Employment
The OECD recently published its follow-up to 1994’s Jobs Strategy, backed by data from the annual Employment Outlook.
In broad terms, since 1994 most OECD countries’ labor markets have improved: unemployment rates (the proportion of the workforce looking for jobs) have fallen; employment rates (the proportion of working-age people in jobs) have risen. Some countries, such as Australia, Britain, Denmark and Ireland, have seen marked improvement in more than one of these measures. In other countries, notably France, Germany, and southern and central Europe, too few people are in work. 70% of Swedes and 61% of Americans aged 55-64 work; a mere 32% of Austrians and Belgians in that age range do.
The Employment Outlook sifts study after study of which policies have done best.
In essence, says the OECD, its members can be divided into 4 groups: 2 successful, in that they have lower unemployment rates and higher employment rates than the average, and 2 not.
The first group, labeled “mainly English-speaking” by the OECD (Japan, South Korea, and Switzerland are honorary Anglo-phones), tends to have weaker job protection, less generous unemployment benefits and thinner tax wedges than the average. Its employment rate is comfortably higher than the OECD average; its jobless rate is comfortably lower. In the 2nd, “northern European,” group (Scandinavia, the Netherlands, Austria and Ireland), taxes and unemployment benefits are high and workers hard to fire. Yet the average employment rate is a little higher than the 1st group’s and the unemployment rate a little lower.
There are 2 reasons why the 2nd group can outmatch the 1st. Their product markets are, like those of the 1st group, fairly loosely regulated, making the whole economy more dynamic. And they spend much more on schemes intended to ensure that the unemployed try hard to find work: benefit-recipients’ job-searches are closely watched and some work-seeking programs are compulsory.
Countries in the 3rd group — mainly southern European ones, plus France and Germany — tend to pay high benefits too. But they have not offset these with labor-market programs on the scale of the 2nd group, and their product markets are more protected. In the last group, which includes the Czech Republic, Poland, and Slovakia, benefits are low. But workers are not especially easy to fire; little is spent on pushing the jobless into work; and product markets are more regulated than in any other group.
“The OECD’s Jobs Strategy,” The Economist