As ageing populations put more downward pressure on economic growth in the coming decades, it is essential that OECD countries improve labour market performance. This edition of OECD's annual report on labour markets brings the reader not only detailed information on recent labour market developments, but also in-depth analysis of the effects of various policy measures and prospects through 2009. The analysis includes coverage of the youth labour market in OECD Countries; informal employment and undeclared work; labour market discrimination and policies to combat it; the link between job stress and mental health problems; and the pay and working conditions offered by multinational firms.
This edition is also available in German at : www.oecd.org/de/beschaeftigungsausblick
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Editorial: Ensuring Equality of Job Opportunities for All Ensuring Equality of Job Opportunities for All
5. Do multinationals promote better pay and working conditions?
Abstract: Although the financial market turmoil might have passed its peak, its fallout will continue to act as a brake on growth in the OECD area for considerable time to come. GDP growth slackened in the second half of 2007 and is projected to slow further during the next two years in the OECD area, albeit in a differentiated manner across countries. Overall, employment growth continued moderately strong in 2007, but is projected by the OECD to slow significantly during the next two years. It is projected that 33 million persons will be unemployed in 2008 in the OECD area, up from 32 million in 2007. Against this background, the growth in real compensation per employee should slow in 2008 in the majority of OECD countries and be broadly in line or below productivity gains.
How long does it take for youth to make the transition from school to working life? Do school leavers taking low-paid and temporary jobs become trapped in these jobs or are they able to move on to better jobs and begin to climb career ladders?
Abstract: The chapter first provides an overview of youth labour market performance over the past decade. It then presents evidence on the sensitivity of teen and young adult unemployment to the business cycle and the increased prominence of temporary and part-time jobs as modes of entry into work. Several indicators of the pace and modality of the school-to-work transition following completion of initial education are then presented and the quality of youth jobs is analysed, including the extent to which temporary and low-paid jobs serve as stepping stones to better jobs. Lastly, the chapter underlines the difficulty of moving out of non-employment for some school leavers – especially those who did not successfully complete secondary schooling – despite the overall fluidity of the youth labour market.
Related documentation: The OECD has launched a new project on Jobs for Youth in 16 member countries.
How widespread is informal and undeclared work in lower- and middle-income OECD countries? What policies can countries adopt to reduce informal employment and the problems it creates?
Abstract: Informal employment and undeclared work is a significant labour market problem for some lower- and middle-income OECD countries, prompting concerns about worker protection, making it difficult for governments to deliver high quality public services and impeding firm productivity and growth. Continuing economic growth does not appear to guarantee a reduction in informal employment. What policies can countries adopt to address informal employment? The answer differs from country to country. Depending on the situation in each country, incentives for employing workers formally may be improved by a combination of reducing labour costs when they are excessive, increasing flexibility in countries with stringent employment protection legislation and improving the design of social protection schemes to increase the benefits to workers of contributing. Better incentives should be complemented by enhanced tax, social security and labour enforcement efforts. Improved governance standards would also encourage voluntary compliance.
Related documentation: Informal Employment and Promoting the Transition to a Salaried Economy (pdf), chapter 5 of the OECD Employment Outlook 2005 Edition.
How much discrimination do women and ethnic minorities encounter in the labour market? What are OECD governments doing to reduce discrimination and how can these efforts be made more effective?
Abstract: Despite some progress there is still evidence of discrimination on the grounds of gender and ethnic or racial origins in OECD labour markets. Field experiments show pervasive ethnic discrimination in many countries. Indirect evidence shows that on average at least 8% of the gender employment gap and a larger proportion of the gender wage gap can be attributed to discrimination. Virtually all OECD countries have enacted anti-discrimination laws in recent decades. How effective are these laws? Available evaluations as well as cross-country analysis suggest that well-designed anti-discrimination legislation can be effective in reducing disparities in labour market outcomes. However, enforcement of anti-discrimination legislation is essentially based on victims’ willingness to claim their rights. Thus, public awareness of legal rules and their expected consequences (notably, victims costs and benefits of lodging complaints) is a crucial element of an effective policy strategy to establish a culture of equal treatment. However, legal rules are likely to have more impact if the enforcement is not exclusively dependent on individuals. In this respect, specific agencies may play a key role.
Does the steep rise in disability benefit receipt for mental illness in many OECD countries reflect on overall increase in mental health problems in the working-age population? How does working and job stress affect mental health?
Abstract: This chapter presents new evidence on the evolution of work-related mental illness in OECD countries and on the role of new work patterns have played to shape it. Despite the steep rise in disability benefit receipt for mental illness in some countries, none of the indicators of mental health problems among the working-age population that are analysed in the chapter indicates that there has been an overall increase across the OECD area. However, mental health appears to have worsened in certain countries and for certain workforce groups, such as low-skilled workers. The reported incidence of certain potentially stressful working conditions has also increased (e.g. high-intensity work and long working hours), but it has decreased for others (e.g. experiencing discrimination on the job). Panel data for individual workers in five countries are then used to analyse more rigorously whether being employed or returning to work is beneficial for mental health, giving particular attention to workers who already suffer from a longstanding illness or disability or who experience potentially stressful working conditions. The longitudinal analysis shows that non-employment generally is worse for mental health than working. The mental-health payoff to employment varies depending on the type of employment contract and working conditions. In particular, the mental health benefits for inactive individuals who obtain a “non-standard” job appear to be smaller than for those moving into standard employment arrangements, particularly for persons with pre-existing mental health problems.
Do foreign-owned affiliates of multinational firms provide better pay and working conditions than domestic firms? Are there spillover effects on wages and working conditions in domestic firms?
Abstract: Foreign direct investment (FDI) by OECD-based MNEs in developing and emerging economies has increased dramatically over the past two decades. While generally perceived beneficial for local development, it has also raised concerns about unfair competition and the protection of workers’ rights in host countries. This chapter assesses the effects of FDI on wages and working conditions for workers of foreign affiliates of MNEs and those of their independent supplier firms. The evidence suggests that MNEs tend to provide better pay and working conditions than their domestic counterparts, especially when they operate in developing and emerging economies. The effects on wages and working conditions also spread to the foreign suppliers of MNEs, but the effects are small.
For further readings: OECD-ILO Conference on Corporate Social Responsibility
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