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OECD EMPLOYMENT OUTLOOK
1. The OECDs June 1999 Employment Outlook predicts little improvement
in the overall unemployment situation in the OECD in the two coming years.
With growth in the OECD forecast for 1999 and 2000 at a little more than
2%, average unemployment is likely to remain at around 35 million - 7.0%
of the labour force. Small falls in unemployment in continental Europe,
Canada and Australia are forecast to be counterbalanced by rises in the UK, US and
Japan. In Korea measured unemployment is forecast to stabilise
at around 1.6 million - 7.5% of the labour force and three times the average
of the last decade.
2. Over and above the employment forecasts in recent years the annual
editions of the OECD Employment Outlook have provided valuable analysis
and empirical work on key aspects of the employment policy in OECD countries.
The June 1999 edition is particularly useful summarising in its editorial
the conclusions of the OECD/US Conference on Youth Employment held in February
1999, reviewing evidence on the quality of part time jobs (Chapter 1) and
setting out more detailed findings on employment protection and employment (Chapter 2), the training of adult workers
(Chapter 3), and new work practices (Chapter 4).
3. The Outlook is drafted by the OECDs Department for Employment, Education,
Labour and Social Affairs (DEELSA), but is discussed in detail by the OECDs
Working Party on Employment made up of officials from predominantly labour
and employment ministries in OECD countries. When taken together with the
findings from previous Outlooks on minimum wages (1998), collective bargaining
(1997) and earnings inequality (1999) and when set beside the joint work
between DEELSA and the OECD Economics Department on income inequality and
poverty, it is clear that attempts to deregulate labour markets, whilst
having significant social costs, have not contributed to better economic
outcomes. On the contrary, it would appear that there is evidence to support
the maintenance of decent minimum standards in the labour market and active
involvement of trade unions as factors, which improve economic performance
and provide a sound basis for managing structural change.
4. As part of an OECD initiative on Youth Employment a joint OECD/US
Conference was held on Youth Employment in Washington in February 1999
in which a TUAC delegation took part alongside OECD government, business
and academic participants. The Outlook editorial summarises the broad consensus
reached at the Conference on the lessons learnt over the last two decades
for youth employment policy.
5. Despite an overall problem of declining employment rates for youth
(1979: 53 - 1998: 45%) the most serious problem facing OECD countries is
the appearance of a hard core of disadvantaged youth often coming from
deprived family and social backgrounds who experience long periods of unemployment
interspersed with spells of low wage employment.
6. Part of the necessary policy response is seen to be the reform of
basic education to identify the youths at risk as early as possible and
develop more balance between vocational and academic studies. A further
part of the response is to achieve better transition from education to
employment if possible through dual apprenticeship systems or where these
are not feasible through work-based learning within schools leading to
qualifications within unified frameworks of certification. Whatever the
system, employer and trade union engagement is seen as a key to success.
7. Finally more knowledge is being accumulated on what works and what
doesnt in the field of active labour market programmes for youth. A key
factor is the quality of schemes and the need to avoid a revolving door
situation of young people participating in successive schemes but without
finding decent jobs at the end of them. The Outlook sets out some of the
features of high quality schemes.
8. The conclusions of the Conference concur closely with the experience
of the trade union participants. It is significant that reducing youth
wages was not seen by participants in the Washington Conference as a particularly
effective route for increasing job opportunities for youth, on the contrary
the North American participants in particular emphasised that minimum wage
jobs were regarded as unattractive by many young people. If all that was
on offer were minimum wage jobs then the number of labour market dropouts
9. The general chapter on labour market developments focuses on the
quality of part-time jobs. Part-time jobs have grown as a share of total
employment in most OECD countries since the early 1970s. The OECD average
is 14.3% with the highest share in the Netherlands (30%), Australia, Switzerland
and the UK. The OECD Jobs Study in 1994 urged governments to foster the
growth of voluntary part-time work as a factor that would lead to higher
employment. Trade unions have in general adopted a more differentiated
approach, recognising that part-time jobs for some workers can make a significant
contribution to family income allowing them to balance work and child-care
responsibilities. But on the other hand, there has been concern at the
low quality of part-time jobs in terms of pay, training and career enhancement.
