OECD Employment Outlook 2014

Mark KeeseHead of Employment Analysis and Policy

Directorate for Employment, Labour and Social Affairs

Launch of theEmployment Outlook 2014

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• Unemployment has started to decline, but further progress is required as the job recovery has not gone very fast yet.

• People have borne considerable personal, economic and social costs that may prove to be long-lasting:

– long-term unemployment remains persistently high,

– many employees have experienced economic hardship.

• Fixed term contracts are increasingly used for new hires, but they are not an automatic stepping-stone to permanent work.

• Not just more jobs but also better jobs are needed. The good news is that there is little sign of a trade-off between job quantity and job quality across countries.

• People should also be given the opportunity to acquire the right skills to get a good job. It is not just educational attainment that matters.

The recovery is gaining momentum but there is no time for complacency

3

Unemployment has started to decline, but further progress is required…

Italy Euro area France OECD United Kingdom

United States Canada Germany Japan0

2

4

6

8

10

12

14

Unemployment ratePercentage of the labour force

Current value (Q4 2013) Start of the crisis (Q4 2007)Country-specific peak Projected value (Q4 2015)

%

4

… since the job recovery has not gone very fast yet.

Canada United Kingdom

Japan Germany United States OECD Euro area France Italy41

43

45

47

49

51

53

55

57

59

61

63

Employment-to-population ratioPercentage of the working-age population (aged 15 or more)

Current value (Q4 2013)

Start of the crisis (Q4 2007)

Country-specific trough

Projected value (Q4 2015)

%

5

• Among those who are unemployed, an increasing number of persons are out of work for 12 months or more, facing a depreciation of their skills and a risk of labour market exclusion.

• Among those who have kept their jobs, many workers and their families have experienced economic hardship as a result of declines in the spending power of their earnings from work.

People have borne considerable personal, economic and social costs

6

Long-term unemployment remains persistently high.

Canada United States United Kingdom

OECD France Japan Germany Euro area Italy0

10

20

30

40

50

60

Long-term unemployed (more than one year) as a percentage of total unemployed

Q4 2013 Start of the crisis (Q4 2007)

%

7

Labour costs have grown at a much slower pace. This has played an important role in helping the labour

market weather the crisis…

Japan

Euro areaOECD Italy

United States

Germany

France

Canada

United Kingdom-4

-2

0

2

4

6

Unit labour cost growthAverage annualised growth rate

Q1 2009-Q4 2013

Q4 2007-Q1 2009

%

-2

-1

0

1

2

3

Real wage growthAverage annualised growth rate

Q1 2009-Q4 2013

Q4 2007-Q1 2009

%

8

… but the flip side is that many workers saw the real value of their earnings fall.

FIN NLD DNK SVN AUS LUX ITA POL AUT FRA BEL ALL DEU USA CZE GBR ESP GRC PRT EST0

10

20

30

40

50

60

70

Incidence of real wage cut in 2010Percentage of full-time job stayers

(aged 15-64, staying at least one year with the same employer)

Nominal wage cut Real wage cut

%

9

• When gaps in employment protection are excessive, the impact of a downturn on job losses is greater, especially among those on “atypical” and precarious jobs. They also undermine employment prospects.

• Reducing these gaps could be done by introducing a single or unified contract. This involves overcoming implementation difficulties and requires complementary reforms to be effective.

Gaps between permanent and temporary workers should be reduced…

10

... since fixed term contracts are increasingly used for new hires…

GBR LTUDNK

ESTAUT

LVA

CHENOR

LUX

BEL IRL ISLDEU

SVKHUN ALL GRC

CZE FIN ITANLD FRA

SWESVN

PRTPOL

ESP0

10

20

30

40

50

60

70

80

90

Fixed-term contracts among new hiresPercentage of employees with no more than three months of tenure

2011-12 2006-07

%

11

… albeit atypical jobs are not an automatic stepping-stone to permanent work.

NLD GRC EST FRA ESP IRL ITA AUT BEL POL ALL PRT SWE LUX CZE SVN GBR FIN HUN SVK NOR ISL0

10

20

30

40

50

60

Three-year transition rates from temporary to permanent contractsShare of temporary employees in 2008 that were employed as full-time

permanent employees in 2011%

12

Job quality embraces a range of aspects that matter for well-being:

• Earnings quality: level and distribution of earnings;

• Labour market security: risk and consequence of job loss in terms of lost income;

• Quality of the working environment: extent to which workers have the resources they need to meet the demands of their jobs.

Not just more jobs but also better jobs are needed

13

There is little sign of a trade-off between job quantity and job quality across countries…

14

… but there are considerable differences in job quality between socioeconomic groups within countries.

Job quality outcomes by socio-demographic group (gender, age, education)Average over 23 European countries, 2010

0

4

8

12

16

20

Earnings quality

PPP-adjusted gross hourly earnings

0

2

4

6

8

10

12

14

Labour market insecurity

Risk of income loss due to unemployment risk, as a % of

prev ious earnings

0

5

10

15

20

25

Quality of the working environment

Incidence of job strain

15

The OECD’s international Survey of Adult Skills shows that:

• It is not just educational attainment but also the type of skills acquired and proficiency in these skills that affect the probability of finding a job.

• Work experience and generic skills positively affects wages early on.

Having the right skills to get a good job: what matters most?

16

Youth with high proficiency levels in literacy are much less likely to be NEET…

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-10 -8 -6 -4 -2 0 2 4 6 8 10

Level 4 and 5

Level 3

Level 2

Level 1

Services

Health and welfare

Agriculture and veterinary

Engineering, manufacturing and construction

Science, mathematics and computing

Humanities, languages and arts

Teacher training and education science

General programmes

Tertiary

Post-secondary, non-tertiary

Upper secondary

Percentage point difference in the probability of being NEET

The determinants of the probability of being neither in employment nor in education or training (NEET), for young people aged 16-29

Proficiency in literacy(as compared to below Level 1)

Field of study(as compared to Social Sciences)

Educational attainment(as compared to lower secondary)

17

… and work experience as well generic skills are key determinants of the level of pay.

0

3

6

9

12

15

18

21

24

Youth Prime-age workers Older workers

The determinants of the variation in hourly wages

Percentage of the explained variance (R-squared) in hourly wages

Experience

Generic skills

Field of study

Education

Use of information-processing skil ls

Proficiency in li teracy

Read more about our work

Website: www.oecd.org/employment/oecdemploymentoutlook.htm

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Thank you