Unemployment is on the rise in a majority of member countries, reminding us that the fight against high and persistent unemployment should remain at the top of the policy agenda. The deterioration of labour market conditions could affect disproportionately some groups, such as older workers, women, lone parents, people with disabilities, immigrants and disadvantaged youth. As stressed in this edition of the Employment Outlook, these groups are already under-represented in employment, and mobilising them into jobs should now be a key policy objective for OECD countries. This requires a broader approach of reducing non-employment, which embraces both unemployment and inactivity.

The share of the working-age population in employment rose in two thirds of all OECD countries during the past decade. However, the OECD average hides a wide diversity of experiences, ranging from dramatic increases in employment rates in a few countries to rising unemployment or greater labour market inactivity in others. Are employment gains registered during the past decade sustainable? How do employment losses recorded in the current economic slowdown compare with previous recessions? Is there evidence that progress in increasing employment has been accompanied by improvements in “job quality”, notably as regards earnings inequality, job insecurity and working conditions?

This chapter analyses the scope for policies to raise aggregate employment rates by fostering greater labour market participation among population groups that tend to be under-represented in employment. Under-represented groups are diverse and their relative numerical importance differs from country to country. Nonetheless, women, older workers and less educated workers represent the largest reservoirs of underutilised labour potential in most OECD countries. To what extent are certain population groups, such as women, older workers and less educated workers, trapped in situations of labour market inactivity? Once in employment, do they have career prospects or is there a risk that they will become trapped in low-quality jobs? How would a better mobilisation of these groups help respond to the challenges of population ageing?

Pay is a major determinant of the employment of under-represented groups. Sometimes, work is not financially rewarding for would-be workers. On the other hand, if pay is too high vis-à-vis market realities, it will act as a demand barrier to employment. And non-financial factors, such as the possibility for women to reconcile work and family life, also matter. How can “make work pay” policies help improve the employment prospects of under-represented groups? To what extent can family-friendly policies and flexible work arrangements, such as part-time jobs, facilitate access to employment for these groups?

In many countries, the share of the working-age population receiving income replacement benefits continued to increase in the 1990s, particularly as regards old-age, disability, lone-parent and social assistance benefits. In some countries, most of the people who are neither employed nor studying receive an income replacement benefit. To what extent can "activation" strategies help reduce benefit dependency? How can key elements of these strategies, such as intensive job counselling and benefit sanctions for refusal of a suitable job, be applied to groups traditionally on the margins of the labour market? And when reliance on one benefit is reduced, do people transfer to other types of benefits or do they really find jobs?

Upgrading skills is an essential component of any comprehensive lifelong learning strategy; it is particularly important to improve the employment prospects of under-represented groups. Yet, in all OECD countries, these groups receive much less training than those who are already highly skilled or have a good job. What explains the relatively low training incidence among the less educated, older workers, women, immigrants, part-timers and temporary workers? How can training policies effectively reduce these inequalities and what is the role of co-financing arrangements in such a strategy?