OECD: Job recovery to remain weak in 2015

[LuckyTheDog]

Reposted in full from Wonky News Nerd.

Unemployment will remain stubbornly high in developed countries, despite modest declines over the rest of 2014 and in 2015, according to a new report from the Organisation for Economic Co-operation and Development (OECD).

The Employment Outlook 2014 says that average jobless rates will decrease slightly over the next 18 months in the 34 OECD countries, to 7.1 percent at the end of 2015, compared with 7.4 percent in mid-2014.

In a statement accompanying the report, Stefano Scarpetta, OECD’s director for employment, labor and social affairs said policymakers must work to “foster the creation of not just more jobs but also better jobs – a task that is now the defining challenge for many governments around the world.”

The [a href= "http://www.oecd.org/unitedstates/EMO-USA-EN.pdf"]country-specific findings[/a] for the United States provide reasons for both hope and frustration:

At 6.2 percent in July, the US unemployment rate is back where it was in September 2008 when the bankruptcy of Lehman Brothers signaled an intensification of the recession that had already been underway since the end of 2007. While harder hit by the Great Recession than the average advanced economy, the 2014 OECD Employment Outlook shows that US unemployment has come down more strongly in the recovery period so that it is now below the OECD average of 7.4 percent.

Despite the strong employment growth in the first half of 2014, the share of the US working age population (aged 15-64) that is employed is still considerably lower than before the crisis. A portion of this decline is due to unemployment still being 1.1 percentage points above its level at the end of 2007. However, the decline in participation rates is a larger factor. Both the ageing of the baby-boom cohort and difficult labor market conditions have depressed participation.

Current rates of unemployment in the developed world overall mean 45 million people are out of work in OECD countries, 12.1 million more than just before the economic crisis that started near the end of 2007. Globally, an estimated 202 million people are unemployed, with many more in low-paid and precarious jobs.

The report finds that real wage growth has come to a virtual standstill since 2009. Wages actually fell in a number of countries by between 2 percent and 5 percent a year on average, including in Greece, Portugal, Ireland and Spain.

This slowdown has been fairly evenly spread across the earnings distribution. However, slower real wage growth, and cuts in wages in some cases, result in real hardship for low-paid workers, the report says. The OECD urges policymakers to ensure that any further wage adjustments are not concentrated among low earners.

Long-term unemployment has likely peaked but remains a major concern, the report says. Just over 16 million people – over one in three of the unemployed – had been out of work for 12 months or more in the first quarter of 2014, almost double the number at the start of the crisis. Because of that, the OECD says policymakers should prioritize efforts on helping the long-term unemployed back to work.

The entire report is available here: http://www.keepeek.com/Digital-Asset-Management/oecd/employment/oecd-employment-outlook-2014_empl_outlook-2014-en#page26