I am delighted that so many have joined us for this discussion. I would like in particular to thank you, Commissioner Schmit, for co-organising this important event and for being with us today.
COVID-19 90 million infected, two million dead, and counting. Terrible unprecented toll.
Beyond the direct health consequences, the pandemic has also had a major impact on many other aspects of our well-being, including jobs and the broader economy. Global GDP declined by around 4% in 2020, the worst outcome in the 60-year history of the OECD. Unemployment across OECD countries spiked to 8.8% last April, and although employment rates are about halfway back to pre-pandemic levels, the risk of another wave of job losses remains acute.
But as catastrophic as this crisis has been, there have been some important positives in the response. Policymakers learned lessons from the 2008 Global Financial Crisis and have taken timely steps to ensure we don’t repeat past mistakes. Most OECD countries have taken unprecedented measures to support businesses and keep people employed. Last spring, a third of workers in some OECD countries were on a job retention scheme and in many countries regular safety nets coupled with extraordinary measures have largely sheltered household income from the deep drop in economic activity.
Great progress has also been made with the very rapid development of several effective vaccines, making the proverbial light at the end of the tunnel seem brighter and nearer.
Despite that good news, however, we are still in a critical phase of the crisis. Vaccine distribution is progressing slowly and it will take time before their widespread distribution could really slow down significantly the diffusion of the virus, also taking into account the new, more transmissible strains of the virus.
As important as it is to start planning the recovery from this deep and protracted crisis, this is not yet the time to ease up in efforts to support all those affected. More than 45 million people are unemployed in OECD countries, millions of others are still on job retention schemes, and many businesses are struggling. After a decline in the summer from the huge numbers seen in April, the take-up of job retention schemes has increased again recently in several OECD countries. And, by the way, they dwarf the levels seen at the peak of the global financial crisis. In the United States, jobless claims have begun to increase again.
This is therefore no time to slacken our efforts. We need to continue supporting workers and businesses, with the combined forces of Central Banks and Treasuries.
The Commission’s temporary Support to mitigate Unemployment Risks in an Emergency, known as SURE, has played a crucial role in mitigating the harms of the pandemic in the EU by financially assisting member countries and by providing incentives to encourage a “race to the top” to strengthen national safety nets.
The most vulnerable in our societies have suffered the most in this crisis, and should be helped by targeted policies. This includes young people. After the global financial crisis, it took governments too long to address the labour market challenges of young people, causing lasting damage to their careers. We must not allow another generation’s prospects to be blighted in this way.
The short-term costs of the immediate support policies will be small compared with the potential costs arising from a depressed labour market and prolonged economic downturn. We should start preparing for the recovery by promoting business creation, encouraging hiring and adapting support for jobseekers and employers.
Commissioner Schmit, dear friends,
This discussion couldn’t be more timely, or more important. I am encouraged to see so many of you today and I’m looking forward to a dynamic discussion on the outlook and how we can adapt to deliver better policies for better lives in these unprecedented circumstances.