July 9, 2015 10:36 am
Time is running out to stop millions of people from becoming permanently unemployed or trapped in low paid and insecure jobs, the Organisation for Economic Co-operation and Development has warned.
The Paris-based organisation said young people who entered the jobs market during the 2008/9 financial crisis were now approaching a “make or break point” in their working lives. Its research shows a person’s long-term career prospects are largely determined by their first decade in the labour market.
“Governments need to act now to avoid a permanent increase in the number of workers stuck in chronic joblessness or moving between unemployment and low-paid precarious jobs,” said Angel Gurría, OECD secretary-general. “If that happens, the long-run legacy of the crisis would be to ratchet inequality up yet another notch from levels that were already far too high.”
The OECD’s annual Employment Outlook shows unemployment is starting to recede slowly in developed countries, including in those hardest hit by the crisis. But about 42m people were still jobless in the 34 OECD countries in May, 10m more than before the crash. In addition, real wage growth remains unusually weak, averaging 0.5 per cent a year since 2007.
There are vast disparities between countries: by the end of 2016, the OECD predicts unemployment will have dropped to about 5 per cent in the UK and US, but expects it to remain above 20 per cent in Spain and Greece.
As Greece’s debt crisis intensifies, the OECD’s data demonstrate just how badly its workers have suffered: youth unemployment is about 50 per cent, in spite of a sharp fall in average real wages and a 22 per cent cut in the cash value of the minimum wage between 2011 and 2012.
The OECD’s biggest concern is the sharp increase in long-term unemployment since the crisis, particularly among young people. More than a third of the unemployed in the OECD area have been out of work for a year or longer, and their ranks have swollen 77 per cent since 2007.
Mr Gurría urged policy makers to spend more money to help the unemployed back into work, pointing out that many countries had slashed spending on this area as they tried to repair their budget deficits after the crisis. Real spending on active labour market programmes per unemployed person fell between 2007 and 2013 by more than 50 per cent in Ireland, Italy, Spain and the UK.
Like the International Labour Organisation, the UN’s labour market division, the OECD is becoming increasingly worried about the quality and security of jobs at the bottom of the labour market, which are partly the result of globalisation and long-term technological shifts, as well as the cyclical effects of the crisis. It endorsed policies that support the incomes and upward mobility of people on the bottom rungs of the jobs market, such as carefully-set minimum wages and better skills training.
It published new research that suggests countries with a large number of workers with poor information-processing skills can boost upward mobility and reduce inequality if they can find and fund ways to improve those skills.