Friday

23rd Feb 2018

Unemployment on slow downward trend, report says

  • A youth unemployment summit in Berlin (Photo: Valentina Pop)

Unemployment has started to fall in Europe, but will remain next year at higher levels than before the euro-crisis, according to a report published by the Organisation for Economic Co-operation and Development (OECD).

The OECD comprises 21 EU countries, plus Australia, the US, Canada, Korea, Chile, Mexico, Turkey, Israel, Norway, Iceland, Switzerland, Japan and New Zealand. Some 45 million people are out of work in OECD countries, 12.1 million more than before the crisis.

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The Employment Outlook 2014 says that average jobless rates will decrease slightly over the next 18 months in the OECD area, from 7.4 percent in mid-2014 to 7.1 percent at the end of 2015.

The jobless projection for 2015 diverges widely among countries, with unemployment falling but still remaining very high in Spain (24%) and Greece (27%).

The eurozone as a whole will see joblessness decline to 11.2 percent at the end of 2015, from 11.6 percent this year and will stay above ten percent Portugal, the Slovak Republic and Slovenia.

Unemployment is forecast to fall below five percent by the end of 2015 in Austria, Germany, Iceland, Japan, Korea, Mexico, Norway and Switzerland.

The Outlook also analyses the impact of the crisis on wages: Real wage growth has come to a virtual standstill since 2009 and wages fell in a number of countries by 2-5 percent per year on average, including in Greece, Portugal, Ireland and Spain.

“While wage cuts have helped contain job losses and restore competitiveness to countries with large deficits before the crisis, further reductions may be counterproductive and neither create jobs nor boost demand,” OECD chief Angel Gurria said while launching the report in Paris.

The report calls on decision-makers not to aim further wage adjustments at low-earners, including in countries like Germany and the US "where the proportion of low-earners exceeds the OECD average and concerns one-fifth and one-quarter of workers respectively".

Temporary work, a pillar of the German 'flexicurity' model, is also criticised in the report, which calls for better employment protection and warns that temporary jobs are often not an automatic stepping-stone to a permanent job.

In Europe, less than half of temporary workers in a given year had full-time permanent contracts three years later, the report notes.

EU needs to invest, IMF warns on eve of jobs summit

The eurozone and Japanese are the economies most vulnerable to a protracted period of stagnation and need to increase public investment, the International Monetary Fund (IMF) has warned.

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