Unemployment to remain high until end of 2013
Jobless rate in the 34-country OECD area will still be stuck at 7.7 percent at the end of 2013
By CFOWorld staff | CFO UK | Published 11:21, 10 July 12
The jobless rate in industrialised countries will stay stuck at 7.7 percent until the end of the year and remain high until at least the end of 2013 as the economic outlook deteriorated, the OECD said on Tuesday.
Young people and the low-skilled will bear the brunt of what is by far the weakest economic recovery in the past four decades, Organisation for Economic Cooperation and Development said in 2012 Employment Outlook.
The jobless rate in the 34-country OECD area will still be stuck at 7.7 percent at the end of next year, close to this May's 7.9 percent rate and leaving 48 million people out of work, according to the report.
The recent deterioration in the economic outlook was very bad news for the labour market, OECD secretary-general Angel Gurria said.
"It is imperative that governments use every possible means at their disposal to help jobseekers, especially young people, by removing barriers to job creation and investing in their education and skills," said Gurria. He presented the report in Paris, where the think tank is headquartered.
Countries needed to tackle the jobs crisis with appropriate macroeconomic policy measures, including immediate steps to stabilise Europe's banking system. There was also a case for some easing of fiscal policy if governments retain room for budgetary manoeuvre, the OECD said.
The challenges facing policymakers were in some respects unprecedented, according to the report:
- Almost three years into the recovery from the trough of the global financial crisis, the May jobless rate was just 0.6 percentage points below the post-war high of 8.5 percent touched in October 2009.
- Youth employment has declined by almost seven percentage points, relative to overall employment, since the start of the crisis, while low-skilled employment has dropped almost five percentage points.
- What's more, temporary employment has picked up strongly because of companies' reluctance to rehire workers on open-ended contracts given the uncertain economic outlook.
- Long-term unemployment has jumped to 35 percent of the jobless total from 27 percent before the crisis, raising the spectre that the increase becomes structural as skills erode.
Despite the grim environment, the OECD called for bold structural reforms in labour and product markets. For example, governments could tap a rich seam of job growth by opening the retail trade and professional services to greater competition.
photo credit: Reuters
Economists have pointed to still restrictive shop opening times in a raft of European countries and international lenders have demanded that Greece and Italy loosen closed-shop practices, whether it be by pharmacies, law firms or taxi drivers.
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