Help wanted

Chair, Employment, OECD Labour and Social Affairs Committee

Bo Smith

Among the employment challenges exacerbated by the economic crisis, long-term joblessness and youth unemployment are especially troubling as their effects can linger long after the job market has recovered.
Governments would do well to focus on these problems now.

More than two years into a jobs-poor recovery, a great many countries continue to bend under the weight of stubbornly high unemployment and under-employment. And too many of those who do work remain trapped in low-paid jobs with little social protection. Indeed, the gap between rich and poor has widened in most OECD countries over the past quarter of a century—a trend that was occurring well before the Great Recession. Therefore, the OECD has been arguing for some time now that creating more and better jobs must take centre stage on the political agenda.

Two aspects of the current situation are particularly worrisome: the serious threat that high levels of unemployment might become entrenched and the disproportionate impact of the crisis on youth.

For those joining the ranks of the unemployed, the drawnout nature of this crisis means that it can take longer to find a new job, assuming they can find one at all. By the second quarter of 2011, the share of the unemployed who had been jobless for a year or more had risen above the pre-crisis level in over two thirds of OECD countries, with the largest rises occurring in those countries where the recession has hit labour markets particularly hard. For example, in the US, a post-war high of 32% of all unemployed had been jobless for a year or more in the second quarter of 2011, up from just under 10% three years earlier. Over the same period, Spain recorded an increase from 18% to 41%, and Ireland saw an increase from 29% to 58%. These large increases in long-term unemployment are distressing for the individuals concerned and their families, but they also raise the spectre of increasing rates of structural unemployment that may take many years to unwind.

And the negative effects of long-term unemployment can reach well beyond joblessness. Those suffering from long-term unemployment run a greater risk of poverty and health problems while their children are more likely to suffer from failure at school. So the policy implications are plural and pressing. As the recent OECD publication, Divided We Stand: Why Inequality Keeps Rising shows, the jobs crisis has been hitting the most vulnerable groups hardest and may be widening the gap between the poor and the rich even further.

Youth have been hit particularly hard by the jobs crisis. This was clearly spelled out in the 2011 OECD Employment Outlook and in the joint OECD/ILO report on youth employment that was prepared for the G20 Employment and Labour Ministerial meeting in Paris in September 2011. Giving a better start in the world of work to the young is a challenge that cuts across all countries. Whereas overall employment in the OECD area was 1.5% lower in the second quarter of 2011 than three years earlier, employment for youths aged 15 to 24 fell a staggering 8.8%. This sharp deterioration in labour market opportunities for recent school leavers contrasts sharply with the 7.2% rise in employment for workers aged 55 to 64 over the same period.

Large employment losses for youth are of particular concern because unemployment and other labour market difficulties encountered early in their working lives can jeopardise their career prospects over the long term. OECD governments have implemented a number of crisis measures intended to help youth weather the economic storm, both by providing additional opportunities for education and training, and by helping young workers gain valuable work experience through employment subsidies and increased places in apprenticeship-type training. But at this point, it is not yet possible to assess how successful these measures have been in limiting the scarring effects that can accompany them for life.

So how should governments respond? Ensuring a credible medium-term strategy of fiscal consolidation is essential for unwinding large increases in public debt, rebuilding confidence and ultimately renewing the basis for sustained growth. Yet, while necessary, this will not be sufficient to bring down long-term unemployment. We need to support a new wave of job creation. With public resources limited, the OECD rightly suggests that the focus should be on cost-effective measures. This will include well-designed hiring subsidies and training programmes tied closely to local labour market needs and focused on the most vulnerable groups.

Improving the labour market situation of youth requires a two-pronged approach. First, action needs to be directed at tackling the rise in youth joblessness that took place during the crisis. Policies involving job-search assistance, hiring subsidies and remedial assistance should focus on the most disadvantaged youth, including those most at risk of exclusion. In a number of countries, there is also a need to expand opportunities for “study and work” programmes, such as apprenticeships and other dual vocational education and training programmes.

Second, policies must be put in place to give all youth a better start in the labour market. This means ensuring youth do not leave school before acquiring adequate foundation skills, both cognitive and non-cognitive. As underlined in the OECD’s in-depth country reviews on youth employment, such skills will be a critical issue looking further ahead, particularly the need to achieve a better match between the skills youth acquire at school and those required by the labour market. This requires improving early childhood education and development and making sure that dropping out of school is not an option. Education and trainings systems also need to be made more responsive to the skill needs of employers.

