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OECD: COVID-19 retention schemes supported 60 million jobs — but unemployment remains high

That’s 10 times the amount saved in the 2008 financial crisis.

Allie Nawrat

Leader

OECD job
Credit: Herve Cortinat via OECD.

Unleash Your PeopleHow can governments and businesses use this as an opportunity to build back better?

Bolstered by the success of vaccine rollouts, the developed world is in the beginning of its post-pandemic recovery.

However, this recovery doesn’t seem to be causing a rebound in jobs, according to the Organization for Economic Cooperation and Development (OECD)’s 2021 Employment Outlook report.

The report found that, while the OEDC unemployment rate is declining (6.6% in May 2021, compared to 6.7% in April), there are still 43.5 million people unemployed and that is 8.1 million higher than before the pandemic in February 2020.

Credit: OECD Employment Outlook 2021

22 million jobs were lost in 2020 in the OECD area, and 8 million more people are unemployed than before the crisis, meaning the OECD doesn’t expect the employment rate to recover until the end of 2022.

Another concern for the OECD is the risk of long-term unemployment beyond the end of the pandemic and into the economic recovery period.

This is primarily because many of those who lost their jobs early on in the pandemic are still jobless and could find it increasingly difficult to compete successfully for roles in the future.

An opportunity to build back better

But it is not all doom and gloom.

The OECD’s report found that job retention schemes – such as the furlough scheme in the UK – supported 60 million jobs, which is 10 times more than were saved during the 2008 financial crisis — and saved 21 million jobs.

In turn, these schemes have been instrumental in keeping businesses afloat and preventing additional economic shocks.  

However, the OECD is clear that the job retention scheme has not been positive for job creation, and therefore, in the next stage of recovery, the report suggests that governments target their support on key sectors, such as those more affected by social distancing measures.

Thinking generally, the OECD concludes governments and businesses must seize this opportunity to ensure the future labor market is more inclusive.

It is important to remember that the crisis did not affect everyone equally. The report states that “COVID-19 has…accentuated economic and social divides.

“It [COVID-19] has amplified existing inequalities in labour market outcomes, skills, and opportunities.

“It has accelerated the digital transformation and automation, providing opportunities for many to continue work remotely, but also widening the gulf between workers.

“Teleworking became mainstream for many high-skilled workers, but remained peripheral in many low-skilled occupations.

Therefore, the report calls on the recovery to focus on the most vulnerable because “failing to address inequality and exclusion now is likely to result not only in deeper social divisions but will have negative ramifications for productivity and economic recovery.”

So what should be done?

The OECD’s report suggests governments must invest and spend their way out of the crisis in order to support jobs. It applauds some countries, like the US, for already starting to do this.

OECD Secretary-General Mathias Cormann noted: “It will be very important to get policy settings right to encourage business investment and job creation, as well as to drive the necessary upskilling, reskilling and skills matching required to ensure everyone has the best possible opportunity to participate and benefit from the recovery.

“Withdrawing support too soon would risk jeopardizing the recovery,” he concluded.

“The short-term costs of fiscal support measures can be reduced by enhancing the targeting to the most vulnerable sectors, companies and households, while fostering start-ups and job creation.”

Employers and HR teams also have a part to play in building back better. They need to focus on supporting their own employees through the crisis (both in terms of wellbeing, burnout and skills), as well as doing their best to continue to recruit and bring in new talent who, by no fault of their own, lost their jobs in the crisis.

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