The Great Recession of 2008-2009: Causes ... - Index of - IZA

Of the countries that emerged from recession at the end of 2009, gross capital formation has
only expanded in Australia 45 , Canada, Iceland, Korea, Mexico, Norway, Switzerland, Turkey
and the US, which does not bode well for the longer term growth prospects in other countries.
Moreover, output growth in a majority of economies (80%) has been supported by an
expansion in exports, which emphasizes the important (but potentially fragile) contribution of
the rebound in global trade to the recovery.
5.2 Labour market remains in crisis
The real test of the recovery is not whether the economy in aggregate is back on track but
whether there are signs of improvement in the labour market. In this respect, unemployment
continues to rise in the vast majority of OECD countries, having peaked only in Australia,
Japan, Korea, Mexico and Poland (out of the 20 countries that have emerged from recession),
and even in these countries, it is still too early to proclaim that the crisis in the labour market
is over.
Rather focusing just on the levels of employment/unemployment, a fuller insight into the
state of the labour market can be gained by looking at flow data. In this respect, layoffs
peaked early in 2009 before returning to pre-crisis levels. This trend is evident in both the
data on monthly lay-offs at the company-level across the world in different sectors as
reported by the media between December, 2008 and September, 2009 (Figure 12), and
figures on flows in the US labour market (Figure 13). 46 In the case of media-announced layoffs
(which tended to be large companies), the peak occurred in January 2009 when almost
382,000 pending dismissals were announced globally. In the US, monthly layoffs reached a
maximum of 2.5 million in the same month.
45
Australia did not technically enter a recession.
46
The firm-level figures were estimated from data reported on a bi-weekly basis in the Financial Crisis Alert
Series (FCNA) compiled by the International Labour Office since mid-December 2008. In all, information was
available on 417 companies across the world.
49