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The OECD’s painfully slow job recovery

By Jon Beale

In its most recent annual employment assessment, the Organization for Economic Cooperation and Development (OECD) found that job growth in member states has been “painfully slow” since the 2009 global financial crisis. More than three-quarters of the 35 OECD member states are still experiencing high levels of unemployment. Greece, France, Italy, Portugal, and Spain are faring the worst with continuing unemployment rates in the double digits.

This inability of many countries to rebound is attributed to a “low growth trap” involving low levels of investment, weak productivity gains, little job creation, and stagnating wage rates.

For those countries where unemployment rates are back below five percent (such as the United States, Germany, Japan, and Mexico), the OECD expresses concern over the low quality of jobs and high levels of labour market inequality that are fuelling those gains. In some cases, these unemployment figures may also have decreased as a result of discouraged workers giving up on job searches and declaring themselves disabled or retired. A focus on job quality in particular highlights that a higher percentage of young people in OECD countries are neither employed nor in school compared to pre-crisis levels (in some countries, this number has increased significantly).

To counter these trends, the OECD recommends that countries adopt “high-performance work practices” in order to boost productivity. This includes encouraging job rotations, bonus pay, and flexibility in working hours, many practices that some of the world’s leading private companies are starting to implement. The report also recommends prioritizing getting disadvantaged youth into the workforce through a variety of coordinated services such as healthcare, overcoming skills deficits, and reducing social isolation.

This post first appeared in TINAN 73. Subscribe to TINAN for the latest economic development news and resources.