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The labour market has deteriorated throughout the OECD area, and at an unprecedented rate in certain cases. Between December 2007 and July 2009, the recession resulted in an increase in the number of unemployed by almost 15 million. According to the OECD’s latest forecasts, the unemployment rate may reach 10 per cent by the end of 2010, leading to an increase in the total number of jobseekers by approximately 25 million compared to pre-recession levels.
According to the International Labour Office (ILO), the number of jobseekers worldwide could reach between 219 and 241 million in 2009, which corresponds to a worldwide unemployment rate of between 6.8 per cent and 7.5 per cent. An increase of between 39 and 61 million jobseekers compared to 2007 is considered to be the most probable range based on the latest forecasts.
Although social security systems have had a significant stabilizing effect, cushioning the impact of economic slowdown, the OECD highlights the heavy price paid by young people. Statistics available up to the second quarter of 2009 show a significant rise in youth unemployment in the OECD zone – up to 18 per cent of the active population on average compared to 14 per cent in the previous year. This trend is corroborated worldwide by the most recent statistics published by the ILO showing that young jobseekers (aged between 15 and 24) may total between 78 and 90 million at the end of 2009, compared to 72.5 million in 2007.
Box 1. France: Incentives for apprenticeships and possibilities of combining work with study, and employment measures for underprivileged young persons
The action plan for youth employment announced in April 2009 in France aims to:
i. Facilitate transition from the school system to the world of work by supporting recruitment under contracts combining training with work experience. Any company which recruits a young apprentice before the end of 2010 will be exempt from social security contributions for this person for one year. Moreover, small enterprises (with less than 50 employees) will be entitled to an additional direct subsidy amounting to EUR 1,800. The public authorities will also finance 170,000 new vocational training contracts by mid-2010 on top of the 145,000 issued in 2008. This type of contract provides for combining work placements and formal training. In order to encourage companies to propose these contracts, the plan proposes a one-off direct subsidy amounting to EUR 1,000 for each trainee aged under 26. If the trainee does not have a qualification equal to the general, technological or vocational Baccalaureate, the subsidy is doubled and amounts to EUR 2,000.
ii. Encourage companies to convert work placements to permanent employment contracts. Companies which make this change before the end of September 2009 will receive a payment of EUR 3,000 per trainee from the State.
iii. Offer additional training and job opportunities to underprivileged young people. Young people without qualifications will be offered 50,000 training courses leading to a qualification financed jointly by the government and the employment authorities to help them gain a qualification. The government also plans to subsidize 50,000 additional recruitments for these young people in the market sector and 30,000 in the public sector. This final measure involves the creation of jobs that reintegrate into the labour market. These subsidized contracts in the local public sector are focused on gaining transferable skills which may be profitably used in the private sector (for example, IT skills, childcare services and real estate management).
On a short-term basis, the OECD’s main objective is to ensure that new jobseekers, as well as those already facing problems in finding employment, maintain links with the labour market. The OECD argues that governments are also responsible for preventing young people from leaving school early without qualifications, as there is a significant disparity in terms of youth employment depending on whether or not a young person has completed secondary school education. In general, education is beneficial: the employment rate for young persons aged between 15 and 29 who left school with an upper secondary education qualification is significantly higher than the rate for young persons who left school with no qualifications (see chart below).
More precisely, the growth in knowledge-based economies requires increased cognitive skills. Therefore, the unemployment rate for young persons who leave school early is three times higher than the rate for young persons who gain an upper secondary education qualification (G. Esping-Andersen, 2007). Moreover, workers with a relatively low-level of training have a higher probability of facing poverty in retirement.
In the short-term, the OECD proposes two temporary measures to help unemployed youth: Extending the conditions of eligibility for unemployment benefits to improve cover for young workers (such as, for example, periods spent carrying out work placements or vocational training so as to achieve the required number of months to claim unemployment benefits); and adopting measures to promote apprenticeships, as well as enabling apprentices without a contract to complete their training.
