OECD 2021 Employment Outlook, 7 July 2021

 

Remarks by Mathias Cormann,

Secretary-General, OECD

Paris, 7 July 2021

Dear colleagues, dear friends,

I am delighted to be here with you today to launch the 2021 edition of the OECD Employment Outlook.

Economic recovery is underway in the OECD.

The GDP of OECD countries is expected to increase by 5.25% this year, the fastest growth in almost 50 years, although it will only bring output back to 2019 levels.

The situation in labour markets has also improved considerably largely on the back of the unprecedented measures taken by many OECD countries to support businesses and households through the crisis.

The OECD-wide unemployment rate stood at 6.6% in May 2021, down from 8.8% in April 2020, when the first wave of the pandemic was peaking.

The most striking improvement on the unemployment front has come in the United States, where the unemployment rate has fallen from a comparatively high peak of nearly 15% reached early in the pandemic, to 5.9% in June 2021.

The recovery, albeit faster than initially anticipated, remains incomplete.

Across the OECD there are still over 8 million more people unemployed than before the crisis, and over 14 million more inactive people. Total hours worked in the first quarter of 2021 remained 7% lower than in the last quarter of 2019 and, despite a strong rebound, pre-pandemic levels of employment in the OECD will not be reached before 2023, according to our projections.

The essential economic policy task in the short term continues to bring the virus under control and to keep it under control through effective public health measures – most importantly by getting as many people as possible vaccinated all around the world.

Economic and labour market recovery will remain precarious while vaccination rates remain uneven, not least because of new COVID-19 variants of concern.

We need more jabs for more jobs.

It will be very important to get policy settings right to encourage business investment and job creation, as well as to drive the necessary upskilling, reskilling and skills matching required to ensure everyone has the best possible opportunity to participate and benefit from the recovery.

As governments roll out their recovery plans, it is essential to continue supporting families most in need while better targeting fiscal policy measures designed to boost growth towards firms and jobs that have a viable future in the new post-COVID environment, by providing the right incentives for business investment leading to the restoration and creation of more new jobs.

Withdrawing support too soon would risk jeopardising the recovery. Maintaining blanket support for too long would risk jeopardising the strength and quality of the longer term recovery by slowing down the necessary reallocation of capital and labour across the economy.

Where activity has resumed, market mechanisms should start operating more fully, facilitating the movement of workers and resources from unviable to thriving activities.
So the short term costs of fiscal support measures can be reduced and their longer term effectiveness improved by better targeting – to the most vulnerable sectors, companies and households, while fostering start-ups and job creation.

The 2021 OECD Employment Outlook also highlights the challenges that need to be addressed for a strong labour market recovery, and policies to sustain the creation of more productive and rewarding jobs.
First, despite support efforts from countries, the crisis has hit vulnerable groups such as youth, many women, the low-skilled and frontline workers, harder. Without well-targeted measures, some of these short-term effects risk becoming long-term scars.

Young workers, for example, saw large reductions in their hours of work, nearly twice as much as for prime-aged and older workers at the peak of the crisis in 2020. Similarly, among those with low levels of education, half of the total hours lost at the peak of the crisis was due to increases in unemployment. In contrast, for the highly educated, almost all the decline in hours was driven by reductions in working time. Workers with non-standard labour contracts -- part-time, fixed-term and independent -- were frequently unable to access job retention schemes or to benefit from full unemployment insurance, reducing the effective support that they could receive.

A second challenge lies in the acceleration of structural changes in labour markets, including the digital and green transition. The evidence in the report suggests that jobs that had the strongest decline in online job postings are also those most exposed to automation and demographic ageing. Private sector job creation by successful and growing businesses will be at the core of the job recovery.

So what must be done?

The recovery plans that countries are putting in place present a once-in-a-lifetime opportunity to heal labour markets and address the key structural issues so as to prepare for a stronger, more resilient future of work for all. The 2021 OECD Employment Outlook identifies three priorities for this.

A first priority must be connecting people to jobs. This involves supporting job creation with targeted and temporary hiring subsidies, and helping start-ups and young firms grow and find the talents and skills they need. But it also involves expanding active labour market policies to quickly connect job-seekers to available jobs.

About two-thirds of OECD countries have increased their budget for public employment services since the onset of the crisis, but increasing spending may not suffice. How the money is spent is just as important. Employment and training services need to be integrated, comprehensive, and individualised; they need to reach out to firms that create jobs and to people most at risk of long long-term unemployment.

The second priority is investing in effective skills policies to help businesses, start-ups and workers transition to occupations and sectors with high growth potential.

All efforts should be made to promote a culture of lifelong learning and linking training to individuals rather than jobs. Training programmes should address bottlenecks to participation and seek to engage those who need training the most.

Indeed, workers whose jobs are at high risk of automation are only half as likely to engage in adult learning than their peers in jobs with lower risk of automation.

Finally, the third priority is to address long-standing gaps in social protection. During the crisis, many countries put in place emergency support for the self-employed. These emergency measures should now be re-assessed and translated into more targeted but more systemic responses, capable of ensuring both fairness and incentives to work.

This means a more neutral treatment across forms of work, improved portability of entitlements, and eligibility that is more responsive to people’s changing needs. Many countries are, for example, considering how to provide unemployment support to the self-employed.

Dear colleagues, dear friends,

The COVID-19 recovery plans include an unprecedented level of spending, and we owe it to future generations to use it wisely.

The 2021 OECD Employment Outlook clearly outlines policies to make the most of this opportunity and build productive, inclusive and future-proof labour markets.

Thank you.

 

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