The OECD Employment Outlook provides an annual assessment of key labour market developments and prospects in member countries. Each edition also contains several chapters focusing on specific aspects of how labour markets function and the implications for policy in order to promote more and better jobs. This year’s special chapters cover four topics: recent wage developments, job quality, non-regular employment, and the employment impact of skills and qualifications. Reference statistics are also included.

Despite recent improvements, further progress in labour market conditions remains largely dependent upon a broader and sustained economic recovery. Although unemployment has declined in response to renewed job creation, large job gaps remain in many countries with deep scars from the crisis both for people with work and those without. The unemployed have borne considerable personal, economic and social costs that may prove to be long-lasting. This is especially true for those who have endured a long spell of joblessness, who are facing a depreciation of their skills and a risk of labour market exclusion. Among those who have kept their jobs, an increasing number of workers and their families have experienced economic hardship as a result of declines in the spending power of their earnings from work. The crisis has also deepened a long-standing issue of poor job quality in advanced and emerging countries alike.

Unemployment remains well above its pre-crisis levels in many OECD countries despite a recovery in job growth. Modest declines in unemployment are projected over the rest of 2014 and in 2015. The persistence of high levels of unemployment has been translated into a rise in structural unemployment in some countries, which may not be automatically reversed by a pick-up in economic growth, as it has led to a loss in human capital and motivation to find work, especially among the long-term unemployed. For the OECD area as a whole, 16.3 million people – over one in three of the unemployed – had been out of work for 12 months or more in the first quarter of 2014, almost twice the number in 2007. Given these developments, promoting demand should remain a key policy objective where the recovery has been less robust, accompanied by reinforced measures to combat structural unemployment. Priority should be given to employment and training measures for the long-term unemployed who typically face significant barriers to finding work and are most likely to quit the labour force.

This chapter provides an overview of recent labour market developments in OECD countries and short-term prospects. Despite some signs of a recovery in job growth, unemployment remains well above pre-crisis levels in many countries, although some further modest declines are projected over the rest of 2014 and in 2015. Moreover, an assessment of the available evidence suggests that the persistence of high levels of unemployment has been translated into a rise in structural unemployment in some countries, which will not be automatically reversed by a pick-up in economic growth. Given these developments, promoting aggregate demand should remain a key policy objective where the recovery has been less robust but accompanied by reinforced measures to combat rising structural unemployment. In particular, priority should be given to employment and training measures for the long-term unemployed who typically face significant barriers to finding work and are most likely to drop out of the labour force.

This chapter documents how wages have evolved during the global financial and economic crisis and recovery in OECD countries. It contributes to a better understanding of the role of wage adjustment for the strength of the labour market recovery and the way the social costs of the crisis have been shared across the labour force. A persistent increase in unemployment in many OECD countries has exerted considerable downward pressure on real wage growth, including among low-wage workers. Significant wage moderation has already contributed to curb unit labour costs and thus promote external competitiveness in a number of countries, particularly in the euro area. In a context of low inflation, where further wage adjustments would require difficult and painful cuts in nominal wages, other policy measures are needed to address persistently high unemployment rates. In addition to the role of macroeconomic policies, this includes better assistance in developing skills necessary for displaced workers to shift to new areas of employment, and more effective product market competition. While wage adjustment costs have been shared quite evenly across workforce groups, declines in real earnings are likely to hurt the low-paid more and may require appropriately designed measures such as in-work benefits and statutory minimum wages to tackle in-work poverty.

This chapter provides a broad picture of job quality across OECD countries and socio-economic groups, along three broad dimensions that are essential for worker well-being: earnings quality, labour market security, and quality of the work environment. The chapter argues that labour market performance should be assessed in terms of the increase in both the number and the quality of job opportunities. It suggests that such an approach would indeed make a difference. While a number of countries display equally good (or bad) performance in both aspects, the picture is more mixed in some other countries, where a high (low) quantity of jobs is not necessarily accompanied by high (low) quality. In addition, the chapter provides new insights on labour market inequalities, by shedding further light on the nature and depth of the disadvantages faced by some population groups. In particular, youth, low skilled workers and those with temporary jobs appear to cumulate many disadvantages, while high skilled workers not only have access to more jobs, but also to the best quality jobs.

This chapter provides new evidence on the incidence of non-regular employment, defined as all types of employment that do not benefit from the same degree of protection against contract termination as permanent employees, and its impact on labour market duality and inequalities in job security across workers. In most OECD countries, regulations concerning termination of non-regular contracts are typically less costly for employers and less protective for workers than those applying to the dismissal of permanent employees. These differences in legislation are reflected in both actual and perceived job security. Moreover, there are growing concerns that large differences in regulations across contracts tend to concentrate any required labour market adjustments on non-regular workers, thereby increasing labour market segmentation. Policy options to reduce this labour market divide include making the use of temporary contracts more difficult and costly, relaxing regulations on dismissal of permanent workers or fostering convergence of termination costs across contracts, including by introducing a single or unified contract. Each of these options involves overcoming implementation difficulties and requires complementary reforms to be effective.

This chapter draws on the OECD’s international Survey of Adult Skills to shed light on how different skills contribute to two key labour market outcomes for young people (16 to 29): the risk of not being in employment nor in education or training and, if in work, the level of hourly wages. The skills areas covered include: educational attainment; information-processing skills (literacy, numeracy, and problem solving in technology-rich environments); generic skills (the ability to organise one’s own work or influence that of others, to work in a team and to solve complex problems); and skills specific to fields of study and training. The chapter also assesses the extent to which employers make the best use of young people’s skills in the labour market and identifies those skills areas most prone to mismatches between what workers can do and what their job demands. Finally, the chapter identifies the main policy levers that are most likely to influence the way in which employers recognise and reward their employees’ skills. This provides new insights to policy makers, strengthening previous findings based chiefly on returns to education.

The tables of the statistical annex show data for all 34 OECD countries. Data for Brazil, Colombia, Latvia, the Russian Federation and South Africa are included in a number of tables.