TUAC NEWS

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"Filling the Jobs Gap requires a change of policy"

16/07/2013

“The latest issue of the OECD Employment Outlook provides a strong call upon governments to act boldly in order to close the existing jobs gap. The Outlook reveals that the way out of the crisis requires policies strengthening aggregate demand instead of using sticks to push more unemployed into the jobs market,” said TUAC General Secretary John Evans.

The Employment Outlook, one of the flagship publications of the OECD, provides an assessment of labour market developments and prospects in industrialised countries. Against the worsening employment situation across much of the OECD, such an assessment is welcome. That applies in particular to the detailed discussion of the short-term outlook based on the latest OECD projections.

Given the fact that currently more than 48 million workers are unemployed across the OECD, it is no surprise that the analysis reveals that a large and persistent jobs gap continues to exist. The Outlook reports that the jobs gap for the OECD area has increased by 2.4 percentage points between the start of the crisis and the last quarter of 2012. According to the projections, the jobs gap is expected to narrow only slightly to 1.9% at the end of 2014. In all Euro area countries, except Estonia and Germany, the jobs gap is expected to widen further through to the end of 2014.

Against this background closing the jobs gap must shift to become the central priority of policy makers. TUAC agrees that, as a key implication of the analysis presented, “the main policy priority must be to take action to underpin aggregate demand” and that “monetary policies have to remain accommodative.” The analysis rightly warns against “excessive tightening” with regard to fiscal consolidation.

However, these the main OECD message should be that austerity should now be replaced by a Jobs Plan. By pointing to limited financial resources for active labour market and employment policy, the key recommendations of the analysis still predominantly lean towards ‘activation’ and ‘structural reform’ policies.