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The 2015 edition of the OECD Employment Outlook provides an in-depth review of recent labour market trends and short-term prospects in OECD countries. Chapter 1 looks at recent labour market developments focusing on minimum wages, while Chapter 2 draws on the OECD’s International Survey of Adult Skills and considers skills and wage inequality. Chapter 3 looks how policies to get job seekers back into work can help make labour markets more inclusive, while Chapter 4 examines job quality in terms of earnings mobility, labour market risk and long-term inequality. Finally, Chapter 5 discusses how job quality in emerging economies can be enhanced.
Labour market conditions are generally improving in OECD countries but the recovery from the recent economic crisis remains very uneven across countries. Employment is still growing too slowly in the OECD area to close the jobs gap induced by the crisis any time soon. The jobs mix has shifted towards more part-time work and away from manufacturing and construction jobs which may be making it harder for some unemployed to find full-time jobs. Consequently, unemployment will remain high even by end 2016. At 7.1% in Q4 2014, the OECD average unemployment rate was still 1.6 percentage points above its pre-crisis level. Unemployment is projected to continue its slow decline during the rest of 2015 and 2016, reaching 6.6% in the last quarter of 2016 while remaining above 20% in Greece and Spain. Long-term unemployment also remains unacceptably high and there is a danger that many in this group have become disengaged from the labour market, making it harder to reduce unemployment. Youth unemployment remains well above its-pre crisis levels in many countries as does the share of young people who are not working or studying (the so-called NEETs). Weak real wage growth also remains a concern, particularly in the euro area.
The jobs recovery is becoming more widespread and gaining momentum putting unemployment on a declining path in most countries, including those hardest hit by the crisis. However, the recovery is still far from complete and time is running out to prevent millions of workers from being left trapped at the bottom of the economic ladder. Many of the youth who finished their schooling during the crisis years and have struggled to gain a secure toe-hold in the labour market may be approaching the make or break point so far as being able to ascend the career ladder. Indeed, one of the striking findings in this edition of the OECD Employment Outlook is that long-term career prospects are largely determined in the first ten years of working life. Some of the experienced workers who have lost their jobs during the crisis are also having a difficult time putting their careers back on track. For example, a number of those who lost jobs in the manufacturing or construction sectors will need to make a career switch to growing service industries and often to adapt their skills if they are to avoid becoming trapped on the margins of the labour market.
Inequality has been rising in a large majority of OECD countries and efforts to halt or reverse this rise rank very high on the policy agenda. This chapter assesses the potential role of skills in reducing wage inequality, a key driver of changes in household income inequality. New data on the information-processing skills of the workforce from the Survey of Adult Skills (PIAAC) are used to analyse the role of skills in explaining cross-country differences in wage inequality. This analysis helps to inform policy choices by disentangling the contributions of average skill levels, how skills are distributed across the workforce, the extent to which skills are used on the job, and the return they command on the labour market.
This chapter analyses how earnings mobility – defined as moving up or down the earnings ladder and in and out of work – affects labour market risk and long-term inequality. To this end, it employs a simulation methodology to analyse workers’ careers using short panel data for 24 OECD countries. On average, three quarters of inequality in a given year is shown to be permanent in nature, while the remainder evens out over the life cycle as a result of mobility. Mobility does not appear to be higher in countries with more inequality. Chronic unemployment, weak cognitive skills, atypical work arrangements and poor productivity in firms are major determinants of low long-term earnings. Unemployment insurance plays a major role in securing worker careers by mitigating income risks due to unemployment. Minimum wages reduce the risk of extreme low pay, but their impact is muted in the long-term due to the equalising effect of mobility and potential adverse employment effects.
In this chapter, a new framework is put forward for the design of effective activation policies to connect people with jobs and foster more inclusive labour markets. While activation policies draw on many tools that can be assembled in different ways, the overall package needs to maintain the motivation of jobseekers to actively pursue employment while also improving their employability and expanding their opportunities to be placed and retained in appropriate jobs. The implementation of these three elements – motivation, employability and opportunity – has to be managed by effective and efficient labour market institutions and policies, which are the keystone of any successful activation strategy. These principles are illustrated in the chapter through a review of a wide range of policy experiences and evaluation evidence.
This chapter provides an overview of labour market developments in the OECD area since the onset of the financial and economic crisis in 2008 and discusses OECD projections through the end of 2016. Changes in the level and composition of employment are documented, as well as the evolution of real wages. A special section analyses statutory minimum wages. After describing the minima in place in 26 OECD countries, evidence about their effectiveness in supporting the incomes of workers at the bottom of the wage ladder is presented and assessed. Effective co-ordination of minimum wages with tax and benefit policy receives particular attention.
The OECD Employment Outlook provides an annual assessment of key labour market developments and prospects in member countries. Each edition also contains chapters focusing on specific aspects of how labour markets function and the implications for policy in order to promote more and better jobs. This year’s chapters cover five topics: minimum wages; skills and wage inequality; activation policies for more inclusive labour markets; earnings mobility, labour market risk and long-term inequality; and job quality in emerging economies. Reference statistics are also included.
This chapter provides the first comprehensive analysis of job quality in emerging economies. It extends the OECD Job Quality Framework to better suit the countries considered, while maintaining its fundamental principles and its three broad dimensions: earnings quality, labour-market security and quality of the working environment. The analysis delivers a detailed cross-country picture of job quality across emerging countries and socio-demographic groups, placing particular attention on the gap between formal and informal occupations. Moreover, using panel data from a selection of countries, it presents an in-depth dynamic analysis of transitions in and out of informal jobs, with the aim to investigate whether such occupations may be considered stepping stones or traps leaving permanent scars on workers’ career prospects. Finally, the chapter outlines a set of policy orientations to foster high-quality jobs in emerging economies.