Employment

Labour market strategies in a time of crisis: OECD countries’ experience

 

Speech by Angel Gurría, OECD Secretary-General, delivered at HEC Montréal

Montréal, 7 May, 2010

Mesdames, Mesdemoiselles, Messieurs:

C’est un grand plaisir pour moi d’être ici à HEC Montréal et de pouvoir discuter avec vous. Les étudiants sont les “forces vives” qui représentent le futur de nos pays. Aujourd’hui, nous allons parler d’un sujet qui me tient à cœur, l’emploi, qui en général est un sujet de préoccupation pour les jeunes, et qui est l’un des plus grands défis pour nos économies et nos sociétés.

Comme vous le savez peut-être, nous avons eu notre Réunion Ministérielle annuelle il y a dix jours à Paris. Des ministres des quatres coins du globe étaient réunis et ont échangé leurs points de vue sur les principaux défis pour la reprise et pour retrouver une croissance soutenue et soutenable. Et, sans surprise, le chômage était une préoccupation prioritaire.

L’un des ministres présents, la Présidente du Conseil des Conseillers Économiques des États-Unis, Madame Christina Romer, a affirmé que les politiques ne pouvaient et ne devaient surtout pas accepter le haut niveau de chômage actuel comme étant la nouvelle « norme ». Nous estimons que depuis 2008, il y a 18 millions de chômeurs supplémentaires dans les pays de l’OCDE. Un sur quatre jeunes est au chômage dans nos pays. Un sur trois en France, un sur deux en Espagne. Ceci est une catastrophe ! Nous devons tous travailler ensemble afin d’offrir de nouvelles perspectives aux millions de jeunes et de moins jeunes qui cherchent un emploi. 

Aujourd’hui, je voudrais partager avec vous la vision de l’OCDE sur les défis liés au marché du travail et certaines de nos recommandations afin de promouvoir une croissance riche en emplois.

Data for early 2010 suggests that OECD unemployment may have peaked. This is good news, but we should not count our chickens before they hatch. Past recessions suggest that it could take a long time to bring unemployment back down to an acceptable level.

Indeed, even in countries with employment-friendly policies and institutions, it could take about 5 years for unemployment to revert back to pre-crisis levels after its recessionary peak. In other countries, high unemployment may persist for much longer, up to 10 years.

Moreover, we are facing a second great challenge related to fiscal deficits. Most OECD economies are exiting from the recession straight into a major policy conundrum: how to support the recovery and reduce high unemployment on one hand and how to tackle unprecedented fiscal deficits on the other.

In the past two years, public finances in OECD countries have deteriorated at an alarming speed. Today, the OECD average fiscal deficit is close to 10% of GDP, while public debt is expected to reach 100% of GDP by 2011. This is a shocking 30 percentage points higher than before the crisis.

As if this were not bad enough, our estimates suggest that OECD countries may have lost over 4 per cent of their potential output as a result of the crisis. Half of it is due to higher unemployment and lower participation rates in the labour market. This will for sure limit the extent to which countries can “grow their way” back to fiscal balance.

So, in this highly challenging context, what can governments do?

There is no magic bullet, but we have identified some key policy measures that, adjusted to country-specific circumstances, could help us move in the right direction.

First, support needs to shift from preserving jobs to supporting job creation. It is time to begin phasing out short-time working schemes in countries where they expanded significantly during the downturn, such as Germany. These schemes provided subsidies to firms that reduced working time instead of dismissing workers during the downturn. In the recovery phase, it would be important to shift the focus to hiring incentives, especially for employers recruiting the long-term unemployed or workers from other vulnerable groups, such as young workers.

It is also important for governments to focus on new sources of growth, like innovation and green growth, as engines for job creation. Green growth initiatives, such as programmes to retrofit existing buildings for greater energy efficiency, have a great potential to generate jobs.

Second, effective re-employment services, combined with adequate safety nets, are very important. They allow for a quick reintegration of jobseekers into jobs while fighting poverty.

The build-up in long-term unemployment and the possibility of prolonged under-employment should be avoided at all costs. Well-targeted and employment-oriented safety-nets can play an important role in alleviating economic hardship. But income support for jobseekers should be combined with effective re-employment services. And, in order to ensure effective support to a large and growing pool of unemployed, these services need to be adapted to the different phases of the downturn and recovery.

Wisely, most countries have maintained or even expanded core job-search assistance and have also sought to provide more targeted re-employment services, including training opportunities, for the most hard-to-place unemployed.

A shift towards greater investment in training, especially linked to local labour market needs, is also necessary in the present circumstances. We have worked with the ILO on a training strategy for the G20 Labour Ministerial. We are now launching a Skills Strategy at the OECD. This will help identify essential skills and improve the match between demand and supply of skills.

Third, policies to prevent a “lost generation” are a must. Coping with a job loss is difficult for anyone. But for some young workers, failure to find a first job or keep it for long can have long-lasting negative effects on their career prospects. Experts refer to “scarring” effects.

