TUAC - TRADE UNION ADVISORY COMMITTEE TO THE OECD

03/09/2014

“A key lesson that policymakers and governments must draw from the findings of the OECD Employment Outlook 2014 is that in a context of weak aggregate demand and disappointing job creation in most economies, austerity policies and supply-side interventions are failing to boost growth and employment. Governments should increase public investment in infrastructure to support aggregate demand, and boost employment in the short-term while mitigating the adverse consequences of long-term unemployment”, said John Evans, TUAC General Secretary, in Paris on the occasion of the launch of OECD Employment Outlook 2014.

He added that “raising the minimum wage and increasing the share of wages through collective bargaining would definitely help support demand, and in the current situation also help job creation”.

The OECD Employment Outlook 2014 shows that there is a massive jobs gap as many OECD countries experience only a modest reduction in the unemployment rate, while others are faced with a further increase in unemployment. To compare country data, click here.

Prospects are alarming: the difference between the current employment rate and its level at the beginning of the crisis is projected to improve only modestly. Across the OECD, it is expected to narrow to 1.3 percentage points by the end of 2015. That would leave the OECD area with an unemployment rate of 7.1 per cent by the end of 2015, down from 7.7 per cent in 2013.

“The substantial increase in long-term unemployment across the OECD shows that the jobs recovery is stalled. Over  one in three unemployed workers had been out of work for 12 months or more; this corresponds to 16.7 million workers – which is almost twice as much as at the onset of the crisis” said Evans. The Employment Outlook attributes the substantial decline in the prospects of the unemployed finding a job to cyclical factors and importantly remarks that “promoting aggregate demand and job creation remains a key policy priority going forward.”

The OECD analysis also reveals that cutting wages does not translate into an increase in employment. According to a more detailed analysis based on micro-data from 19 countries, one in two workers has experienced cuts in real wages. Half of those who experienced such cuts also saw their nominal wage compensation fall. The Employment Outlook notes that this has led to hardship and social distress, in particular for low-skilled and low-paid workers.

Evans commented “the OECD report is right in arguing that further cuts in wages will do little to create jobs, while increasing the risk of poverty and depressing aggregate demand. Further increases in income inequality are unacceptable, the world’s working population needs a pay raise”.

Key findings of the Outlook confirm that policies – which the global labour movement are  is calling for – such as robust minimum wages, progressive taxation and in-work benefits can help sharing the costs of economic adjustment in a more fair and just manner.

A L20 delegation will be making this case at the meeting of G20 Labour and Employment Ministers’ in Melbourne on September 10.

We will post a longer analysis on the Outlook on this page shortly.

For more information on the Employment Outlook and detailed  country notes, see  www.oecd.org/employment/outlook.