Remarks by Angel Gurría
7th July 2020 - (Virtual) OECD, France
(As prepared for delivery)
Dear Ambassadors, Ladies and Gentlemen,
The 2020 Employment Outlook we launch today paints a rather grim picture of what the COVID-19 pandemic has done to our labour markets. The impact of the COVID-19, both on health and economic terms has been, and continues to be, dramatic.
We are witnessing a sharp drop in economic activity caused by lockdowns and by households and firms curtailing their spending. We estimate that the level of GDP OECD-wide in the second quarter of 2020 was 15% lower than in the fourth quarter of 2019.
This is also being reflected in employment and hours worked. In just a few months, the pandemic has wiped out the progress in labour markets made over the past decade to recover from the Global Financial Crisis. The average OECD-wide unemployment rate stood at 8.4% in May, a sharp rise from the February level of 5.2%.
And we do not seethis deterioration as transitory. Even if we avoid a second wave of infections, our latest Economic Outlook projects that the average unemployment rate will reach 9.4% at the end of 2020, before declining gradually to 7.7% by the end of 2021. If there is a second wave of infections in late 2020, things will be even worse: we project that the unemployment rate would increase to 12.6% by the end of this year and still be at 8.9% at the end of 2021.
Alarming as they are, these dry numbers do not convey the massive hardship that is implied by an increase in unemployment on this scale. It would mean large jumps in poverty, personal bankruptcies, depression, suicides, homelessness, and crime. That is why policy responses must be timely, ambitious and sustained.
In general, national responses in the area of macroeconomic policies have been bold and decisive. This has helped to “flatten the curve” in the economy, just as the health and social distancing measures have done for infections. It will remain crucial to support demand for a good while yet; and it is also essential that this be done in a way that is job rich. For example, programmes to boost public and private investment should be formulated with the objective of returning to full employment quickly.
As for labour market and social protection policies, the Employment Outlook underlines the need to adapt the measures taken so far, to find a balance between supporting firms and people in need and making sure that support is directed to activities that are viable in the medium term. This means restoring incentives to work for those who can, given the sanitary conditions; and improving targeting so that those in need receive adequate support.
Moving to the recovery phase also means supporting jobseekers through active labour market policies and training. The capacity of public and private employment services will need to be scaled up to help them serve high numbers of jobseekers with varied needs.
But we mustn’t think of this in terms of getting back to normal. We have to recognise that the old pre-crisis normal was deficient in important ways. In particular, we need structural changes to make our economies and societies more resilient and inclusive.
One of the key messages of this Employment Outlook is that the current crisis offers an opportunity to make those necessary changes. Calamitous as the crisis is, some good can and should come from it.
Through emergency measures, countries have extended access to income support and other forms of social assistance to groups that were previously not well covered. This includes, the self-employed and workers in non-standard forms of employment such as those on temporary or part-time jobs. These efforts should not go to waste. We should now look at how some of these measures can be transformed into effective and sustainable structural measures – to improve the resilience of our economies and societies.
The other message of the Employment Outlook that I want to underline is that we must act fast to put in place comprehensive support for groups who were already at a disadvantage and who are among the hardest hit by the crisis.
This means the low-paid, those in informal work, women, the self-employed – who are overrepresented in sectors most affected by the pandemic and the confinement measures taken to combat it.
It means frontline workers – such as health-care workers, cashiers, or truck drivers – who had to face a substantial risk of contracting the virus to provide essential services during lockdowns while earning low wages.
And it means the young, who are once again at risk of becoming the biggest losers of the crisis. Youth employment has already plummeted in some countries. For example, in Canada the number of employed youth dropped by 33% from February to May, while in the United States the teenage unemployment rate more than tripled over the same period. More generally, across the OECD region, the chances of this year’s graduates to secure a job, or even an internship, are poor.
The OECD is working hard to support the necessary policy response. In addition to our flagship reports like the Employment Outlook, we created a Digital Hub on Tackling the Coronavirus that draws together the OECD’s wide-ranging expertise. There are now 116 policy briefs on the Hub spanning all areas of the OECD’s work, from education to tax by way of innovation, employment, the environment and many more.
We are also working closely with our member countries. Notably, in conjunction with the release of the Employment Outlook we are today holding a virtual roundtable meeting of Ministers in charge of employment, social affairs and the economy, under the chairmanship of Spain.
Building on the findings of the Outlook, Ministers will discuss the impact of the COVID-19 crisis for employment and social cohesion; the policy responses they have adopted to protect workers, firms and the most vulnerable; and the opportunities to address long-term challenges by boosting job creation and strengthening social protection. This is part of a series of meetings on different aspects of the crisis leading up to the OECD’s Ministerial Council Meeting in late October.
Ladies and Gentlemen,
The OECD remains committed to providing the data, the analysis and the policy advice in order to get the world onto a path of recovery that leads to more inclusive, sustainable and resilient economies and societies. A path with, as our motto says, better policies for better lives. Thank you.