The global economic recovery remains fragile and unemployment is likely to stay high until the end of 2011.
This video looks at the countries that have been hit hardest and at how many jobs they will need to create to get back to pre-crisis levels.
After a BBC World Debate at the OECD on the jobs gap, panelists and participants give their views on what needs to be done to create jobs and find the right people to fill them.
How high is unemployment?
In total, about 47 million people are officially unemployed in OECD countries, making for an unemployment rate of 8.6% as of May 2010. That’s up from 5.8% in 2007, which means there are now about 17 million more people out of work than before the crisis.
However, the official figures don’t tell the full story: Taking into account people who have given up looking for work or are working part-time but want to work full-time, the actual number of unemployed and under-employed in OECD countries could be about 80 million.
Is unemployment still rising?
The latest data suggest unemployment in OECD countries may have peaked in April 2010. However, even with somewhat stronger job creation through 2011, joblessness is likely to remain above 8% in 2011. Despite improvements in labour market policies to help jobseekers get back to work, there’s a danger that some of the recent rise in unemployment will linger.
Who’s been hit hardest?
As in previous downturns, groups that were already experiencing problems in the labour market – young people, immigrants and workers in temporary or part-time jobs – have borne the brunt of the job losses. But, unlike past recessions, in many countries men have suffered higher job losses than women, largely because they work in sectors worst hit by the crisis, such as construction, manufacturing and mining. That’s why some people describe the crisis as a “mancession”.
Among young people and workers on temporary contracts, employment fell by 8% between the end of 2008 and the end of 2009, nearly four times the decline in overall employment. Unemployment among young people in OECD countries stood at 20.1% in the first quarter of 2010 – 23% in France, 26% in Italy and more than 40% in Spain.
Unemployment among male immigrants, many of whom worked in sectors badly hit by the crisis, has generally risen more than among native men. By contrast, in some countries there has been an increase in employment rates among immigrant women, who have taken jobs to make up for the lost income of their unemployed spouses.
What have governments done so far?
Most OECD country has taken steps to sustain labour demand. Measures have included expanding job subsidies or public sector job-creation programmes; lowering employer’s social contributions; establishing or expanding short-time work schemes; or some combination of these three.
Employers in a number of OECD countries made extensive use of hours reductions (“work sharing”) as an alternative to layoffs. As a result, even though GDP fell back in both Japan and Germany, for example, unemployment increased little.
When it comes to improving the job prospects of the unemployed, much of the focus has been on expanding the capacity of public employment services, job-search assistance and training programmes. Around half of OECD countries have moved to increase the incomes of workers who have lost their jobs by expanding unemployment benefits or extending coverage to those previously excluded. A number of countries have also provided new or expanded support through social assistance, training allowances, housing support or health insurance.
A number of countries have stepped up resources for training existing workers or apprentices to improve their labour market prospects or provide income support for low income earners through the tax system.
What issues will governments need to tackle in the months ahead?
As the recovery strengthens, it will be vital to create the right incentives for firms to hire more workers. This could involve temporary hiring subsidies and improving the employability of jobseekers, through, for example, training. But it could also mean finding a better balance between temporary and permanent contracts. In many countries, employers find it hard to remove workers on permanent contracts, and so instead favour temporary hires. As a result, temporary jobs often become traps – especially for young workers – rather than serving as stepping stones to permanent jobs.
However removing some of the job protection of permanent staffers would imply that, over time, they would face increased labour mobility with the prospect of reduced earnings, both while searching for a new job and even after finding one. To protect workers’ interests, employment protection would need to be rebalanced as part of a comprehensive package: This would mean providing workers with adequate unemployment benefits – so long as they were genuinely searching for work – as well as training and job-search assistance.
Governments will also need to increasingly target jobs policies on the most disadvantaged groups, and those with few or no skills, who are at greatest risk of losing contact with the labour market.
Contact for questions on impact of crisis on employment
For further information, please contact Stefano Scarpetta, Deputy Director of the Directorate for Employment, Labour and Social Affairs, firstname.lastname@example.org or tel: +33 1 45 24 19 88