If the global economy spirals downward as some think it could, workers are likely to take it on the chin. And if that happens, it’s a fair bet that support for globalization will erode.

A new report from the International Labour Office finds that economic turbulence—largely due to credit market turmoil and rising oil prices—could spur an increase in global unemployment by an estimated 5 million people in 2008.

The number of unemployed people worldwide in 2007 was an estimated 189.9 million, and the global unemployment rate was 6 percent, says the ILO, an agency of the United Nations.

Not only does the ILO’s annual Global Employment Trends report warn of a gloomy 2008, it has some bad news from 2007. Despite “sound” global economic growth of 5.2 percent and a net increase of 45 million new jobs last year, not all was sweetness and light for workers around the world, according to the study. It said the global unemployment rate was virtually unchanged, and the worldwide deficit in decent jobs—especially for the poor—is “massive.”

An estimated 487 million workers, or 16.4 percent of all workers, still don’t earn enough to lift themselves and their families above the $1 per person, per day poverty line. Meanwhile, 1.3 billion workers—43.5 percent—still live below the $2 per day threshold, the ILO says.

“While global growth is annually producing millions of new jobs, unemployment remains unacceptably high and may go to levels not seen before this year,” ILO director-general Juan Somavia said in a statement.

For business leaders, the prospect of millions more workers unemployed around the world this year should do more than tug at the heartstrings. Those workers double as consumers who may lose purchasing power, and as citizens who may turn against the global trade system.

That interconnected system is generating prosperity and profits in many places. But it also can amount to a tight-wire act for workers—one in which the safety net leaves much to be desired.

Unemployment benefits have been falling in the group of mostly developed countries that make up the Organization for Economic Cooperation and Development. A report last month from the research organization found that across most OECD countries, the level of benefits that unemployed people typically receive was 59 percent of average after-tax earnings in 2001. That figure fell to 55 percent in 2005. The report found that the “index of generosity” in the U.S., Greece, Turkey and Italy is below 30 percent.

Already, support for global trade is waning in some quarters. Americans and Western Europeans are less supportive of international trade and multinational companies than they were five years ago, according to a study last year by the Pew Research Center.

Political leaders in the U.S. are working on an economic stimulus package that may temporarily extend unemployment benefits. Will these leaders and others around the world do enough to head off or ease the potential trouble ahead?

As U.S. political leaders hash out how to rev up the economy, they would do well to strengthen the country’s economic safety net at the same time.

Amid housing and financial sector woes and reduced job growth, it’s clear the economy is facing a slowdown if not a downturn.

President Bush last week called for a stimulus package that includes tax incentives for American businesses to invest in their firms this year as well as tax relief for consumers.

“Letting Americans keep more of their own money should increase consumer spending, and lift our economy at a time when people otherwise might spend less,” Bush said in a speech.

That sounds great on the surface. But an across-the-board tax break may not be as effective in sparking spending as help given specifically to low-income or middle-income people, and to people out of work. According to a New York Times report last week, economist Mark Zandi has estimated that increases in unemployment benefits produced about $1.73 in additional demand for every dollar spent, while tax rebates to all citizens generated about $1.19 for every dollar spent. Reductions in tax rates produced just 59 cents per dollar.

Better unemployment benefits dovetail with calls from some leading economists for a stronger safety net. A sturdier net with improved unemployment benefits and training options not only has moral implications but economic growth potential. That can come in the form of both higher-skilled workers and a greater public appetite for global trade, if economic dislocations aren’t devastating.

According to a report last year from the Pew Research Center, just 59 percent of Americans have positive views of trade. That was the lowest figure of 47 countries highlighted in the study on economic globalization. What’s more, the report found that Americans are less supportive of international trade and multinational companies than they were five years ago.

Global trade, despite its downsides, is a powerful engine for generating prosperity. So is a better-trained workforce.

A stronger safety net, therefore, may be more than just a key to short-term economic growth. It could underpin long-term success as well.

A new study from professional services firm KPMG reveals that companies would love to trim their expatriate employee programs. But can they afford to in today’s global economy?

