Thursday, July 9, 2015

OECD, GLOBAL ECONOMY

OECD Indicates Employment Is Growing Too Slowly

Annual report says global economy isn’t growing quick enough to replace job losses in the wake of the financial crisis

Jobseekers queue for access to a job center in Athens, Greece, on June 11, 2015. In Greece, the employment rate is almost 11 percentage points lower than in 2007, ENLARGE
Jobseekers queue for access to a job center in Athens, Greece, on June 11, 2015. In Greece, the employment rate is almost 11 percentage points lower than in 2007, Photo: Bloomberg News
The global economy still isn’t growing fast enough to quickly replace the jobs lost in the wake of the financial crisis, while millions are at risk of a lifetime of insecure and low paid employment, the Organization for Economic Cooperation and Development said Thursday.
In its annual report on employment, the Paris-based research body said that as of May 2015, around 42 million persons were without work, 10 million more than just before the crisis. It forecast that the unemployment rate will continue its “slow decline” through this year and next, and reach 6.5% by the end of 2016, from 7.1% at the end of last year.
“Employment is still growing too slowly in the OECD area to close the jobs gap induced by the crisis any time soon,” wrote Stefano Scarpetta, the OECD’s director for employment, labor and social affairs. “Consequently, unemployment will remain high even by end 2016.”
According to the report, the proportion of people aged 15 and over in work will be just 54.8% at the end of next year, still below the 55.8% recorded at the end of 2007. That difference of one percentage point is the equivalent of 11 million jobs.
The size of the “jobs gap”—or the difference between the employment rate now and before the crisis—varies widely across the OECD’s 34 members, most of which are developed economies. It remains widest among those European countries that were forced to seek international bailouts. In Greece, the employment rate is almost 11 percentage points lower than in 2007, while in Ireland the gap is just short of 10 percentage points. By comparison, the jobs gap in the U.S. is under five percentage points, and much of that is due to withdrawal from the jobs market, rather than unemployment.
Advertisement
The OECD warned that long-term unemployment remains very high, threatening a lifetime of insecurity and low pay for those affected. Across its 34 members, 15.7 million people had been without work for 12 months or more at the end of last year, more than a third of all unemployed. The size of that group was 77% higher than in 2007, while more than half had been jobless for two years or longer.
It said part of the increase in long-term unemployment may be due to the disappearance construction and manufacturing jobs, leaving workers from those sectors with the wrong skills for a jobs market that is shifting toward services.
The OECD also said that real wages have yet to recover from the crisis. In 10 of the 30 countries for which it has figures, real wages have fallen since the crisis, while in most of the rest, wages growth has slowed.
“Time is running out to prevent the scars of the crisis becoming permanent, with millions of workers trapped at the bottom of the economic ladder,” said Angel GurrĂ­a, the OECD’s 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. 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.”