Economies in many developed countries may be starting to recover slowly from the recession, the jobs crisis looks set to last a while yet. By the end of 2011, OECD countries will need to create 15 million new jobs just to get employment levels back to where they were before the crisis hit.
Over the past two years (to the first quarter of 2010), unemployment increased by half in OECD countries to 8.7%. The rise in some countries, such as Iceland, Ireland and Spain, was even greater. Unfortunately, that’s only half the story. Include people who have stopped looking for work and part-timers who would like to work full-time, and the true numbers for unemployment and under-employment throughout the OECD area are nearly twice as high as headlines suggest.
Recovery should help ease the problem, although it may take some time, as employment growth usually lags behind other signs of recovery, such as rising spending and trade.This time unemployment could prove to be more intractable than usual, with real fears that some countries could be facing a jobless recovery. The prospect of long-term structural unemployment setting in seems real indeed.
Little wonder governments are under pressure to spend money to support existing jobs and to help create new ones. At the same time, they’re also under pressure to rein in public spending, which grew substantially during the crisis. A strong case can be made for supporting jobs programmes, but governments must make sure they get maximum impact from that spending, while removing some the barriers to jobs growth in their labour markets too.