This article is part of a series in which OECD experts and thought leaders – from around the world and all parts of society – address the COVID-19 crisis, discussing and developing solutions now and for the future.
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In early 2020, the employment rate in OECD countries was a cause for rejoicing. At nearly 70%, it had reached a new record high, after the decade-long recovery from the 2007-08 financial and economic crisis.
Then the COVID-19 pandemic struck.
Faced with a public health crisis of staggering proportions, many countries adopted drastic containment measures, shutting down most non-essential activities, from kindergartens, to schools, factories and most shops and recreational facilities. The combination of fear of infection, mandatory lockdowns and great uncertainty produced a sharp contraction in economic activity, the worst in a century.
Unemployment soared, far more so than during the first months of the financial crisis – up to 10 times more in some countries. The impact of the crisis has been greater on some workers than others, with youth and women, those with low income or low skills, those with part-time or temporary jobs, and the self-employed, among those at greatest risk of joblessness and poverty.
In the face of this unprecedented crisis, governments took swift action, extraordinary in its scale and scope, with trillions of dollars pumped into the world economy to protect people and jobs. This helped cushion the immediate impact for millions of workers and their families and for the firms that employ them.
However, while the first wave of the pandemic has peaked in many countries, the struggle is not over. COVID-19 has profoundly changed how we live and work. Now, as countries begin to move out of lockdown and learn to live with the virus until a vaccine and treatments are found, what must governments do?
In the short-term, it is vital for governments to continue to support hardest hit workers and sectors. This requires a two-pronged approach.
Read the OECD Policy Brief The territorial impact of COVID-19: Managing the crisis across levels of government and more on key policy responses
First, labour market policies must help prevent a second severe pandemic wave while simultaneously preparing for one, in case it materialises. For about one-third of jobs in OECD countries, teleworking remains an effective way to work while limiting risks of contracting the virus. But almost two-thirds of jobs cannot be fully performed from home at all, or only to a limited extent. In this context, rigorous occupational safety and health standards are imperative. Moreover, continuing to guarantee extensive paid sick leave will remain crucial, so that potentially infected workers do not spread the virus in the workplace.
Second, policies need to be adapted to the varying conditions of workers, households and companies. During the lockdown, a one-size-fits-all support strategy was justified, as most activities simply stopped and companies and jobs would not have survived without immediate support. Now, policy makers are facing the difficult task of moving the economy from emergency action to recovery, where support needs to be targeted better to ensure that those with the greatest needs get help, while fostering the incentives to go back to work for those who can.
As these efforts move forward, all parts of society need to assume a sense of responsibility, in particular those who have received, or still receive, public support. Even more than in the lockdown phase, the success of prevention measures during post-confinement relies on the co-operation and joint effort of all actors in society. Workers, employers and social partners will each have to play their role in rebuilding a better labour market.
Finding the right balance between public support for struggling firms and industries and private sector support for efforts to boost employees’ skills and help the unemployed return to work, is essential. A similar “mutual obligations” approach applies to jobseekers, with governments providing benefits and effective employment services and beneficiaries taking active steps to search for work or improve their skills.
Must-dos to Move Out of the Crisis: SMEs and COVID-19 by Véronique Willems, Secretary General, SMEunited
In the medium term, countries should address the structural problems that the COVID-19 crisis has put under the spotlight. Not all workers have the same access to social protection benefits such as unemployment assistance, paid sick leave or minimum income support. The self-employed and “non-standard” workers with part-time, temporary or gig jobs, are most likely to be excluded or poorly covered, with many youth, women and low-skilled workers holding such precarious jobs. The crisis prompted decisive actions to reduce such gaps in social protection and now the challenge is to build on these initiatives, transforming temporary fixes into structural changes and ensuring that systems are more resilient should another crisis hit.
As we look to the longer term, we must aspire to reconstruct better, more resilient labour markets. This is an investment in the future and in future generations. We cannot afford to lose today’s youth, the “Corona Class” generation. There is no time to waste in establishing a comprehensive policy package for young workers. Every stakeholder must assume their part: companies, for example, should be encouraged to hire new graduates or offering apprenticeships, internship or work-related training, while governments should accompany these opportunities with specific financial incentives.
More broadly, a comprehensive jobs recovery plan should expand measures such as counselling, job-search assistance and entrepreneurship programmes. It is also crucial to support vocational education and training, while ensuring that these programmes are sensitive to the changing needs of employers. Social dialogue and collective bargaining also have a key part to play. In many countries, they have been instrumental in ensuring safer workplaces and in finding flexible, tailored solutions for both companies and workers during the crisis.
Last year, the OECD called for a “transition agenda for a future that works for all” to re-shape a more inclusive and resilient labour market. The Covid-19 crisis has made this inclusive transition even more urgent. The challenge before countries is how best to continue the impressive efforts made during lockdown, but not to rebuild the old. Today’s policies will affect lives for a decade to come and now it is the time to build better, shaping a strong and resilient labour market that works for all.
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