Warning that high unemployment could set off EU confidence crisis

At a conference co-hosted by the IMF and the International Labour Organisation, visiting Spanish Prime Minister Jose Luis Rodriquez Zapatero said high unemployment may trigger a "crisis of confidence" in Europe.

The IMF said more and more workers worldwide were unable to find jobs for longer periods, weakening social cohesion and raising risks of unrest and even undermining democracy.

"The labour market is in dire straits," said IMF managing director Dominique Strauss-Kahn told the meeting, adding that the recession had left a "wasteland of joblessness".

"We must acknowledge that the crisis will not be over until unemployment declines significantly," he said, calling growth and jobs the "most urgent problems".

According to International Labour Organisation (ILO) data, 30 million people have lost their jobs since 2007 – three-quarters of them in the developed world. A further 23 million would be jobless if not for stimulus packages. The IMF said that extended fiscal stimulus was worth the additional debt if it helped cut long-term unemployment.

Mr Zapatero said longer periods of high unemployment could set off a confidence crisis in the EU, which has been rocked by high debt and financing fears from Greece to Portugal.

"The worst crisis would be a crisis of pessimism, of a lack of confidence, of resignation. Europe must not fall into that," he said, adding that job training would be the top priority for Spain, where 20 percent of the workforce is without a job.