(IDEX Online News) – "If current economic policies do not change quickly, the Eurozone may lose 4.5 million jobs over the next four years, a report by the UN's International Labour Organization warned Tuesday. This also poses a threat to the jewelry industry.

The report, "Eurozone job crisis: Trends and policy responses," states that there is “mounting evidence” that a prolonged labor market recession may be in the making.

One sector threatened by the European economic problems is luxury. As unemployment levels remain high in the Eurozone, and GDP is predicted at a growth of just +0.2 percent to a -0.3 percent decline in 2012, middle-class consumers are not expected to rush to jewelry stores and buy high-ticket items.

The report adds that this would increase the risk of social unrest and would further erode citizen’s confidence in their governments, the financial system and European institutions.

“Without a prompt policy turn – to address the crisis and to regain the trust and support of workers and enterprises – it will be difficult to implement the reforms necessary to put the Eurozone back onto a path of stability and growth,” the report states.

Total employment in the Eurozone remains 3.5 million lower than before the crisis, and that employment has fallen since the start of 2012 in half of the zone’s countries. The result is that 17.4 million people are looking for jobs in the region.

The jewelry industry's main driver, bridal related purchases would be especially affected by the very high unemployment rate among younger Europeans, who are particularly at risk, according to the report. The current youth unemployment rate is 22 percent in the Eurozone.

The youth unemployment rate is especially high in Italy, Portugal, Greece and Spain, with these last two countries having a youth unemployment exceeding 50 percent. Total unemployment in Spain is at 24.9 percent.

The report adds that by embracing a Eurozone growth strategy with jobs at its core, a recovery is still possible within a single-currency setting – however, to do this, austerity approaches need to be abandoned and countries must urgently reform their financial systems.

“In a depressed macroeconomic context, these reforms are likely to lead to increased numbers of layoffs without any boost to job creation at least until economic recovery gathers momentum,” it states.