In the case of Western and high-income economies, these forecasts improve, while the situation worsens with periphery states and less resources. “Unemployment is generally not expected in low-income countries and [especialmente] inside Africa And arab states The agency said in its report that it will return to pre-pandemic levels in 2023.
Poor states are seeing how the growth of their working-age populations has not stopped while their economies are not creating enough jobs to absorb this demographic growth. What does it promise to feed? migrant flows proportion of people who go to Europe or the United States, among others, in search of a better future.
In this sense, the ILO advocates improving education systems. social protection by guaranteeing adequate pensions in low-income states, especially for the elderly. And it is that organism researchers emphasize that some are better. pensions they reduce the fertility rates of societies because it is not necessary to have so many children to care for them, given the expectation of adequate benefits when they are no longer able to work.