"The employment situation is alarming," Chantal Harasty, one of the authors of the new ILO report, told a press conference.
"After two years of economic slowdown, and delayed recovery that is forecast for 2003-2004, unemployment has now reached unprecedented levels," she said.
She warned that if the situation got any worse it could lead to social instability worldwide.
The report entitled Global Employment Trends showed that another 550 million people earn US$1 or less a day.
The Geneva-based ILO said the increase in unemployment was due to the crisis in the information technology sector from Spring 2001, exacerbated by the September 11 terror attacks and a fall in investor confidence.
Rising unemployment in 2001 and 2002 has hit all continents, though industrialised countries, Latin America and the Caribbean were particularly affected, Harasty said.
Industrialised countries saw unemployment increase from 6.1% in 2000 to 6.9% last year, while in Latin America it was nearly 10% on average in 2002.
South-east Asian unemployment rose from 6% to 6.5% in two years, and in Sub-Saharan Africa it reached 14.4% last year.
Job losses in the public sector were seen in both the Middle East and North Africa, the report noted, adding that youth unemployment in Syria, Algeria, Bahrain and Morocco was especially worrying.
Gulf countries are increasingly replacing migrant workers with their own nationals, the ILO said.
Transition economies in Eastern and central Europe saw unemployment rise again last year to its 2000 level of 13.5%.
At least a billion jobs need to be created globally over the next 10 years to absorb new workers and to reach the UN's objective of halving extreme poverty by 2015, the ILO warned. - Sapa-AFP