Job fears pressure European governments to act

By Estelle Shirbon - Analysis

PARIS (Reuters) - European governments are facing calls for action to prevent a sharp rise in unemployment in the worst economic upheaval since the 1930s Great Depression.

The International Labour Organisation has forecast 20 million jobs worldwide will disappear by the end of next year, and economists expect job queues to lengthen across Europe.

Companies facing a sharp downturn in activity have already announced thousands of job cuts. The inevitable question from workers to governments is: "You found billions of euros for the banks, what are you doing now to protect jobs?"

The answers range from fiscal incentives for new investments, as in France, to making it harder for foreign workers to enter the country, as in Spain. But there has been nothing huge and coordinated across borders like the banking rescue plans.

Some economists think that is just as well, warning that governments should be wary of rolling out costly stimulus packages when many countries already have solid safety nets inherited from the fight against past recessions.

"Most countries' unemployment policies are more advanced now, not only benefits but also training and measures to help people find work in tough times," said Stefano Scarpetta of the Organisation for Economic Cooperation and Development (OECD).

He also said the crisis had hit at a "relatively favourable" time, with low unemployment rates in many European countries.

Analysts also say states would be unwise to rush into new spending when they are already saddled with budget deficits and they face a rise in welfare spending as people lose jobs.