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OECD Countries - Governments must act on youth and long-term unemployment

16 September 2011

Unemployment remains stubbornly high in the OECD area with the latest economic forecasts suggesting job creation will remain anaemic in the near term, according to a new report published by the Organisation for Economic Co-Operation and Development area (OECD).

The latest Employment Outlook says that in mid 2011 the number of unemployed people in the OECD area has declined to just over 44 million, still more than +13 million higher than immediately before the crisis.

OECD Secretary-General Angel Gurría, commented "of all the facets of the financial and economic crisis, high unemployment is the most visible manifestation of the challenge to restore sustained growth. This is the human face of the crisis. Governments cannot stand still. The challenges of tackling high and persistent unemployment, improving job opportunities and ensuring adequate social safety nets should be at the top of the political agenda."

The risk of high unemployment becoming entrenched has increased with a steep rise in long-term joblessness. In the United States, the share of the unemployed who have been out of work for more than a year has tripled to a record high of over 30%. In Spain it exceeds 40%. Of the major OECD economies, only in Germany has long-term unemployment fallen.
 
Effective labour market policies can make a difference. Some OECD countries, including Australia, Japan, Korea and the Netherlands have managed to contain the increase in unemployment. Germany has actually reduced unemployment during the crisis.

"With public resources limited, the focus should be on cost-effective measures - such as well-designed hiring subsidies, and on the most vulnerable groups," said Mr Gurría, citing as an example President Obama's proposed American Jobs Act which would waive employer's payroll tax for companies expanding their workforce.

Income support for the unemployed should be maintained or even reinforced where assistance is relatively low, difficult to access and where the long-term unemployed face a serious risk of falling into poverty and exclusion, the OECD says. But it is essential to combine income support with effective re-employment programmes to avoid benefit dependence. In emerging economies, the OECD recommends targeting income support to those who most need it and better integrating social protection programmes.

Helping young people must be a priority. In the first quarter of 2011, the unemployment rate for people aged 15 to 24 was 17.4% in the OECD area, compared with 7% for adults aged 25 and over. Targeting youth will reduce the risk of young people falling into long-term unemployment and losing touch with the job market.

Mr Gurría said "tackling the large human cost of unemployment, especially for those youth who fail to get a permanent foothold in the labour market, must be a priority. A better match must be achieved between the skills youth acquire at school and those needed in the labour market."

To read the full report, please click here

To read the Secretary-General's full speech, please click here
 

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