Unemployment and nickel-and-dime jobs may slow the recovery

Fotolia 25992432 S a 1For the member states of the Organisation for Economic Cooperation and Development (OECD), the recession years of 2008 and 2009 also constituted a social protection system stress test. This is indicated by an analysis of employment and unemployment presented in September 2011 (OECD Employment Outlook 2011). It appeals to the governments of the G-20 states to solve the structural problems of the employment market.

There are differences in the unemployment rate in the OECD region and between the G-20 states. Only Germany and Chile are better off here than they were before the crisis. On the bottom line, 13 million jobs were lost in the 34 OECD member states so that, as of June 2011, 44 million people were unemployed in the OECD region.

While Germany fared comparatively well in terms of youth and long-term unemployment, the long-term unemployment rate doubled in some countries. According to the OECD, it even tripled in the USA. Women fared better in the crisis: while the male employment rate fell by 2.7 percent, it only dropped by 0.6 percent for women.

The structural problems are fundamentally the same. Unemployment can no longer be viewed in isolation. According to this analysis, low-wage jobs are not a solution but a risk factor that endangers economic development. According to the OECD, this is currently expressed in an employment market split. Youths, low-wage earners and the long-term unemployed are the big losers. The situation is particularly dramatic for youths – in part even with an education – since they are at risk of being permanently excluded from the job market. Here youths who did not finish school and / or have no higher education stand out as a separate risk group.

Among other things, these youths require support in the form of preschool and school programmes in order to find regular employment at all. On the other hand, the OECD identifies the paradox that every fourth employed person is now overqualified for their job. However, the authors do not consider this a problem for the employment market in view of the need for lifelong learning.

Due to the often very long start-up time through temporary work contracts, which often lead into a dead end for the career while others result in phases with low wages, many newcomers to the job market face lower earnings than the preceding generation. At the same time, the risk of poverty is rising because of lower earnings and the increased chance of unemployment. These factors could prove to endanger the recovery, in part also because of their risk to the cohesion of society. According to the report, aid money could be used as a tool to soften the impact of fluctuations in household income and therefore have a stabilising effect.

The implementation of job protection is a means against the division of the job market. Here the onus is on politicians to find a balance between strict job protection regulations on the one hand and measures against the division of the job market on the other hand, says the report. Ultimately however, the crucial question is whether efforts to promote economic growth will be successful, boosting employment while simultaneously providing broad access to productive and well-paid work.

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