Why 'time is running out' to fix long-term unemployment

The world of work has changed since the financial crisis, says the OECD.

by Rachel Savage
Last Updated: 04 Aug 2015

The financial crisis dealt a blow to the jobs and future prospects of many workers around the world, particularly in Europe. But while unemployment is now falling for the most part, deeper technological change is making it harder than ever for people to get out of the long-term unemployment or low-paid, insecure jobs they were plunged into by the crash, according to a new report by the Organisation for Economic Co-operation and Development.

Around 42 million people across the 34 countries of the OECD are currently out of work. That’s an improvement on 45 million last year, but still 10 million higher than before the recession. Out of those, 37% have been jobless for at least a year, up a staggering 77.2% since the end of 2007. Meanwhile, real wage growth has fallen from 1.8% between 2000 and 2007, to 0.5% since.

‘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,’ OECD Secretary-General Angel Gurría said, in a suitably dramatically worded statement.

‘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.’

That is a sweeping statement given the enormous differences between the globe-spanning countries of the OECD. Unemployment is less than 4% in South Korea, Japan and Norway, but more than 25% in Greece and above 23% in Spain.

Credit: OECD

The report does raise an interesting point about deeper structural change taking place across the world. Technology is ‘skewing job demands towards towards high-level skills and putting downwards pressure on the pay of less-skilled workers,’ the report said.

That, as many have said before, will only increase as robots and software programs automate ever more human work. Meanwhile, ‘sharing economy’ startups like Uber and Fiverr, an odd jobs platform, are filling some of the gaps, but with what is effectively relatively insecure self-employment (and Uber wants to get its cars to drive themselves in the future anyway).

So the issue of low-skilled and long-term unemployed workers is not going to go away for developed countries any time soon, even if countries like Greece and Spain are feeling the pain far more right now. For the UK's part, it will be interesting to see the impact of Osborne's new 'living wage' on unemployment - think tanks have said it will cost 60,000 jobs, but the Chancellor claims a million will be created by his shake-up.

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