OECD Employment Outlook 2009: chapter summaries

- Chapter 1. The jobs crisis: what are the implications for
                  employment and social policy?

Governments need to respond vigorously to limit the social and economic costs of the current economic and jobs crisis. A first priority is to assure that income support for job losers and other workers who need it is adequate and accessible. Temporary extensions of unemployment benefit duration or the coverage of non-standard workers may be desirable in some countries, provided incentives to find a new job are not undercut. A second priority is to scale up effective active labour market policies so as to provide increased numbers of jobseekers with the re employment assistance they require and minimise the build-up of long-term joblessness. Core job-search assistance should be maintained through the downturn, but an

Comparing unemployment rate trajectories during previous downturns and the current downturn

Source: OECD calculations based on the OECD Economic Outlook Database.

increased emphasis on training, hiring subsidies and subsidised work experience may be required to ensure that more disadvantaged jobseekers do not disconnect from the labour market. It is also important to maintain effective labour supply for the recovery and thus to resist the temptation to open pathways to early retirement and disability benefits.

Background documents:

• Technical Annex
• Addressing the Labour market challenges of the economic downturn: a summary of country responses to the OECD-EC questionnaire

- Chapter 2. How do industry, firm and worker characteristics 
                  shape job and worker flows?

New firms are continuously created, even in downturns, while existing firms expand, contract or shut down. In the process, many jobs are created and workers are hired; at the same time, many positions are suppressed and workers separate from their employer. Evidence from internationally harmonised data on gross job flows (i.e. job creation and destruction by firms) and gross worker flows (i.e. hirings and separations) suggest that, each year, more than 20% of jobs are created and/or destroyed on average in OECD countries, and around one third of all workers are hired and/or separate from their employer. However, job and worker flows are remarkably different across countries, industries and

There are significant cross-country differences in worker reallocation rates across all industries

Source: OECD estimations.

worker types. In countries such as the United States and the United Kingdom gross job and worker flows are almost twice as large than in most continental European countries. The process of reallocation appears to be productivity-enhancing: job destruction is greater in older, less efficient firms and job creation is greater in young, more efficient firms in most countries.

Background document - Looking Inside the Perpetual-Motion Machine: Job and Worker Flows in OECD Countries (OECD Social, Employment and Migration Working Papers No. 95)

- Chapter 3. Is work the best antidote to poverty?

Employment considerably reduces the poverty risk, but it does not solve all problems. On average in the OECD area, 7% of individuals living in households with at least one worker are poor. And while in-work poverty is often related to insufficient work participation, resulting from very short part-time work or very short employment spells over the year, there are other important factors at work. In particular, poverty rates are higher for families with children. In this respect, social transfers play a key role, precisely because they can be targeted towards the most vulnerable households: on average in the OECD area, they reduce by almost half the rate of in-work poverty. Among these transfers, in-work benefit schemes can be particularly effective, if they are well conceived and combined with a

On average in the OECD area, 7% of individuals living in households with at least one worker are at risk of social exclusion and poverty

Mid-2000s

Source: OECD Employment Outlook 2009.

binding minimum wage set – by law or collective agreements – to a moderate level. Conversely, since the risk of in-work poverty is much less related to hourly wage rates than it is with working time, employment duration or household composition, the minimum wage per se is not as effective in alleviating in-work poverty.

- Chapter 4. Pathways onto (and off) disability benefits: assessing the role
                  of policy and individual circumstances

Disability benefit recipiency rates have increased in a majority of OECD countries, particularly among women, young adults and individuals with mental health problems. While health problems appear to be important drivers of the inflow into disability benefits, other individual and work-related factors matter for both retention of workers and entry into disability benefits. Disability recipiency rates are also found to vary across countries, partly because of different economic and labour market conditions but mainly because of wide differences in disability policy. Indeed, new OECD indicators of disability policy reveal a diversity in both the generosity aspect and the employment integration component of disability policy. At the same time, most countries have

Trends in disability benefit recipiency rates in
OECD countries, 1990-2007
Percentage of working-age population

Source: National authorities.

tightened access to benefits in the last decade while improving employment integration. This is a promising development because there is evidence that more generous disability policy is associated with higher numbers of beneficiaries while more comprehensive employment and rehabilitation programmes are associated with lower recipiency rates.