The number of unemployed worldwide is projected to rise by 5.1 million this year to more than 202 million, The International Labour Organization warns.

In its annual report released Tuesday, the Geneva-based agency predicts the number of jobless worldwide will grow by another three million next year.

A quarter of the increase of four million in 2012 to 197 million has been in the advanced economies.

Moreover, it said, about 39 million people have dropped out of the labour market as job prospects waned.

Unemployment, the ILO says, is having "marked effects" in East Asia, South Asia and Sub-Saharan Africa.

"Those regions that have managed to prevent a further increase in unemployment often have experienced a worsening in job quality, as vulnerable employment and the number of workers living below or very near the poverty line increased," it said.

Youth unemployment rate 12.6%

In advanced economies, the ILO observes Europe has also been hit in particular by recession, but notes regions such as Latin America and the Caribbean "have also suffered from increased volatility of international capital flows."

It predicts recovery in the job market will be hobbled by a mismatch between candidates’ skills and what the market demands.

"New jobs that become available often require competences that the unemployed do not possess," the ILO said.

"Such skill and occupational mismatches will make the labour market react more slowly to any acceleration in activity over the medium run, unless supporting policies to re-skill and activate current job-seekers are enhanced."

The situation for the young is especially bleak.

The ILO estimates 73.8 million young people are unemployed globally and predicts that number to grow by half a million by 2014, pushing the youth unemployment rate from 12.6 per cent in 2012 to 12.9 per cent by 2017.