Two years into the recovery from the financial and economic crisis, OECD economies have resumed generating jobs at a sufficient pace to start making a dent in the large numbers of the unemployed who lost their jobs or failed to find one during the crisis. The number of people unemployed in OECD countries reached a peak of 47.5 million in the fourth quarter of 2009, but by June 2011 had declined to 44.3 million, still some 13.2 million higher than just prior to the crisis. And the OECD harmonised unemployment rate had fallen to 8.2% in June 2011, down 0.6 of a percentage point from its post-war high of 8.8% in October 2009.

Since reaching its post-war peak in late 2009, OECD-wide unemployment has declined only modestly and long-term unemployment has continued to rise. This chapter examines how well social safety-net systems in OECD countries have stood up to the “Great Recession” and asks what insights this experience has offered. The findings provide the basis for a better understanding of the operation of unemployment benefit schemes and “last resort” benefits, such as social assistance, during a deep recession. Potentially significant gaps in the safety net for the unemployed are identified and the advantages and disadvantages of taking crisis-related measures to raise benefit levels or expand coverage during a deep recession are weighed.

This chapter looks at the labour market effects of three major components of social protection systems in key emerging economies. Country studies are used to examine the case of unemployment compensation in Brazil, cash transfers in South Africa and health protection in Mexico. The findings suggest that extending social protection coverage can, if well-designed, contribute to improved labour market outcomes. Poorly designed systems can weaken the incentives to work and impede the development of formal employment. To ensure positive outcomes, countries should consider: targeting income support policies to those who need it most; better integrating programmes and policies; and promoting self-insurance among those who can afford it.

This chapter presents, for the first time, comparable estimates of the extent to which individuals’ earnings fluctuate from year to year in a large number of OECD countries. It looks at which individuals are most likely to be affected by earnings volatility and at what causes it, as well as the impact of taxes and benefits. It also examines how wages and earnings vary across the business cycle, and how policies and institutions influence such fluctuations and the relative importance of different adjustment margins. By breaking the latter down by level of education, the chapter also examines the effect of the business cycle on earnings inequality, a key issue for social cohesion that has to date been investigated for only a few countries.

This chapter sheds light on the issue of qualification mismatch, disentangles its link with skill mismatch and analyses its determinants. The findings provide the basis for a better understanding of the role that education systems, lifelong learning institutions and labour market policies can play to ensure that workers acquire the skills needed on the labour market and that these skills are matched to the most appropriate jobs.