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Issue #1436      18 November 2009

Unemployment to hit 57 million: OECD

The Organisation for Economic Co-Operation and Development has warned that unemployment in the 30 largest capitalist states will continue to rise into next year. The OECD’s Employment Outlook 2009 says “There are growing signs that the worst may be over and that a recovery may be in sight. But the short-term employment outlook is grim.”

The official overall jobless rate in OECD member countries has hit a post-war record of 8.5 percent, thanks to 15 million layoffs since the end of 2007. Overall unemployment in the OECD countries may surpass 10 percent, which would mean 57 million out of work.

“Employment is the bottom line of the current crisis,” OECD secretary general Angel Gurria said. “It is essential that governments focus on helping jobseekers in the months to come.” Of course, the OECD’s policy recommendations have two purposes: heading off an explosion of working class anger, and ensuring that employers have a sufficient pool of trained workers to exploit.

The OECD suggests that output growth will resume in the first half of 2010 and will be mild until late in the year. It admits that job creation will lag significantly behind any pickup in output.

Unemployment in Canada is forecast to continue to rise to almost 10 percent next year, from the current 8.7 percent. Since employment peaked in October 2008, more than 486,000 full-time jobs have disappeared, many in the manufacturing sector. The report warns that job losses in Canada could be worse than during the recession of the early 1990s, the decade of the “jobless recovery.” While the unemployment rate peaked in early 1993, it took another eight years to fall below its pre-recession level.

Unemployment was quicker to rise in the United States than in many OECD countries due to the collapse of the housing bubble. Since December 2007, payroll employment has dropped by 6.9 million in the US and the unemployment rate increased by 4.8 percent to a 25-year high of 9.7 percent. The OECD expects the US unemployment rate to remain over 10 percent through 2010.

Youth, low-skilled and racialised communities have borne the brunt of the crisis in the US. For teenagers, jobless rates jumped 8.6 percent to an all-time high of 25.5 percent. Other groups seeing sharp rises include young adults (up 5.9 percent), high-school dropouts (up 8.1 percent), Blacks (up 6.2 percent) and Hispanics (up 6.8 percent). One in three unemployed persons in the US had been jobless more than six months by August 2009, the highest since records began in 1948.

The recession is also exacerbating “in-work” poverty. Even before the crisis, 12 percent of Americans living in a household containing one or more workers had a disposable income of less than 50 percent of the median, considered as relatively poor. The recession is also reducing the pay cheques of workers who face cuts in hours and wages. While the number of unemployed persons in the US had risen to 14.7 million by June 2009, 9 million additional workers were limited to part-time hours even though they would have preferred to work full-time.

Japan has experienced sizeable job losses. In July, the unemployment rate hit a record level of 5.7 percent, two percent higher than at the end of 2007, as 1.3 million workers joined the ranks of the jobless. The manufacturing and construction sectors have been most seriously affected.

Youth participation in the labour force fell by 350,000 in the two years to July 2009. Since the “lost decade” of the 1990s, Japanese youth have faced great difficulties in the labour market. The unemployment rate for 15-24 year-olds rose by 2.4 percent over the past 12 months, reaching 9.9 percent in July 2009. This mirrors the situation across the OECD countries, as young people face jobless rates twice as high as adults.

Japan has seen a steady increase in “non-regular” (part-time, temporary, daily and contract) workers, from 16 percent of the total workforce in 1985 to over one-third by 2008. Such precarious workers are highly vulnerable to job loss; the employment of temporary and daily employees fell by 3.6 percent in the 12 months to July 2009, compared to a fall of 1.1 percent for regular employees. Many non-regular workers in Japan are not covered by employment insurance, but steps have been taken to extend their eligibility for short-time work subsidies.

Even before the downturn, the working poor made up more than 80 percent of the poor in Japan, compared with 63 percent on average for OECD countries. Around 11 percent of individuals living in households with at least one person working are poor in Japan, the fifth highest level in the OECD after Turkey, Mexico, Poland and the United States.

The UK unemployment rate, which reached 7.8 percent in the second quarter of 2009, and a post-war peak of 8.5 percent by July, is expected to approach 10 percent in the coming months.

As in other countries, British youth have been particularly affected. While the overall unemployment rate in Britain rose by 2.4 percent during the past year, the increase was 5.8 percent for 16-17 year olds and 4.7 percent for those 18 to 24.

The OECD expects Ireland to be one of the slowest-recovering economies, and warns that unemployment rates could hit 15 percent by the end of 2010. The collapse of the housing price bubble, compounded by the global financial crisis and economic slowdown, caused sharp job losses. From December 2007 to July 2009, 166,000 Irish workers lost their jobs, and the unemployment rate rose by 4.7 percent to 12.5 percent, the second-highest level in the OECD after Spain, shattering Ireland’s “Celtic Tiger” myth.

Unemployment among temporary and part-time workers in Ireland has increased more than twice as fast as that of the total workforce. Migrant unemployment surged in the early months of the crisis, then slowed as many migrants returned to their countries of origin. Youth unemployment did not rise much faster than total unemployment, but the OECD notes that “this largely reflects the fact that many younger job losers have left the labour market.” By July 2009, over one-quarter of workers under 25 found themselves unemployed.

Unemployment is expected to continue rising well into 2010 in France, and could approach 11 percent by the end of 2010 if the recovery falters. Since the end of 2007, the French unemployment rate has risen by 2 percent to reach 9.8 percent in July 2009. More than 600,000 workers have lost their jobs.

Even before the current crisis, the youth unemployment rate in France was significantly above the OECD average. Now almost one in four French youth are jobless.

The OECD notes that “extensive use of short-time work schemes in France helps workers weather the storm. These schemes are a valuable tool to prevent unnecessary layoffs due to temporary reductions in product demand or access to credit. However, in long and deep recessions they are likely to be less effective in preserving jobs and more likely to become an obstacle to recovery, by putting a brake on the reallocation of workers from declining to expanding firms. To avoid protecting the `wrong’ jobs and harming employment growth during a subsequent recovery, it would be important to attach clear and credible time limits to these measures.”

In other words, the main goal of the capitalist state’s employment policies must be to maximise corporate profits.

At the outset of the jobs crisis, the poverty rate among the working-age population was 6.7 percent in France, or 2.3 percent lower than the OECD average. The French social safety net reduces by two-thirds the poverty risk among the whole working-age population, and by more than three-quarters the poverty rate for jobless households.

However, the OECD urges action to prevent “long lasting benefit dependency for a significant proportion of the recipient population.” The report praises Sarkozy’s “reform of the public employment service (which) should strengthen the links between benefit recipiency, job search and participation in employment programs...”

Spain has experienced the sharpest increase in unemployment in OECD countries. Since December 2007, payroll employment in Spain has dropped by almost 2.3 million and the unemployment rate increased by 9.7 percent to reach 18.5 percent in July. The rate is expected to approach 20 percent in 2010, which “implies that the largest part of the total expected increase in unemployment in Spain has already taken place, while in other European countries a significant further increase in unemployment is expected going forward.”

The job losses in Spain “would be significantly larger if vigorous macroeconomic measures had not taken place.” State investment in municipalities has contributed to the creation of nearly 400,000 jobs (the majority of these are temporary), and has helped preserve many existing jobs.

Unemployment is a key driver of poverty in Spain. Prior to the recession, close to 50 percent of jobless households in Spain were relatively poor, compared with 37 percent on average across the OECD.

* People’s Voice is the paper of the Communist Party of Canada.

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