Shaping a new labour market for the post-pandemic economy

What took a decade to achieve unravelled within a matter of months. It seems like another age, but the start of 2020 had marked a decade of decline in the unemployment rate of the world’s advanced economies. When the COVID-19 pandemic struck, the unemployment rate in OECD countries increased by an unprecedented 3.6 percentage points between February and April, to 8.8% – the highest rate in a decade. The OECD unemployment rate has since fallen but is expected to remain above pre-crisis levels throughout 2022.

In the meantime, the devastation to lives and livelihoods around the world caused by the pandemic continues, with the rollout and distribution of vaccines expected to take some time.

As the health crisis continues, its effects on employment risk becoming long-lasting. In addition, accelerated technological adoption risks creating a “double disruption” in labour markets, with many jobs unlikely to return. At the same time, the overall projections for job creation in the next five years are still higher than those of job losses. New jobs are expected to emerge due to shifting demand patterns and the use of new technologies in sectors such as the green economy, care economy and the education sector, as well as new roles in Data and AI across all industries and sectors.

How, then, should government and business leaders begin to shape a new labour market in 2021 and beyond – and support workers to thrive in the jobs of tomorrow?

Building a bridge to the recovery phase: public sector support for income, skills and jobs

The immediate response to the economic challenges posed by the pandemic was unprecedented. Governments around the world pumped trillions of dollars into the global economy, providing the necessary short-term support for businesses and workers in sectors that could not operate at full capacity. The use of short-time work schemes peaked at almost one in five employees across countries in the OECD for which data is available.

As the pandemic continues to unfold, governments must continue some of the urgent measures. They can make income-protection schemes more responsive to the changing situations of people, promote adequate occupational safety and health in all workplaces to ensure a safe return to work, and enhance social protection for those workers who are least covered such as ‘gig work’ and those in informal employment.

At the same time, they must lay the foundations for a more resilient and inclusive recovery, and governments must also turn their attention to preparing workers and re-allocating talent to new, growth jobs and professions in the medium-term.

Government policies can support this agenda with retraining and job creation through subsidies, targeted tax cuts, and investment programs, while social protection provisions can be reshaped to ensure better coverage of workers in non-standard forms of employment. Public and private employment services will also need to be expanded to support unprecedented numbers of jobseekers in their reskilling and job transition from declining occupations to emerging or growing occupations.

Reskilling and upskilling: an urgent task for stakeholder capitalism

It is estimated that 50% of currently employed workers will need reskilling by 2025 to meet the needs of a changing labour market. This will demand a significant expansion of mid-career reskilling and upskilling. For businesses there is a clear return on investment in doing so; two out of three employers expected to see a return within a year.

Employers’ commitments to quality work, fair wage practices and merit-based management practices can further incentivise and complement the learning agenda. Workers in OECD countries whose jobs are at high risk of automation remain 30 percentage points less likely to participate in adult learning than their counterparts in low-risk jobs.

The crisis led to a fivefold increase in employer provision of online learning opportunities to their workers and a fourfold increase in the number of individuals seeking online learning on their own initiative. However, these efforts must be further accelerated and coordinated, both to support workers and to ensure adequate talent is available as businesses and economies bounce back. The Reskilling Revolution platform brings together leaders from governments, business and society together to collaborate on providing better education skills and jobs to 1 billion people by 2030.

Ensuring that no one is left behind in the labour markets of tomorrow

The crisis has not affected everyone equally. Women, youth, ethnic minorities and low-income workers are among those hit hardest. Young people have faced disruption to planned assessment and university closures. In addition, as hiring has slowed, young people entering the labour market are facing a reduction in entry-level opportunities, internships and apprenticeships. Top-earning workers have been able to work from home, while low-earning workers have less opportunity to do so.

There is no time to waste to put in place comprehensive policies to avoid creating a lost generation and greater disadvantages for those who were already impeded from full access to learning and earning. Both public and private sector efforts must ensure that as we rebuild, the post-pandemic labour market embeds justice and fairness for all segments of society.

Resilience, inclusion and sustainability must be at the heart of international collaboration in 2021. To that extent, better aligning public and private policies and actions is crucial. By joining forces to address these issues, the OECD and the World Economic Forum will help build a future of work that works for all.

This article originally appeared on The Straits Times.

Learn more at the OECD Tackling Coronavirus (Covid-19): Policy Hub.