Thinktank predicts further rises in unemployment, particularly among young southern Europeans
Older workers have weathered the financial crisis better than young people, according the west's leading economic thinktank.
Warning that joblessness will remain high to the end of 2014, the Paris-based Organisation for Economic Co-operation and Development (OECD) argues that young people need urgent help from governments if they are to escape long-term scars from persistently high unemployment.
It cautions, however, that leaders must not repeat their past mistakes of thinking the experience of older workers comes at the expense of the young and that early retirement programmes are a way to cut youth unemployment.
Assessing the overall employment outlook across its 34 rich country members, which include the US, UK and Australia, the OECD repeated its prediction that unemployment will remain high through 2014, with young people and the low-skilled hit hardest. It also highlighted that an unequal share of the unemployment burden was being shouldered by low-paid workers.
"The social scars of the crisis are far from being healed," said the OECD secretary-general, Ángel Gurría, at the launch of the group's latest unemployment report in Paris. "Many of our countries continue to struggle with high and persistent unemployment, particularly among youth [sic]."
The report reveals big, widening disparities between countries. Unemployment in the US is projected to fall from 7.6% in May 2013 to below 7% by the end of 2014. In Germany, the unemployment rate will decline from 5.3% to under 5%. But in the rest of Europe, joblessness will remain flat or even rise in many countries. By end 2014, unemployment is expected to be close to 28% in Spain and Greece.
"Over five years have passed since the onset of the global financial and economic crisis but an uneven and weak recovery has not generated enough jobs to make a serious dent in unemployment in many OECD countries," the thinktank said.
It forecasts little change from the relatively high OECD area unemployment rate of 8% – representing over 48 million people, almost 16 million more than in 2007.
"In many countries, these difficult labour market conditions have been exacerbated by an unequal sharing of the hardship that has resulted from the crisis. Job loss and a lack of job opportunities have been concentrated among low-paid workers," the report adds.
While low-skilled young men were doing particularly poorly in the labour market, by contrast older workers have weathered the crisis better than in previous deep recessions, the OECD said.
It raises the concerns that the bleak labour market situation of young people in many OECD countries "may generate pressures on governments to resort to measures that actively encourage older workers to withdraw from the labour market in the hope that this frees up jobs for young workers". But the thinktank cites new evidence that suggests that youth and older workers are not substitutes in employment.
"This means that the good performance of older workers did not come at the expense of youth and that encouraging older workers to leave the labour force would be a mistake. Not only would this be ineffective in alleviating the problem of high and persistent unemployment, but it would also be very expensive for the public purse," the report says.
The recommendation is that instead of promoting early retirement, governments should pursue a strategy that will lead to better employment prospects for both younger and older people, including structural reforms as well as active labour market policies to help youth and older workers with specific problems of finding or staying in employment.
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