• Jobless rates rise in advanced economies, says International Labour Organisation
  • No return to pre-crisis levels before 2015
  • Emerging economies bouncing back
ILO jobless forecast puts the squeeze on drinks sales

ILO jobless forecast puts the squeeze on drinks sales

Drinks firms face a tougher consumer environment than previously thought in developed markets after the International Labour Organisation predicted that jobless rates will not return to pre-crisis levels until at least 2015.

Employment prospects have "worsened significantly" in many countries, despite signs that the world is on the road to recovery from the global financial crisis, the International Labour Organisation (ILO) said late yesterday (30 September).

In its annual report, entitled 'World of Work - from one crisis to the next?', the ILO said that it does not expect advanced economies to reduce unemployment to pre-crisis levels before 2015. That compares to its deadline of 2013 in last year's report and raises the prospect of a prolonged period of weak consumer confidence.

"The first reason behind the deteriorated outlook is that fiscal stimulus measures, which were critical in kick-starting a recovery, are being withdrawn," said the ILO, which is a United Nations agency.

"In the majority of countries analysed in the report, fiscal policy has shifted to austerity which, if badly designed, will prolong the job crisis," it said. "In the 35 countries for which data exists, nearly 40% of jobseekers have been without work for more than one year," it added.

The ILO's assessment builds on commentary over the last few weeks that, for many, the recession lives on.

It highlighted a growing schism between advanced economies and emerging markets, as has been noted by several major drinks companies in 2010. Most emerging markets in Asia and Latin America can expect to return to pre-crisis employment levels by the end of this year, the ILO said.

Drinks industry leaders, from Diageo and Pernod Ricard to The Coca-Cola Co and PepsiCo, have all focused on their performance in developing economies in 2010. China's thirst for premium Cognac has significantly enhanced sales for both Pernod Ricard and Remy Cointreau, while Diageo has profited from strong Scotch whisky sales in Asia and Latin America, as well as beer sales in Africa.    

If the ILO's forecast is proved correct, these markets could increase their contribution to drinks firms' sales more quickly than imagined.

For the full ILO report, click here.