The report - Global Employment Trends 2013 - found that although the crisis may have started in the developed world, its effects are now being felt strongly in East Asia, South Asia and Sub-Saharan Africa.
Long-term unemployment is growing: a third of Europe's jobless have been without work for more than a year, and the report estimated that 39 million people had withdrawn from the labour market.
The report also found that regions that have managed to escape increases in unemployment have often experienced a decline in job quality, with vulnerable employment and the number of workers living below or very near the poverty line increasing.
ILO director general Guy Ryder said: "An uncertain economic outlook, and the inadequacy of policy to counter this, has weakened aggregate demand, holding back investment and hiring."
The report called for more funds to be injected in vocational training to equip young people with skills.
"This is a massive waste of the lives of young people and their talents, and extraordinarily damaging to the people themselves and their societies," Ryder said.
The ILO pointed out that countries which had retained apprenticeships - such as Germany, Austria and Switzerland - had the lowest levels of youth unemployment.
Despite the greater number of people believed to have given up on looking for work, the report did not revise figures given a year ago for the total number of people in the labour market.
The 'labour force participation rate', which measures the proportion of the working-age population who are working or looking for work, is thought to have remained steady at 64.1% for the past three years, showing no sign of the labour force shrinking.
The report found that young people remain particularly strickened by the crisis. Over 70 million young people are unemployed globally and the slowdown in economic activity is likely to push another half a million into unemployment by 2014.
The ILO claimed the youth unemployment crisis has dramatically diminished the labour market prospects for young people, as many experience long-term unemployment right from the start of their labour market entry, a situation that was never observed during earlier cyclical downturns.
Ryder said: "The uncertain economic outlook has prolonged the labour market slump in many countries, lowering job creation and increasing unemployment duration even in some countries that previously had low unemployment and dynamic labour markets."