In several countries unions have sought to expand trade union membership
amongst part-time workers and also facilitate the voluntary transition
of part-time to full-time employment.
10. The Employment Outlook shows that there is still much to be done
to improve the quality of part-time jobs. Depending on the country, part-time
hourly earnings are between 55% and 90% of full-time hourly earnings. Those
countries and occupations with the highest level of part-time employment
have the smallest differentials. Part-time workers receive less training
than full-time workers: in the EU training of part-time workers relative
to full-time is 70% for men and 60% for women. In most countries the majority
of men working part-time report that they would prefer to work full-time
whilst the majority of women say they prefer to work part-time. The share
of involuntary part-time work is lower in those countries with most part-time
11. The Outlook raises a key policy issue concerning these findings.
With more adults, often part-time women, living in single-parent households,
with lower relative earnings and receiving less training, there is a clear
risk of a significant group of workers falling even further behind the
rest of the workforce. Trade union efforts to raise earnings and access
to training for part-time workers are therefore crucially important.
Employment Protection Legislation
12. The OECD Jobs Study in 1994 recognised that employment security
provisions whether in legislation or collective agreements could have conflicting
effects on employment. On the one hand, they provide a long-term reciprocal
commitment between firms and workers encouraging training and retraining
and hence improving performance. On the other hand, they could make firms
more cautious in hiring new workers, worsening employment prospects for
those entering the labour force or the unemployed. The overall conclusion
was that public policy should recognise this trade-off and strike a balance
between the conflicting effects. In the follow-up to the Jobs Study, however,
Economic Surveys of individual countries have consistently argued in favour
of the removal or weakening of employment protection provisions. TUAC has
been critical of this, arguing ... many of the labour market recommendations
involved trade-offs between long and short term effects, static and dynamic
efficiency, resource allocation and innovation goals as well as economic
and social goals. These were recognised in the Jobs Study, but had become
largely absent from the follow-up. Moreover the exact nature of these trade-offs
were likely to vary according to national circumstances and differing institutional
structures, yet rather than using national experiences to enrich the strategy
the country specific recommendations appeared to present a one size fits
all solution (1) .
13. Chapter 2 of the 1999 Employment Outlook presents the first serious
review by the OECD of the empirical evidence on whether excessively strict
employment protection legislation has been an important factor behind the
persistently high unemployment in many OECD countries since the early 1980s.
It is therefore highly significant that the Outlook concludes that EPL
strictness has little or no effect on overall unemployment (page 88).
It does, however, find that stricter EPL lowers some forms of labour market
turnover ... fewer individuals become unemployed, but those who become
unemployed are at a greater risk of remaining unemployed for a year or
more (page 88). The policy conclusion of the Employment Outlook is to
emphasise that initiatives to reform employment protection need to confront
this policy trade-off. TUAC would argue that this conclusion must be carefully
borne in mind in future country-specific recommendations by the OECD on
employment. It is refreshing that the OECD has published this work facilitating
open debate on policy.
Training of Adult Workers in OECD Countries: Some Recent Findings
14. With the transition towards a knowledge-based economy, the extent
and quality of education and training are considered by the OECD as key
factors explaining productivity and employment growth. Extending lifelong
learning is now a central policy objective. Chapter 3 of the Employment
Outlook seeks to answer whether the rhetoric on education and training
have been reflected in practice. It tries to analyse a specific type of
job training received by incumbent workers, based on prior research. The
analysis is based on four different surveys, which differ both in the process
of data collection and in terms of definitions. But all of them provide
measures concerning both the level of and the distribution of training.
They allow a comparison of participation rates, the volume and the distribution
of training across countries.
15. The main findings of the chapter are:
- Across OECD countries there is a significantly differing
level of training. Formal, continuing training is rather low in southern
European countries and relatively high in central and northern Europe.
16. The promotion of continuing training and providing for equal training
opportunities is by no means an exclusive task of government. It is also
a challenge, faced by business and trade unions. Their strategies and activities
must be considered as key factors in the promotion of continuing training.