In many cases, governments need to reassess and remove potential barriers to youth employment. These may include excessive labour costs for hiring unskilled youth, as well as restrictive hiring and firing rules that relegate young job seekers to dead-end temporary jobs. Youths, as well as employers, need a degree of labour market flexibility to ensure that younger job seekers receive a fighting chance in terms of hiring and moving onto career tracks.

The immediate future of the world economy is still uncertain at best, and realistic short-term solutions to the challenges of unemployment remain elusive. But doing nothing is not an option as the economic and social costs of rising long-term unemployment and the exclusion of many young job seekers from the labour market would be simply far too high.

www.oecd.org/employment

OECD (2011), Divided We Stand: Why Inequality Keeps Rising, OECD Publishing.

See also: 

OECD (2011), OECD Employment Outlook 2011, OECD Publishing.

The G20 Labour and Employment Ministers’ Conclusions 


©OECD Yearbook 2012




Economic data

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Africa's cities at the forefront of progress: Africa is urbanising at a historically rapid pace coupled with an unprecedented demographic boom. By 2050, about 56% of Africans are expected to live in cities. This poses major policy challenges, but make no mistake: Africa’s cities and towns are engines of progress that, if harnessed correctly, can fuel the entire continent’s sustainable development.
  • “Nizip” refugee camp visit
    July 2016: OECD Secretary-General Angel Gurría visits the “Nizip” refugee camp, situated between Gaziantep and the Turkish-Syrian border, accompanied by Turkey’s Deputy Prime Minister Mehmet Şimşek. The camp accommodates a small number of the 2.75 million Syrians currently registered in Turkey, mostly outside the camps. In his tour of the camp, Mr Gurría visits a school, speaks with refugees and gives a short interview.
  • OECD Observer i-Sheet Series: OECD Observer i-Sheets are smart contents pages on major issues and events. Use them to find current or recent articles, video, books and working papers. To browse on paper and read on line, or simply download.
  • Queen Maxima of the Netherlands gives a speech next to Mexico's President Enrique Pena Nieto (not pictured) during the International Forum of Financial Inclusion at the National Palace in Mexico City, Mexico June 21, 2016.
  • How sustainable is the ocean as a source of economic development? The Ocean Economy in 2030 examines the risks and uncertainties surrounding the future development of ocean industries, the innovations required in science and technology to support their progress, their potential contribution to green growth and some of the implications for ocean management.
  • OECD Environment Director Simon Upton presented a talk at Imperial College London on 21 April 2016. With the world awash in surplus oil and prices languishing around US$40 per barrel, how can governments step up efforts to transform the world’s energy systems in line with the Paris Agreement?
  • Happy 10th birthday to Twitter. This 2008 OECD Observer interview with Henry Copeland said you’d do well.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Once migrants reach Europe, countries face integration challenge: OECD's Thomas Liebig speaks to NPR's Audie Cornish.

  • Message from the International Space Station to COP21

  • The carbon clock is ticking: OECD’s Gurría on CNBC

  • If we want to reach zero net emissions by the end of the century, we must align our policies for a low-carbon economy, put a price on carbon everywhere, spend less subsidising fossil fuels and invest more in clean energy. OECD at #COP21 – OECD statement for #COP21
  • They are green and local --It’s a new generation of entrepreneurs in Kenya with big dreams of sustainable energy and the drive to see their innovative technologies throughout Africa. blogs.worldbank.org
  • Pole to Paris Project
  • In order to face global warming, Asia needs at least $40 billion per year, derived from both the public and private sector. Read how to bridge the climate financing gap on the Asian Bank of Development's website.
  • How can cities fight climate change?
    Discover projects in Denmark, Canada, Australia, Japan and Mexico.
  • Climate: What's changed, what hasn't, what we can do about it.
    Lecture by OECD Secretary-General Angel Gurría, hosted by the London School of Economics and Aviva Investors in association with ClimateWise, London, UK, 3 July 2015.
  • Is technological progress slowing down? Is it speeding up? At the OECD, we believe the research from our Future of ‪Productivity‬ project helps to resolve this paradox.
  • Is inequality bad for growth? That redistribution boosts economies is not established by the evidence says FT economics editor Chris Giles. Read more on www.ft.com.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .

Most Popular Articles

Poll

What issue are you most concerned about in 2016?

Unemployment
Euro crisis
International conflict
Global warming
Other

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2016