This edition of the Employment Outlook is released in the midst of a global health emergency that is turning into an economic and social crisis that evokes the Great Depression. The epidemiological model developed by the OECD shows that the severe restrictions to social and economic life that most OECD countries (and many others) have had to take to slow the spread of the virus have prevented the collapse of health care systems and helped to avoid hundreds of thousands, if not millions, of deaths. Yet, there is no question that these measures have had very serious economic and social consequences. Entire sectors of the economy were essentially closed down for weeks on end. Between the last quarter of 2019 and the second quarter of 2020, OECD-wide GDP is projected to have fallen by almost 15%. In the first three months of the COVID‑19 crisis, in OECD countries for which data are available, hours worked fell ten times more than in the first three months of the 2008‑09 global financial crisis.
In response, governments have implemented packages of measures to support people and companies and to cushion the impact of the crisis, which have often been impressive in their scale and speed. Some countries expanded the support provided by unemployment benefits and made them more accessible. Some countries expanded access to, or the generosity of, paid sick leave. Many countries have eased companies’ access to short-time work schemes, making them more widely available (in particular to small and medium-sized enterprises) and generous while lowering conditionality requirements. Many countries have also stepped up means-tested assistance of last resort, introduced new ad hoc cash transfers, and provided direct support to those who lost their livelihoods.
Despite these substantial efforts, the numbers are stark and our projections are bleak. Even if a second wave of infections is avoided, the June 2020 OECD Economic Outlook projects a 6% annual decline in global GDP for 2020. The OECD-wide unemployment rate is projected to be at 9.4% at the end of 2020, above any previous historical peak, and still 7.7% the year after. The crisis will cast a long shadow over the world and OECD economies. By 2021, it will have taken real income per capita in the majority of OECD economies back to 2016 levels even in the absence of a widespread second wave of infections. In the “double-hit” scenario where a second wave strikes all OECD economies in late 2020, real per capita income in the median OECD economy in 2021 would be back to 2013 levels.
As many countries gradually move out of strict containment measures and the economy re-starts, it is essential to sustain the recovery with a combination of macroeconomic policies and sectoral policies to boost growth and job creation while providing support to the many still in need.
Policies need to sustain public and private investment, especially on green and other essential infrastructure and more generally to foster job creation. Moreover, policy makers will need to modify and adjust the composition and characteristics of their support packages, targeting support where it is most needed and encouraging a return to work where possible. If they get these decisions right, we will be able to look back on 2020 as a year of crisis, successfully navigated. Get them wrong, and the consequences will be felt by many people for a long time.
The Employment Outlook 2020 outlines some of the critical decisions that countries will have to make. Decisions on how, and at what speed, to manage a return to economic and social activity, while keeping workers safe. Decisions on how to scale back job retention schemes without prematurely removing support where it is still needed. Decisions on how to adapt emergency support programmes for self‑employed workers and businesses, especially small ones, as economic activity picks up, given that some viable businesses in the most impacted sectors may continue to face restrictions and/or low demand. Decisions on how to provide adequate income support by adapting some of the support mechanisms exceptionally put in place during the pandemic. Decisions on how to support job creation effectively with targeted subsidies, and how to help jobseekers with public and private employment services. Last, but certainly not least, decisions on how to provide a comprehensive support package to the cohort of young people whose education and early labour market experience have been blighted by the COVID‑19 crisis. The crisis cannot be allowed to result in a lost generation of young people whose careers are permanently diminished by the disruption to the labour market.
More generally, in taking all these decisions, it is essential that the measures adopted leave no one behind. The impact of COVID‑19 is particularly severe for the elderly, low-income earners, women, migrants, children and youth, and those with disabilities and with chronic health conditions. By accompanying labour market and social protection measures with a broad and coordinated policy response, countries can promote a recovery that ensures more inclusive growth. We need strengthened education and the potential of long-distance learning, more resilient and people-centred health care, housing support and specific interventions to enhance personal safety of women and children, as well as support for communities and regions left behind.
This edition of the Employment Outlook is – with the June 2020 Economic Outlook and the OECD Digital Hub on Tackling the Coronavirus – part of the OECD’s response to the crisis, providing member and partner countries with evidence and policy advice to weather the pandemic and to foster more resilient, inclusive and sustainable growth.
COVID‑19 has exposed weaknesses in our economies and societies that will hold people back unless they are addressed. In times of crisis, ‘normality’ sounds very appealing. However, our normal was not good enough for the many people with no or precarious jobs, bad working conditions, income insecurity, and limits on their ambitions. We need to capitalise on the momentum created by the strong initial national responses to the crisis, and build better policies for better lives in the post-COVID world.
Angel Gurría
OECD Secretary-General