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The jobs crisis: the labour market and social policy responses

 

Remarks by Angel Gurría, OECD Secretary-General at the G8 Summit Consultation with Social Partners


Rome, 26 June 2009


President Berlusconi, Minister Sacconi, Ladies and Gentlemen,


It is a great privilege for me to be invited to speak at this important consultation with BIAC and TUAC in advance of the l’Aquila Summit. I come from a very successful OECD annual Meeting at Ministerial Level, which was chaired by Korea, with Italy as vice-Chair. And for the first time, BIAC and TUAC could provide their contribution of ideas and policy advice directly to OECD Ministers.


Much has happened since the end of March, when the human dimension of the unfolding financial and economic crisis was first highlighted by the G8 Social Summit. The jobs’ crisis has continued to worsen. Unfortunately, it will be with us for a considerable time. This is true despite recent signs suggest that the recession may be slowing.


And, as we have learned from previous severe downturns, the jobs recovery will lag substantially behind the next pickup in output growth. Unemployment is expected to attain an all-time high of around 10% in 2010, according to the latest OECD projections. This could swell the ranks of the unemployed in the OECD countries by over 26 million people.


We cannot allow this upsurge to become a fully-blown social crisis. It is essential that vigorous employment and social policy measures are part of the overall policy response to the crisis. The Conclusions adopted at yesterday’s Ministerial recognise this fully: “Recovery plans should serve people by addressing the social and human dimensions of the crisis, through support for the most vulnerable, including active labour market policies, skills development, income support, effective social safety nets, pensions, education and enhanced training projects.”


Now, some OECD countries have devoted significant additional resources to labour market and social programmes in their fiscal stimulus packages. But available resources have generally not risen in line with unemployment, and additional funds are required to avoid a lost opportunity. It would also be important to secure sufficient resources for some time into the recovery period given that hikes in unemployment take time to recede. 


In these difficult times when public budgets in many countries are under unprecedented strains, extra funds must be devoted to cost-effective programmes. Here the good news is that we do know quite well what works and what does not, and for whom.


We need to provide adequate safety-nets to job losers and low-income families. Effective income support programmes must protect disadvantaged groups while also ensuring incentives for them to look for work.


Targeted active labour market programmes can make a real difference in promoting a quick reintegration of job losers into employment and prevent the risk of long-term unemployment.


These policies should be delivered through efficient and well-equipped Public Employment Services (PES).


Reducing high youth unemployment is a priority. Youth unemployment has increased disproportionally in many of our countries during the downturn. In Spain and the US, for example, the youth unemployment rate reached almost 35 and 23%, respectively, in recent months. These figures are unacceptable.


Further investment in human capital is another key action to tackle the crisis and prepare for the recovery. Governments must put in place measures to promote skill formation and lifelong learning to ensure that requirements of new jobs are adequately matched. Some will arise from the shift towards a low carbon economy.


Social dialogue can and must play an important role in building these policy responses to address the crisis. In a number of OECD countries (the Nordics, as well as several other EU countries) a constructive dialogue between the government and the social partners has been instrumental in promoting major labour market reforms.


Ladies and gentlemen:


The number of jobless people around the world will rise massively this year. This is a tragic perspective. Labour market and social policies are more important than ever. We must join knowledge and experience, of the G8, BIAC, TUAC and OECD, to help governments make the best use of these policies.


OECD remains committed to tackle the human and social dimension of the crisis. Our coming meeting of OECD Employment and Labour Ministers, to be held in Paris on the 28-29 September, will be conducted in this spirit. For we very well know that it is an illusion to think that governments can weather the crisis and progress in isolation, without the social partners.

 

Thank you very much.

 

 

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