An OECD study shows drastic unemployment figures and points to necessary improvements in social security.

The COVID-19 pandemic has changed the world. A wide range of measures have been taken to save lives and protect health systems from being overburdened. Millions of people were unable to go out to work. The consequences are being felt on the labour market.

According to the Employment Outlook 2020 published in July 2020 by the Organisation for Economic Co-operation and Development (OECD), up to ten times fewer hours were worked in some countries than in the first months of the financial crisis in 2008. The unemployment rate in the OECD area rose by an unprecedented 3.0 per cent to 8.5 per cent in April - the highest level in the last ten years.

In its study, the OECD assumes that unemployment in the OECD countries will probably reach almost ten percent by 2020 (it was 5.3 per cent end of 2019). Should the feared second wave occur, the figure could rise to as much as twelve per cent. The labour market is not expected to recover before 2021.

It is natural to fear that the health and employment crisis would turn into a social crisis and that existing social inequalities would widen. Women, young people and low earners are particularly affected.

How can a social crisis be counteracted?

The study recommends that the economic stimulus packages introduced in most countries at the beginning of the pandemic may have to be adjusted to support those, who need help most urgently. Policies should provide incentives and support for companies hiring new workers. Another aspect is aid for the self-employed, who should be appropriately targeted.

In the medium term, it is recommended to close the structural gaps in social security. Investment in vocational training and the promotion of social dialogue, in particular with the social partners, should be encouraged. Furthermore, social security for self-employed and atypically employed persons should be regulated.

EU actions

The EU has a lot of relevant items on its agenda even now: Better protection of workers should actually be an EU priority this year and a summit should be held on this issue. As a result of COVID-19, this is likely to be postponed until next year.

The European Commission launched the youth initiative "Promoting Youth Employment: Entry of the up-and-coming generation into Professional Life" in July. This is intended to strengthen the Youth Guarantee, which was launched in 2013. The Commission urged the Member States to actively promote the employment for young people by using the resources available. At least 22 billion euros should be spent for this purpose. It is now up to the Member States to prioritise these investments.

During Germany's EU Council Presidency, too, the topics of shaping the future of work through retraining and advanced training and fair working conditions for platform employees are to be promoted.

The coming months and years will show whether and how successful the measures will be.