Younger workers struggling to find jobs after the financial crisis risk a lifetime trapped at the bottom of the economic ladder unless governments move swiftly to improve their skills and boost investment, according to the Organisation for Economic Cooperation and Development (OECD).
The Paris-based organisation said the global jobs recovery was slowly gathering pace, but long-term unemployment remained a headache for many countries, especially in Europe. More than one in three jobseekers in the 34 OECD countries have been out of work for 12 months or more, equivalent to 15.7m people.
The OECD secretary general, Angel Gurría, said the figure represented an increase of 77% in long-term unemployment since the end of 2007. More than half of of the people in that category had been out of work for two years or more.
“Time is running out to prevent the scars of the crisis becoming permanent, with millions of workers trapped at the bottom of the economic ladder,” said Gurría in Paris at the launch of the organisation’s 2015 employment outlook.
“If that happens, the legacy of the crisis would be to ratchet inequality up yet another notch from levels that were already far too high. Governments need to act now to avoid a permanent increase in the number of workers stuck in chronic joblessness or moving between unemployment and low-paid precarious jobs.”
Gurría, who also said wages had remained stagnant since 2007, highlighted the plight of low-skilled workers in Europe, especially across the Mediterranean belt, who have suffered during six years of high unemployment.
“While levels [of unemployment] have peaked in the worst-hit countries of southern Europe, youth unemployment remains above pre-crisis level in nearly every OECD country.
“The share of young people neither employed nor in education or training – the so-called Neets – is still higher than in 2007 in more than three quarters of OECD countries among 20- to 24-year-olds, and in nearly two thirds of countries among 25- to 29-year-olds,” it said.
The OECD has campaigned for governments to direct greater resources to high-grade training to enhance young people’s skills. In the report it points to evidence that shows a person’s long-term career prospects are largely determined in the first ten years of working life.
“This suggests that many of the youth who finished school during the crisis and have struggled to find work since may find their future career opportunities limited,” it said.
The report found that the UK and several other wealthy European nations had seen a shift towards part-time and self-employment, despite strong demand from workers for full-time work. The share of workers employed part-time had risen from 18.6% before the crisis, to 20.6% currently, the report said.
The Netherlands, at 51.7%, ranked the highest for part-time work, followed by Switzerland at 36.8% and then the UK, Austria, Belgium, Denmark, Germany, Norway and Sweden.
Wage growth across the 34 member countries has slowed from an annual 1.8% between 2000 and 2007 to 0.5% since then.
“Wage restraint helped limit job losses during the recession and encourage a rebound in employment after, but slower wage growth and real declines in some countries has also reduced the incomes of many households, further contributing to economic hardship,” it said.
BY Phillip Inman Economics correspondent
Thu 9 Jul 2015 14.13 BST