Box 2. Australia: The recession - the right moment to improve the education level and combat unemployment
The Australian government is focusing on education and training to prevent young people registering as unemployed. The states and the territories agreed in April 2009 to bring forward the objective of 90% of young people aged 25 holding the equivalent of an ISCED level-3 qualification forward from 2020 to 2015.
The public authorities have also started to review the conditions for 15 to 20 year olds to obtain benefits, by making education and training the most important prerequisite to receive benefits. Employers will be given financial incentives to recruit and keep new apprentices and trainees by means of a subsidy if the apprentice gains a qualification ( Securing Apprenticeships Wage ).
Apprentices and trainees who have lost their jobs should receive support to continue their training by enabling them to complete the formal part of their training programme with the SPE or a private service provider. These incentives have been made available for two years up until the end of December 2010.
Bids relating to new infrastructure projects financed by the public authorities will be given priority if they clearly state that the employer wishes to hire trainees and apprentices. Additional pre-vocational training will be offered to disadvantaged young job seekers.
The OECD’s long-term policy recommendations may be summarized as follows:
- Ensure improved cooperation between the employment authorities and the education system in order to take action in relation to young people as early as possible when a risk of leaving school early is detected;
- Offer advice at an early stage to young people who have left school and are job seeking;
- Extend job-search assistance to the first weeks of unemployment;
- Alter the strategy from encouraging “work as a priority” to a strategy focusing on “learning/training as a priority”.
Box 3. United States: Programmes for young people financed by the Recovery Act
In the United States, the Secretary of Labor recently announced a series of measures for young persons, including in particular:
- Federal financing granted to States in order to extend unemployment benefits to a larger number of unemployed persons, including young persons, part-time workers and people who have joined or left the world of work, and do not receive any benefits in other States. As a result, the current additional financing now enables more young people to receive unemployment benefits;
- The extension of the existing tax credit programme to apply to employers who hire young people on the fringes of the employment market (aged 16 – 24);
- Development of activities targeted at young persons. Particular focus is being placed on creating summer jobs for young persons, but activities throughout the year are also being envisaged. The age set for being able to benefit from these financed activities has been increased from 21 to 24;
- Increased federal financing for the YouthBuild programme, which is an educational and vocational training programme for young people in the building sector;
- Additional funds for building, restoring or purchasing Job Corps centres, a residential training programme for 16 to 24 year olds.
The OECD’s recommendations, and the related implementation strategies, focus on improved consideration of the risks facing young people.
Nevertheless, urgent action is required to enable social policies to act as preventative rather than corrective measures, based on social investment. Cognitive foundations developed during infancy and the pre-school years are fundamental for a child’s motivation and learning abilities once they start school. Targeting child poverty, and providing better childcare and early-learning activities, should prevent both exclusion and form a better trained, qualified, flexible workforce adapted to knowledge-based and service economies (B. Palier, 2005). It is therefore essential to guarantee a minimum income for all families and improve collective childcare.
This may represent an objective for social security systems commensurate with the challenges faced at the start of the twenty-first century.
Esping-Andersen , G. 2007. Investing in Children and their Life Chances (Conference paper, Fundación Carolina International Workshop “Welfare State and Competitivity”, Madrid, 26-27 April 2007). Revised version. < http://dcpis.upf.edu/~gosta-esping-andersen/materials/investing_children.pdf > (accessed on 24.11.2009).
European Commission , 2009. Recovering from the crisis: 27 ways of tackling the employment challenge , Luxembourg: Publications Office of the European Union.
OECD , 2009. Tackling the Jobs Crisis: The Labour Market and Social Policy Response. Theme 3: Helping Youth to Get a Firm Foothold in the Labour Market (Background Document - OECD Labour and Employment Ministerial Meeting). Paris, Organisation for Economic Co-operation and Development. < http://www.oecd.org/dataoecd/54/50/43766254.pdf> (accessed on 24.11.2009).
Palier, B. , 2005. «Vers un État d’investissement social: pistes pour une redéfinition de la protection sociale», in Informations sociales , vol. 8, no 128. < http://www.cairn.info/revue-informations-sociales-2005-8-p-118.htm> (accessed 24.11.2009).