KPMG’s 2007 Global Assignment Policies and Practices Survey found that of 348 human resources executives polled, 49 percent believe international assignment programs “take too much time and effort to administer,” up slightly from 48 percent last year. Forty percent of respondents thought their international assignment programs were “more generous than they need to be,” compared with 38 percent in 2006.

During a reporting trip to China a year ago, I heard discussions along these lines. Expat compensation packages—which traditionally have included “hardship pay” and typically cost at least twice that of an executive in America—have come under scrutiny as cities like Beijing and Shanghai become more cosmopolitan.

On the other hand, the services of expats in China are in high demand as companies from around the world expand operations in the booming country. A study by consulting firm Hewitt Associates released in December found that 55 percent of surveyed organizations plan to increase the number of expatriates they employ in China in 2008.

KPMG suggests globe-trotting generally is on the rise. “As more companies transition to a global approach and conduct more business in regions all over the world, international assignment programs need to change to fulfill the business needs required to move their workforce globally,” Ben Garfunkel, national partner in charge of KPMG’s international executive services practice, said in a statement.

Sure, making expat programs more efficient is a fine idea. But companies would do well to avoid cutting too close to the bone—and getting beat when it comes to global talent battles.

 This blog item. published January 4, contained incorrect and potentially misleading information about Denmark’s efforts to help unemployed people get back to work. Temporary subsidies help employers pay wages to some unemployed workers while they complete an on-the-job training program. And a program to give unemployed individuals an allowance to start up a business ended several years ago. Corrected 07/23/08

 A recent article in The New York Times made the case that Denmark’s high income taxes—which underpin a sturdy economic safety net—are pushing young Danes to leave the country.

The story and related concern about the country’s labor supply raise questions about Denmark’s economic “flexicurity.”

Flexicurity refers to a system that gives companies a fair amount of freedom to hire and fire but also provides significant economic security to workers in the form of unemployment and welfare benefits.

Denmark is part of a broader Nordic pattern of paying out substantial unemployment benefits. A recent report from the Organisation for Economic Co-operation and Development research group found that Nordic countries provide levels of unemployment benefits that typically are above 70 percent of average after-tax earnings. The report found that the comparable “index of generosity” in the U.S., Greece, Turkey and Italy is below 30 percent.

Denmark also does a lot to help unemployed people get back to work, such as providing various training programs. In addition, temporary subsidies help employers pay wages to some unemployed workers while they complete an on-the-job training program.

Denmark’s system has the backing of a major industry association, the Confederation of Danish Industries. “The Danish example shows that labour market flexibility and job security are not contradicting terms but go hand in hand,” the Confederation says on its Web site.

And Danish flexicurity has produced impressive results: an egalitarian society with a high-octane economy. Denmark’s economy “barreled ahead in 2006 by 3.5 percent, one of the best performances in Western Europe,” The New York Times says. “The country is effectively at full employment.”

But a cost of the success is high taxes: The marginal tax rate paid by those making more than about $70,000 is 63 percent, according to the Times. The Times story profiles a Denmark-native software engineer who lives in Germany in part to avoid Danish taxes. It also warns of a looming labor shortage in the country.

The Times story comes on the heels of an OECD report last month that cites labor shortages in Denmark. “[W]age growth is now gaining momentum,” the report says, “and loss of competitiveness is expected to weigh down on growth in the coming years.” It predicts Denmark’s GDP growth will slow to less than 1 percent in 2009.

To improve the labor situation, the Confederation of Danish Industries has called for steps including lower taxes, removal of early retirement subsidies and a more effective public sector.

Meanwhile, OECD says one in three of its member countries—which are primarily developed nations—has cut unemployment benefits in the past six years with a view to encouraging unemployed people to find jobs. The pressure is clearly on Denmark to do the same.

Years ago, the Vikings from Denmark and other Scandinavian lands were famous for imposing their will on other parts of the world. Now, in a more peaceful era, how will this small nation respond to the global economic challenges facing it? Will Denmark persuade others to follow its flexicurity lead? Will it follow others in unraveling the safety net? Will it find a new way?