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Substantial job 'gaps' are threatening the recovery

The "large and persistent" shortfall in the number and quality of jobs in some of the world's largest advanced and emerging economies is threatening economic recovery, a new report shows.

Substantial job "gaps" and overall weakness in the labor market is stunting economic growth, a joint report prepared by the International Labour Organization (ILO), OECD and the World Bank Group found.

The labor markets of the G20 countries are still struggling some six years after the financial crisis and the job shortage is set to continue until 2018 if growth continues at its current rate.

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Terri Henderson, 6, center, whose mother is El Salvador, attends a rally with members of Congress at Union Station's Columbus Circle to announce the Restore Opportunity, Strengthen, and Improve the Economy (ROSIE) Act, July 29, 2014. The legislation provides incentives for government contractors to pay a living wage and other benefits that would help low-income workers.
Tom Williams | CQ Roll Call | Getty Images
Terri Henderson, 6, center, whose mother is El Salvador, attends a rally with members of Congress at Union Station's Columbus Circle to announce the Restore Opportunity, Strengthen, and Improve the Economy (ROSIE) Act, July 29, 2014. The legislation provides incentives for government contractors to pay a living wage and other benefits that would help low-income workers.

As it stands, more than 100 million people are unemployed in the G20 economies and 447 million employees are "working poor" or living on less than $2 a day in emerging G20 economies, according to the report.

Echoing comments from Bank of England Governor Mark Carney, the report also said wage growth has significantly lagged behind productivity and real wages have stagnated or even fallen in most G20 countries.

"We are seeing wage and income inequality widening in many G20 countries, and if the goal is stronger, sustained and balanced growth then inequality cannot be ignored," Nigel Twose, senior director for jobs at the World Bank Group said.

"Equally, the situation of young people who are out of work is acute, and countries that ignore their plight do so at their own peril. There is no magic formula to solve this jobs crisis but we do know that it requires a 'whole of government' approach, involving the active collaboration of many ministries," he said.

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The members of the G20 comprise of a mix of the world's largest developed and developing economies, making up 66 percent of the world's population and over 75 percent of global trade.

The report, presented at the G20 Labor and Employment Ministers meeting in Melbourne on Wednesday, said policy interventions are "essential" to reverse the current cycle of slow growth, low job creation and low investment.

"The current situation calls for strong and well-designed employment, labor and social protection policies to address both cyclical and structural challenges, applied in conjunction with supportive macroeconomic policy mixes," the group said.

Look past the weak jobs report

"The effectiveness of such policies would greatly increase if actions are taken collectively at the G20 level in a coordinated manner," they added.

By CNBC's Jenny Cosgrave: Follow her on Twitter @jenny_cosgrave