The financial and economic crisis has rapidly turned into a jobs crisis with large job losses and potentially severe social consequences. OECD employment and labour ministers will meet on 28-29 September to discuss how labour market and social policies can best help workers and low-income households weather the storm of the current jobs crisis. The ministerial meeting will be preceded by a Policy Forum on the morning of 28 September. The Forum will provide an opportunity for the social partners, researchers, Ministers and representatives of the civil society to discuss the social dimension of the economic crisis and how best policy-makers could respond to the challenges of rapidly rising unemployment which is likely to persist for some time even after the recovery gets underway.

The crisis is killing jobs in all corners of the economy. The young, the old and migrants are hit hardest. Watch the video

With the unfolding financial and economic crisis, labour market conditions have deteriorated rapidly in a growing number of OECD and non-OECD countries. Since December 2007, more than 15.1 million workers have joined the ranks of the unemployed in the OECD area as companies cut production, closed factories and dismissed thousands of workers. As a result, the OECD-average unemployment rate reached a postwar high of 8.5% in July 2009.

Despite recent signs that a recovery may be in sight, the OECD unemployment rate is likely to continue rising in 2010. OECD projections indicate that it could even approach 10% (or close to 57 million unemployed) if the recovery fails to gain momentum.

Most governments have responded to the crisis with vigorous macroeconomic measures including sometimes very large stimulus packages. Greater resources are also available for labour market and social policies to cushion the negative effects of the crisis on workers and low income households. Spending on unemployment benefits has increased automatically as job losses mounted. And many governments have moved promptly to scale up resources for active labour market programmes.

However, when compared with the overall resources available in the fiscal stimulus packages, the additional funds targeted on labour market programmes are rather limited in most countries, and governments are facing difficult choices concerning how best to respond to the different demands coming from the labour market.

As in previous severe economic downturns, already disadvantaged groups in the labour market – youth, immigrants and workers in temporary or part-time jobs – are bearing most of the brunt of the job losses, although men have also be disproportionately affected. For example, the youth unemployment rate in Spain rose by 12.9 percentage points in the year to the second quarter of 2009, reaching 36.2%, while youth unemployment in Ireland rose by 13.1 percentage points reaching 24.5%. Almost one in four teenagers in the labour market is now jobless in the United States compared with one out of ten for all workers.

Temporary workers have also been very hard hit by the current economic downturn, a pattern that has been particularly pronounced in Spain where the employment of temporary workers fell by about 20 percentage points in the year to the second quarter, accounting for almost the 90% of the total employment decline. In Italy, the employment rate of temporary workers decreased by 7% in the year to the first quarter, even as employment edged up for workers on regular contracts.

There is ample evidence that immigrants and their families may be especially hard-hit. The impact on the immigrant labour market is particularly visible in countries where the crisis began earlier and immigrant labour had played a large role in the preceding expansion period. For example, immigrant unemployment surged in the early months of the crisis in Ireland, although it has subsequently subsided as many immigrants returned to their countries of origin. The labour market situation of immigrants in Spain began to deteriorate sharply in 2008 and the unemployment rate of migrants is now nearly 8 percentage points above that for native-born workers.

In many countries, job losses for  men have exceeded those for women, due to the greater tendency for men to be employed in the most affected sectors, including construction and manufacturing. In Spain, the male unemployment rate almost doubled in the year to the second quarter 2009, whereas for women it increased by a smaller (but still large) 54 percent. In the United States, unemployment rate for men reached 10.1% in August, up from 5.8 percentage points since a year earlier, whereas the unemployment rate for women increased by a smaller 2.5 percentage points.

• Promote labour demand while avoiding excess layoffs by credit constrained firms. Short-time working subsidies or reduction in social security contributions will help preserve viable jobs, if they are well-targeted on firms facing a temporary fall in demand and workers who will find it difficult to get another job if made redundant.

• Provide adequate safety-nets to job losers and low-income families. In those OECD countries where the maximum duration of benefits is short, temporary extensions have been implemented to avoid the long-term unemployed drifting into poverty. This should be accompanied by a close monitoring of eligibility conditions to avoid abuses and/or inducing dependence.

• Ensure social assistance benefits are adequate and accessible to those who lose their job and do not have access to unemployment insurance benefits.

• Expand effective active labour market programmes. Public employment services should place emphasis on providing job search assistance to the most employable job losers. Greater reliance should also be placed on training, particularly if it is tied to labour market needs. For the most hard to place unemployed, it would also be advisable to make more use of targeted hiring and work-experience subsidies and public sector job-creation measures.

• Take decisive actions targeted on at-risk young people. In this context, it would be important to ensure that out-of-school youth who are encountering difficulty in the labour market can access appropriate active labour market policies, such as job-search assistance and training.  Further efforts should be made in many countries to ensure that no youth enters the labour market without a recognised and valued qualification. Drop-outs also need special attention from the education authorities to ensure they remain engaged in, or re-connect with, education through the completion of an upper secondary diploma or its equivalent, preferably with an on-the-job training component. 

• OECD Labour and Employment Ministerial Meeting: Tackling the Jobs Crisis OECD employment and labour ministers meet on 28-29 September 2009  to discuss how labour market and social policies can best help workers and low-income households weather the storm of the current jobs crisis.

While the economic crisis is drawing much attention to unemployment levels, the quality of jobs available is also a concern. In some developing countries, up to 60% of the labour force works informally – without written contracts or social security. In India, for example, the official unemployment rate was 4.7% in 2005, but 83% of non-agricultural workers were informal, with jobs but without the benefit of employment protection, unemployment insurance or pension entitlement. The current economic crisis is likely to lead to a surge in informal employment due to job losses in the formal sector, resulting in deteriorating working conditions and lower wages for the poorest. Read more about this issue in "Is Informal Normal? Towards More and Better Jobs in Developing Countries ".

For further information, please contact Stefano Scarpetta, Head of the Employment Analysis and Policy Division, stefano.scarpetta@oecd.org or tel: +33 1 45 24 19 88