The first line of defence is to provide income support to the unemployed youth to help them sustain their job search. And in exchange for income support, following the “mutual obligations” principle, young jobseekers should participate in job-search and job-placement activities. Alternatively, if no suitable jobs are available, they should participate in training programmes. Vocational training is especially suitable for low-skilled youth jobseekers. It can consolidate their skills and enhance their chances of finding a good job when the economic recovery strengthens.

Another promising avenue is to promote apprenticeships, where valuable skills and work experience can be acquired at the same time. In fact, apprenticeships can pay a “double dividend”. It secures the transition towards employment for youth while lowering labour costs for their employers, albeit in exchange for providing occupational training. The Youth Guarantee in the United Kingdom is a very interesting initiative along these lines.

Pour conclure, laissez-moi souligner le fait que, bien que les dernières prévisions macroéconomiques suggèrent un optimisme prudent sur l’évolution de la croissance à court terme dans la zone OCDE, la crise de l’emploi quant à elle va persister pour un temps non négligeable. Mais, comme je le mentionnais au début de mon intervention, nous ne devons pas nous résigner et considérer ceci comme une situation normale. Il est possible de s’approcher résolument d’une meilleure « norme » grâce aux nouvelles sources de croissance, aux nouveaux emplois, aux nouvelles compétences et aux nouvelles perspectives de la nouvelle génération que vous représentez aujourd’hui. 

L’un de nos objectifs à l’OCDE est d’apporter notre soutien aux gouvernements de nos pays membres dans ces temps difficiles afin d’éviter que la crise de l’emploi ne se transforme en une crise de société avec des effets à long terme dévastateurs.

Mesdames, Mesdemoiselles, Messieurs, merci de votre attention.

 

 

 

Countries list

  • Afghanistan
  • Albania
  • Algeria
  • Andorra
  • Angola
  • Anguilla
  • Antigua and Barbuda
  • Argentina
  • Armenia
  • Aruba
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  • Bulgaria
  • Burkina Faso
  • Burundi
  • Cambodia
  • Cameroon
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  • Cape Verde
  • Cayman Islands
  • Central African Republic
  • Chad
  • Chile
  • China (People’s Republic of)
  • Chinese Taipei
  • Colombia
  • Comoros
  • Congo
  • Cook Islands
  • Costa Rica
  • Croatia
  • Cuba
  • Cyprus
  • Czech Republic
  • Côte d'Ivoire
  • Democratic People's Republic of Korea
  • Democratic Republic of the Congo
  • Denmark
  • Djibouti
  • Dominica
  • Dominican Republic
  • Ecuador
  • Egypt
  • El Salvador
  • Equatorial Guinea
  • Eritrea
  • Estonia
  • Ethiopia
  • European Union
  • Faeroe Islands
  • Fiji
  • Finland
  • Former Yugoslav Republic of Macedonia (FYROM)
  • France
  • French Guiana
  • Gabon
  • Gambia
  • Georgia
  • Germany
  • Ghana
  • Gibraltar
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  • Guinea-Bissau
  • Guyana
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  • Hungary
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  • Isle of Man
  • Israel
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  • Japan
  • Jersey
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  • Kenya
  • Kiribati
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  • Kuwait
  • Kyrgyzstan
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  • Latvia
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  • Liberia
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  • Lithuania
  • Luxembourg
  • Macao (China)
  • Madagascar
  • Malawi
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  • Maldives
  • Mali
  • Malta
  • Marshall Islands
  • Mauritania
  • Mauritius
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  • Moldova
  • Monaco
  • Mongolia
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  • Mozambique
  • Myanmar
  • Namibia
  • Nauru
  • Nepal
  • Netherlands
  • Netherlands Antilles
  • New Zealand
  • Nicaragua
  • Niger
  • Nigeria
  • Niue
  • Norway
  • Oman
  • Pakistan
  • Palau
  • Palestinian Administered Areas
  • Panama
  • Papua New Guinea
  • Paraguay
  • Peru
  • Philippines
  • Poland
  • Portugal
  • Puerto Rico
  • Qatar
  • Romania
  • Russian Federation
  • Rwanda
  • Saint Helena
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  • Saint Lucia
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  • Samoa
  • San Marino
  • Sao Tome and Principe
  • Saudi Arabia
  • Senegal
  • Serbia
  • Serbia and Montenegro (pre-June 2006)
  • Seychelles
  • Sierra Leone
  • Singapore
  • Slovak Republic
  • Slovenia
  • Solomon Islands
  • Somalia
  • South Africa
  • South Sudan
  • Spain
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  • Tajikistan
  • Tanzania
  • Thailand
  • Timor-Leste
  • Togo
  • Tokelau
  • Tonga
  • Trinidad and Tobago
  • Tunisia
  • Turkey
  • Turkmenistan
  • Turks and Caicos Islands
  • Tuvalu
  • Uganda
  • Ukraine
  • United Arab Emirates
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  • Uruguay
  • Uzbekistan
  • Vanuatu
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  • Virgin Islands (UK)
  • Wallis and Futuna Islands
  • Western Sahara
  • Yemen
  • Zambia
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