To achieve further progress regarding the goal of lifelong learning, existing
strategies should be reconsidered. Any reconsideration must take into account
some more findings related to the current practice of continuing training:
- Regarding the overall participation rates in job related training,
men and women appear to participate at fairly equal rates, but men receive
more financial support from their employers. A closer look into detail
reveals ongoing discrimination of women. With regard to the period of employment
between school leaving and retirement, women face a significantly lower
expectation of training than men. Women are facing a further disadvantage,
because as seen they are more often employed as part-time and temporary
workers and so receive less training.
- The progress in reaching the objective of lifelong learning has been
limited and uneven. According to one of the surveys, covering 11 countries,
in a lifetime an average worker receives less than a year (1,288 hours)
of training after the period of initial vocational training. It appears
that continuing training, which differs significantly across countries,
is concentrated in the early stages of working life. Particularly in some
western and southern European countries older workers receive much less
training than younger workers.
- Continuing training tends to reinforce existing skill differences
resulting from unequal access to and participation in education in all
- In countries with higher overall average levels of educational attainment
as well as in countries devoting a larger share to R&D, workers tend
to receive more training. Quite often a high overall training rate goes
along with a more equal distribution of training.
- In general, the findings suggest that schooling and training are complements,
therefore policies to strengthen schooling might become a means to encourage
- In most countries, training participation is significantly
higher for employees than for the unemployed. In almost all countries less-educated
workers are significantly less likely to be trained.
17. TUAC will seek to apply these conclusions in our work with the OECD
on lifelong learning in the months ahead.
- Workers on temporary contracts and in part-time jobs are significantly
less to be trained.
- Larger firms are significantly more likely to invest into human capital
and to train employees.
- The introduction of both new work systems and new forms of work seems
to be strongly related to a higher training participation.
- A higher degree of unionisation of employees is associated with a
higher rate of participation in training.
- Greater job stability could contribute to increased returns of investments
in human capital made by employers; international comparisons have often
found that lower labour turnover is associated with higher training.
New Enterprise Work Practices
18. Chapter 4 of the Employment Outlook draws on empirical work developed
as part of a recent OECD project on flexible enterprises, alongside work
by the European Foundation for the Improvement of Living and Working Conditions.
19. The chapter examines changes taking place in workplace organisational
structures including: the flattening of management structures; a greater
involvement of lower level staff; the introduction of team working; and
job rotation. These all have an impact on the extent to which jobs are
re-designed to reflect increased complexity, with higher skill levels,
and improved communications between management and staff.
20. The findings of the OECD are that trade unions and works councils
play a positive role in workplace change. For example, trade unions go
hand in hand with initiatives to flatten management and introduce team
working, while works councils, especially where there are worker representatives
in the largest occupation group recognised for consultation or joint-decision
making are more likely to have developed initiatives in all areas except
team working. The criticism that the public sector is sclerotic as compared
to the private sector is not borne out by the evidence: the existence of
any of the four initiatives are just as likely in a state owned or private
workplace. Furthermore, the OECD found that few strong relationships
could be found between conditions in the wider labour market and moves
to introduce high performance workplaces. The conclusions therefore give
support to the objective of ensuring an active trade union role in workplace
21. OECD countries are confronted by two conflicting approaches of reforming
labour markets to create more jobs. One is to move to yet further deregulated
labour markets where employers can dispose of workers more easily, there
are wider earning disparities, and social safety nets are set at increasingly
lower levels. The former US Labour Secretary, Robert Reich, described the
dilemma facing policy-makers under such an approach as the diabolical
choice between more and better jobs.
22. An alternative approach is to recognise that the employment relationship
has to reflect longer-term considerations and develop trust between employers
and employees and public authorities. This is necessary if training is
to be undertaken, workers are to be innovative and transition to knowledge-based
firms is to be managed effectively. It has been clear that this approach
is socially more desirable. The significance of the evidence accumulated
by successive OECD Employment Outlooks is that such an approach is also
economically more efficient. The OECD is to be undertaking a study on new
sources of growth, including human capital. The Employment Outlook findings
are an important resource for this work and TUAC will seek to be actively
engaged in the dialogue.
(1) TUAC Note to OECD Economic Development
Review Committee on Implementing the OECD Jobs Strategy:
Member Countries Experience, May 1997.