Unemployment to Hit Record High in 2013: ILO

  

  Published: Tuesday, 22 Jan 2013 | 12:00 AM ET

By: Katy Barnato

World unemployment could top record levels this year and continue rising until 2017, the International Labour Organization (ILO) said on Tuesday in its annual employment report.
2009 currently stands as the worst recorded year for world unemployment, with 198 million people across the globe without work.

In its 2013 Global Employment Trends report, the ILO forecasts unemployment numbers will rise by 5.1 million in 2013 to reach 202 million, topping 2009's record.  The report also predicts unemployment will rise further in 2014 to reach 205 million."Unemployment remains as dire as it was during the crisis in 2009," Ekkehard Ernst, chief of the employment trends unit at the ILO, which wrote the report, told CNBC.

While the crisis may have originated in the developed world, the report noted that 75 percent of 2012's newly unemployed came from outside it, with East Asia, South Asia and Sub-Saharan Africa being the worst affected.

Ernst attributed this to the "spillover effect" of weak growth in advanced economies, and in particular, the recession in Europe.  "The main transmission mechanism of global spillovers has been through international trade, but regions such as Latin America and the Caribbean have also suffered from increased volatility of international capital flows," the report said.  It also blamed incoherence between monetary and fiscal policies and a "piecemeal approach to financial sector and sovereign debt problems, in particular in the euro area."

"The indecision of policy makers in several countries has led to uncertainty about future conditions, and reinforced corporate tendencies to increase cash holdings or pay dividends, rather than expand capacity and hire new workers," the report said.

Ernst added that labor markets can lag other economic indicators, meaning they might not reflect recent upturns in the world economy.  "Labor markets reflect what has happened in the last year… it takes some time for improvement in output to be reflected," Ernst said.

In addition, the ILO is recording rising numbers of people who choose not to search for jobs because they think the situation is hopeless. These people, officially classified as discouraged workers, may choose instead to rely on a partner's earnings or claim welfare benefits, if available.   "The labor market situation has been so bad for so long, discouragement has grown out of proportion," he said.
Despite the gloomy forecast from ILO, some people see a turnaround for the global economy. Pimco CEO and co-CIO Mohamed El-Erian said the world economy could be nearing the end of its "new normal" of high unemployment and slow growth.

"We said in 2009: three to five years," El-Erian told CNBC on Thursday, referring to how long the phenomenon of "new normal" might last. El-Erian coined the term in 2009.

 -By CNBC's Katy Barnato

Think Only the Rich Will Pay More Taxes? You're Wrong

 

Think Only the Rich Will Pay More Taxes? You're Wrong
 
Because neither the Democrats nor the Republicans wanted to defend it, the temporary payroll tax cut enacted under Obama died at the end of 2012, which means that everyone in the country will see a bigger tax bite out of their paychecks this year.


You followed all of the debate over the fiscal cliff and were relieved to hear that taxes were only going up for the rich this year.
Well, you were wrong.
Because neither party wanted to defend it, the temporary payroll tax cut enacted under Obama died at the end of 2012, which means that everyone in the country will see a bigger tax bite out of their paychecks this year. So when you get your first check of the year, look at the amount charged under "FICA" – you're going to be paying more than you did in December.
How big a bite is it? For many middle class workers, it will work out to a trip to the grocery store or a tank of gas less every two weeks this year.
Here are the numbers.
For a single person making $60,000 per year who's paid bi-weekly, gross income in a paycheck is $2,307.69.
In December, you would have had to subtract from that federal withholding taxes of $403. 56. FICA taxes were $96.93. Medicare was $33.46. State withholding for a person living in Maryland was $177.35.
That gives the taxpayer net pay in one check in December of $1,596.39.
So what happens this month?
Gross pay is the same, as are the Medicare and state taxes. But FICA taxes go up sharply – to $143.08. That's a $46.15 bite from the political decision to allow the payroll tax cut to expire.
But here's the good news – federal withholding from this paycheck are down by about 4 bucks, to $399.18, due to the way the federal government calculates inflation.
That gives our taxpayer net pay of $1,554.62, or $41.77 less than he or she made for each paycheck in December. And that's money that could have gone to that bag of groceries or tank of gas.
 Read More: http://www.cnbc.com/id/100372837/

CNBC.com Article: Boomers Stand to Benefit Most from Health-Care Act

Boomers Stand to Benefit Most from Health-Care Act
Hit hardest by unemployment, shrinking nest eggs and rising health care costs, the Baby Boom generation will be the main beneficiaries of the Affordable Care Act, according to experts.


With the presidential election and Supreme Court decision behind us, the federal government is moving forward with the Affordable Care Act. Baby Boomers stand to gain the most.
Since the recession, Boomers have been hard hit by unemployment, shrinking nest eggs and rising health care costs. During those years, about 8.6 million Boomers were without health insurance, according to a special 2009 report by Commonwealth Fund.
As the Boomer generation approaches retirement, many hope that the health care law will fill the void. "It is a game changer," says Ron Fontanetta, a health care group practice leader at Towers Watson. "It will provide health care access to pre-65 retirees in a very significant way."
Retirees who have not reached age 65 are more at risk -- they don't qualify for Medicaid, and if their former employers don't offer retiree health benefits, they will not have a group discount.
Also, it doesn't take much for a health insurance company to say that they have a pre-existing condition and deny them coverage, says Paul Fronstin, head of health benefits research at EBRI. Even if Boomer retirees can get a private health insurance plan, it will be very costly.
Based on their age alone, Boomers have to pay prices that are five to seven times higher than younger Americans, according to AARP. But if early retirees can wait until the ACA takes effect, it will change the playing field, says Fronstin.
-- Beginning in 2014, the law is supposed to prevent insurers from denying coverage to those who have a pre-existing condition. On Nov. 20, the Obama administration said that it was moving forward to implement provisions to ban discrimination and protect consumers from possible insurance abuses.
--The ACA also will do away with lifetime and annual dollar limits on benefits, and it will limit the age rating so that a Boomer can only pay three times as much as younger person.
--Health insurance will not necessarily be less costly. It will be operated by state health insurance exchanges, which will offer a competitive private health insurance market that should provide one-stop shopping.


 Read More: http://www.cnbc.com/id/100343188/