OECD Employment Outlook 2010: Moving Beyond the Jobs Crisis

This chapter updates the analysis in the 2009 Employment Outlook of the labour market impact of the 2008-09 recession and policy responses to the resulting jobs crisis. The OECD area unemployment rate reached a post-war high of 8.7% in March 2010 and is probably near its peak, but is projected to decline only slowly. Total labour market slack exceeds conventional unemployment and a broader measure encompassing inactive persons who wish to work and involuntary part-time workers is more than twice as large. The extent to which falling output translated into higher unemployment has differed dramatically across the OECD depending on whether employers emphasised labour shedding or work sharing. The contribution of hours reduction to labour input adjustment is shown to have been unusually high in a considerable number of countries, due in part to public short-time work schemes, which preserved a significant number of jobs at least in the short run. Governments also continue to scale up income support and re-employment assistance for job losers in 2010, but now face difficult choices concerning how quickly to phase out these measures in the context of a still uncertain recovery and mounting fiscal pressures. A major priority going forward is to assure a job-rich recovery while limiting hysteresis effects in unemployment and participation.