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07/07/2010 - OECD countries need to create 17 million jobs to get employment levels back to where they were before the crisis, according to the OECD’s Employment Outlook 2010.
Unemployment may have peaked in the OECD area, having reached 8.6% in May 2010, it says.
“Creating jobs has to be a top priority for governments,” said OECD Secretary-General Angel Gurría, launching the report in Paris. “Cutting unemployment and fiscal deficits at the same time is a daunting challenge but it needs to be tackled head on. Despite signs of recovery in most countries, the risk remains that millions of people may lose touch with the labour market. High joblessness as the new normal can not be accepted and has to be tackled by a comprehensive policy strategy.”
Today's “jobs gap” varies widely between countries: in the United States nearly 10 million jobs need to be created. In Ireland, 318 000 jobs are needed to return to pre-crisis levels, that is one job for every 5 existing jobs today. Spain has lost 2.5 million jobs since the end of 2007.
Altogether, there are 47 million unemployed in the OECD area today. But taking into account people who have given up looking for work or are working part-time but want to work full-time, the actual number of unemployed and under-employed in OECD countries could be about 80 million, according to the Outlook.
The challenge for governments, according to the OECD, is to define a new balance between fiscal consolidation while at the same time helping the people most in need, notably young people and the long-term unemployed. Maintaining effective support for these people is vital and governments must resist the temptation to cut benefits or reduce funds for re-employment services to save money in the short-term.
“A strong case can be made to ensure that labour market policies remain adequately funded,” the report argues. “But it becomes essential to focus on cost-effective programmes and to target the most disadvantaged groups at risk of losing contact with the labour market.”
Most countries have maintained or expanded programmes to help the unemployed find work during the crisis. They should also invest more in training, especially for people with low or obsolete skills. Tax breaks and other types of hiring subsidies for firms that recruit people who have been out of work for more than a year would help jumpstart job creation, according to the report.
In emerging economies, the global financial crisis may also slow down if not reverse falling poverty trends observed since the early 1990s, the report warns. In Brazil and Mexico, job losses among workers in the formal sector are likely to be worse than in previous crises, notably for young or low-skilled workers.
Emerging economies should as far as possible reinforce their safety nets. They should provide cash transfers and public work schemes for the most vulnerable families and help people who lose their jobs in the formal sector who are at risk of falling into poverty and informal employment.