By Anna Rubin, Policy Analyst, Local Employment, Skills and Social Innovation Division, OECD Centre for Entrepreneurship, SMEs, Regions and Cities
COVID-19 has unleashed the worst jobs crisis in a generation. The latest figures from the OECD’s Economic Outlook are striking. Compared to the last quarter of 2019, hours worked fell over 15% in the Euro Area, the United Kingdom and Canada in the second quarter of 2020, and by over 10% in the US. Output is projected to remain 4 to 5% below pre- crisis expectations in many countries through 2022.[i]
The recent positive news about vaccines offers a light at the end of the tunnel for the health crisis, but we will clearly be dealing with the economic crisis for much longer. And if patterns from the 2008 crisis hold true, even once national economies start to turn around, some places and people may be left behind. Indeed, 10 years after the last crisis, almost half of OECD regions still had unemployment rates higher than in 2008.
The OECD Local Development Forum Webinar launching the report Job Creation and Local Economic Development 2020: Rebuilding Better helped us dig into what these numbers mean at the local level, at the level where people live and work. So, what did we learn?
1) The pain is shared, but not equally across places and people
The share of jobs in the sectors most at-risk from COVID-19 varies from less than 15% to more than 35% across OECD regions. Tourism-intensive communities and large cities have relatively high shares of jobs at risk. In Europe, for example, tourist destinations such as the South Aegean Islands in Greece and the Algarve region in Portugal have 40% or more of jobs at risk.[ii]
And these risks are already becoming realities in many places. Raquel Gil Eiroá, Commissioner for Employment and Policies against Precariousness, Barcelona City Council and Chair of Eurocities Employment Working Group, noted that unemployment in the city now stands at around 20%. Tourism – which is estimated to account for 10% and 12% of the city's GNP and around 14% of its jobs[iii] – alongside sectors such as culture and other services, have taken hard hits. In the United States, tourism destinations have likewise seen unemployment spike. As of October, Nevada (which includes Las Vegas) and Hawaii had the highest unemployment rates of all states, at 12.0% and 14.3% respectively.[iv]
Emerging evidence also suggests that big cities have indeed taken big hits. In October, Île-de-France, which includes Paris, accounted for 37.1% of applications for short-time work compensation claims in France, while it only accounts for just under a quarter of jobs.[v] In the United Kingdom, London has continued to experience the largest relative drops in online job postings of all UK regions. The week of 4 December, postings were just 60% of the level they were a year ago in London, compared to 74% at the national level.[vi]
Of course, the story is not just about divides between places, but also divides within places. Jeff Finkle, President/CEO of the International Economic Development Council (IEDC) spoke to thes gaps in the United States. Research shows that the number of white business owners fell by 17% between February and April, while the number of Black business owners fell by 41% and female-owned businesses fell by 25%.[vii] Other panellists spoke of the disproportionate job losses young people have faced, many of whom are now facing the second crisis in the formative stage of their working lives. In the EU, Barbara Kauffmann, Director, Employment and Social Governance, DG Employment, Social Affairs & Inclusion, noted that youth unemployment stood at just about 17.5% as of October, over twice the general unemployment rate.
2/ Reskilling is an imperative for today and tomorrow
The message was clear: reskilling is not only an immediate priority to help workers in hard hit sectors, but also essential to smoothing longer-term structural transitions that began before COVID-19. Yet, for many people facing job losses, long-term training is simply not a feasible option. Short-term and modular trainings that build on transferrable skills and that are well-aligned with local employer needs are one part of the solution.
In Ireland, for example, Denis Leamy, Chief Executive of the Cork Education and Training Board and Chair of OECD Local Economic and Employment Development Directing Committee talked about the Skills to Compete programme. This package of targeted and modularised training is managed at the national level by SOLAS, but implemented and tailored to local needs in close cooperation with local employers by regional Education and Training Boards.
Tor Hatlevoll, Labour Market Economist with the Swedish Association of Local Authorities and Regions (SALAR) highlighted how even prior to the pandemic, SALAR was working in its capacity as an employer organisation with unions and the national government on a programme to help workers in sectors affected by structural change transition into permanent employment in growing sectors, such as healthcare. The pandemic made needs even more acute, as both the number of workers in sectors such as hospitality and retail needing to transition and shortages in health and care sectors grow. This new programme, which allows people to combine paid employment and training and is funded by the national government, was launched in the fall.
3/ “Mind the gap”: bridging emergency responses and the longer-term recovery
The international, national and local policy response has been unprecedented in its scope and scale. Yet Ben Butters, the CEO of EUROCHAMBRES, still reminded us to “mind the gap”, particularly in the transition from short-term emergency measures to longer-term recovery. A bumpy or poorly coordinated transition could set us back.
Likewise, the patchwork of schemes and programmes requires careful coordination across levels of government to ensure that they complement each other and do not leave important gaps. Accordingly, ensuring sufficient coverage for different sectors and populations, from culture and creative industries to the self-employed, continues to be a priority. Even just understanding the supports available can be challenging for individuals and SMEs, and regional and local actors have played an important role in helping workers and businesses navigate the various programmes.
Finally, panellists spoke to the importance of keeping an eye towards the future, and ensuring emergency relief supports longer-term resilience. The European Commission’s Recovery and Resilience Facility aims to combine a quick and inclusive recovery while also supporting the digital and green transition. Targets for green investment and reforms are set at 37%, while digital investments and reforms targets a set at 20%. Implementation of the Barcelona Green Deal, which aims to strengthen the city’s competitiveness, sustainability and equity and create over 100 000 jobs in green and digital sectors, have been accelerated as result of the pandemic. The IEDC’s Restoreyoureconomy.org provides more examples of how local economic developers are already putting the pieces in place for the longer-term recovery from COVID-19, and lessons for doing so from other types of disasters. After all, as Jeff Finkle reminded us, we can’t afford to let this crisis go to waste.
[vii] Fairlie, Robert W. (2020), “The impact of COVID-19 on small business owners: Evidence of early-stage losses from the April 2020 Current Population Survey”, National Bureau of Economic Research Working Papers, No. 27309, http://www.nber.org/papers/w27309