Many advanced economies will face high unemployment through 2011 even though job growth will return this year, the International Monetary Fund says.
In its initial chapters of the World Economic Outlook, the IMF said combating unemployment was a key policy challenge as the global economy emerges from the worst recession since World War Two.
It will release the full report next week.
"The nature of the recent recession in several advanced economies weighs against unemployment moderating any time soon," the Fund said Wednesday.
"Based on the current path of policies ... although employment growth will turn positive in many advanced countries in 2010, the unemployment rate will remain high through 2011."
The United States and Spain experienced high rates of unemployment during the recession, due to declining output and the collapse of their housing markets.
U.S. job growth resumed in March but the unemployment rate remains at 9.7 percent and is expected to rise as the improving labor market attracts discouraged workers back to seek work.
The IMF said that while monetary and fiscal policy remained the primary tools for boosting employment, repairing the financial sector and encouraging wage flexibility could also help reduce joblessness.
"For economies with lingering macroeconomic uncertainty, but where labor productivity remains strong, targeted and temporary hiring subsidies may help advance employment creation," the IMF said.
"In countries with large short-time work programs, phasing them out as the economy recovers, combined with carefully designed wage-loss insurance programs could help facilitate movement of labor across sectors."
In countries with two-tier labor markets, transitioning to an open-ended labor contracts system under which employment security gradually increased with tenure could help reduce the negative impact of temporary employment and the lack of unemployment benefit coverage for such workers, the IMF said.
Two-tier labor markets are those where employment protection legislation is strict for permanent workers and the share of temporary staff is high.
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