September 24, 2020

Joblessness to Keep Rising, O.E.C.D. Forecasts

Joblessness is expected to continue edging up, to about 28 percent in Spain and Greece, 12.5 percent in Italy and 11 percent in France by the end of 2014, the Paris-based O.E.C.D. said in its forecast. Young people and the low-skilled will be affected the most, according to the organization, which represents 34 of the world’s largest economies. Two of the biggest exceptions to the trend are the United States and Germany, where the number of people out of work is expected to decline further next year, the study said.

“The social scars of the crisis are far from being healed,” the organization’s secretary general, Ángel Gurría, said.

Unemployment in many developed economies around the world has been on a steady rise since the financial crisis started in 2008. People on short-term contracts, especially the younger and lower skilled workers, were often the first to be fired at the beginning of the crisis and struggled to find a new job, the O.E.C.D. said.

Chancellor Angela Merkel of Germany declared youth unemployment Europe’s biggest challenge earlier this year. And some governments, including France, pledged new measures to try and reduce unemployment.

But some economists said that some labor policies pushed through by governments to improve the employment situation, including apprenticeship programs, can do only so much to alleviate the unemployment burden. Government reforms can help a bit, said Jennifer McKeown, an economist at Capital Economics, but “it’s more about boosting firms’ confidence and easing access to credit and maybe further easing of austerity.”

The O.E.C.D. warned against trying to address youth unemployment by turning to early retirement programs or relaxing unemployment benefits for older workers, saying it would be “a costly mistake.” New evidence cited by the O.E.C.D. showed that even though workers tend to retire later because of better health or financial needs, they did not stay in their jobs longer at the expense of younger workers.

Holger Schmieding, chief economist at Berenberg Bank, agreed with that assessment, saying that European demographics and the growing financial demands of pensions made it necessary to get people to work longer, not shorter. But Mr. Schmieding was less pessimistic than the O.E.C.D. He said that while more bad news on unemployment was already “baked into the cake,” the labor markets should stabilize as the economic environment improves, probably over the summer.

“Unemployment is a lagging economic indicator and even if the economies stabilize there may be pressure, but it doesn’t have to get quite as bad as the O.E.C.D. forecasts,” Mr. Schmieding said.

In Europe’s hardest-hit job markets, the outlook remains grim. In Greece, where thousands walked off their jobs Tuesday in a 24-hour general strike against austerity measures, one university graduate at the protest in Athens said she had few hopes of finding a job in the fall.

“I was top of my class and all my teachers said I should have a bright future, but I can’t see it, can you?” said Aliki Tsavou, 24, an economics graduate who has been working part time and uninsured in a cafe for the past year as she looks for a full-time job. “I’ve even applied to make coffee in an accountant’s office but there’s nothing, absolutely nothing.”

The O.E.C.D. also said that governments should spend more on helping the unemployed with their job search and training. Spending per job seeker fell on average by almost 20 percent among O.E.C.D. countries since the beginning of the crisis.

In Italy, addressing youth unemployment is a stated priority of the 11-week old government of Enrico Letta, which at the end of June approved a series of programs to increase jobs. The measures include tax breaks for employers, as well as new training and internship programs. But concerns remain that Italy’s overall economic situation — limping through a two-year recession — will continue to act as a brake to new hires.

“The real issue is one of demand,” said Stefano Sacchi, assistant professor of political science at the University of Milan, who noted that work incentives were unsustainable in the long term.

Calls for the government to relieve the tax load on companies and reduce labor costs to boost employment have also been widespread, but tax breaks in other areas have reduced the government’s wriggle room. “The margins for this are tight in the current situation,” Mr. Sacchi said.

Flavio Vallone, 28, a Web developer and university graduate in Siena, Italy, has been struggling after a first job that ended when the company was taken over. Now that he has spare time, he has been teaching himself new skills in Web marketing and social media in the hope that it will help land new employment.

“I’m taking advantage of being unemployed to learn what I didn’t while I was at university,” he said. But prospects look dim. “Companies want the compromise between a young person and a person who has experience, which is a paradox.”

Elisabetta Povoledo contributed reporting from Rome and Niki Kitsantonis from Athens.

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