Jobs are the bottom line of the global crisis

Secretary-General of the OECD

Some 15 million people have joined the ranks of the unemployed in OECD countries since the end of 2007. Unemployment has already reached a record high of 8.5% as a result. Without the right policies and if the recovery fails to gain momentum, OECD unemployment could approach 10% next year. That would mean 57 million people out of work-roughly equivalent to the population of some G8 countries!

The financial and economic crisis has developed into an unemployment crisis, with untenably high economic and social costs. Employment always take time to recover after recessions, but the time lag could be longer this time. Many firms have been wiped out and livelihoods destroyed because of the financial crisis. These are the challenges ministers from around the world will confront when they gather at the OECD Labour and Employment Ministerial Meeting on 28-29 September 2009. Despite stretched budgets and burgeoning debt, they must act decisively to end the jobs crisis.

Job losses have affected all social groups, but as usual, disadvantaged groups--youth, low-skilled, immigrants, ethnic minorities and those on temporary contracts--have borne the brunt. Indeed, youth unemployment has risen sharply in several countries including France, Spain, the UK and the US, to around twice the average for the OECD overall.

Policymakers must work to prevent these vulnerable unemployed from being trapped in long-term unemployment or dropping out of the labour force altogether. Governments must act now to stop the vicious circle whereby job hunters become demoralised, lose confidence and become less employable. They must act now to prevent persistent unemployment from casting a long dark shadow over people's welfare and from damaging the social fabric of our countries. And they must act now to prevent it from dragging down the recovery and, with it, the prospects of an entire young generation.

The good news is that governments are taking action, as ministers writing in this special edition of OECD Observer testify. In fact, jobs feature strongly in many governments' fiscal stimulus recovery plans. This is because active labour market policies help people maintain their skills or acquire new ones, and provide an opportunity to prepare workers for green growth. They help people find work, for even in today's deep crisis, millions of new jobs are being filled. A recent OECD survey of 19 countries suggests that such additional spending could save up to 5 million jobs by 2010.

Many governments have acted to limit layoffs, with programmes such as the German Kurzarbeit that has kept some 1.5 million workers in their jobs.

Extending coverage and the duration of unemployment benefits has been another vital option, which governments have widely used to support incomes.

But more must be done, particularly by providing more resources to assist job losers with training and active job search in return for benefits. Policymakers will get more "bang for their buck" using this approach, which boosts morale and skills, and keeps people in the labour market.

Worryingly, in most countries public spending on active labour market measures has not kept pace with the rise in unemployment ; spending per unemployed person has declined by over 40% in Ireland, Spain and the US since the crisis started. This looks like a missed opportunity. Employment offices must be able to deal properly with job-seekers' needs and make full use of the opportunities, which effective active labour market programmes provide.

What matters is finding policies that work. We know one size does not fit all. For instance labour market systems in some Nordic countries which combine generous social safety nets, relatively flexible labour and product markets and a tradition of social dialogue, cannot simply be transposed to countries where taxes are lower or where employment institutions are less sophisticated. Such differences must be taken into account when designing and implementing effective policies. Our ministerial discussions will help countries identify good practices to suit their circumstances, while avoiding the costly mistakes of the past.

But governments should not be left to struggle with the unemployment problem on their own. In the past year we have witnessed an unprecedented global effort dedicated to address the financial crisis. It is starting to bear fruit. A similar effort must now be afforded to beating the jobs crisis across developed and developing countries alike. Social protection and a decisive fight against informal employment should be a priority in ensuring decent work, a sustainable and just recovery and social progress in developing countries. Leaders of the G20 are fully committed to supporting global growth to achieve a recovery strong enough to create the jobs needed all over the world. Though governments can lead the way, they will need support not only from international organisations such as the ILO and the OECD, and in fora such as the G20, but also from business.  

The gloom in the global financial sector may be lifting, but a full recovery will only come when we have solved the jobs crisis together. Employment is the bottom line of the global crisis.

©OECD Observer No 274, October 2009


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