From the TUC

And now … back to the real debate!

16 Sep 2009, by in Economics, Labour market

After a few days in which the Westminster Village and what used to be called Fleet Street have conspired to convince us that spending cuts is the only meaningful topic of political discussion, I am pleased that the OECD has brought us back to reality today.

The Organisation for Economic Co-operation and Development represents the 30 richest countries in the world. Politically, it is instinctively free market. It is, however, trade union and business friendly, in the sense that it has a common sense, social partnership approach to its work, so unions and employers can and do meet with it and seek to influence its policies.

In it’s annual ‘Employment Outlook’ , published today, the OECD notes that, from a 25-year low of 5.6 per cent in 2007, the OECD unemployment rate has risen to a postwar high of 8.3 per cent in June 2009. To put it another way, this means that nearly 15 million workers have joined the ranks of the unemployed in that time. As always, already disadvantaged groups – young people, the low-skilled, immigrants, ethnic minorities and those in atypical work – are hurting the most.

The OECD expects output growth to become positive, but only mildly, in the first half of next year. But OECD unemployment is projected to continue rising throughout 2010, approaching a new postwar high of 10 per cent (57 million unemployed) in the second half of next year.

A major risk, according to today’s report, is that much of this large hike in unemployment will become structural, as many of the unemployed drift into long-term joblessness or drop out of the labour market altogether. Accordingly, labour market and social policies have a key role to play in helping to get those who lose their jobs back into work or reskilled as quickly as possible.

The OECD praises the role of active labour market policies (ALMPs), but argues that when compared to the overall resources available in fiscal stimulus packages, more could have been spent on ALMPs in many countries. (For the record, the OECD is largely supportive of the UK response).

But, I hear some cry, we shouldn’t be focusing on ALMPs or on fiscal stimuli. The burning priority it to tackle the deficit. This is where the OECD Employment Outlook becomes really interesting. The report says:

“While calls for additional public spending on labour market policies have to bear in mind that public finances are facing growing constraints in many countries due to the actual and projected  build-up in public debt, they can be justified on cost-effectiveness grounds. We now know a lot about what works and what does not work in this area.” (My italics) And this from a renowned free market organisation.

My boss, Brendan Barber, said it on Monday, and I’ll say it again here. We cannot talk of recovery until unemployment is coming down. The OECD painfully tells us that that isn’t going to happen any time soon. Until it does, enough of this foolish talk of spending cuts. Let’s focus on the real issue: getting the UK, and the OECD, back to work. And getting our economies on a sustainable footing once again.

One Response to And now … back to the real debate!

  1. Today’s unemployment figures | ToUChstone blog: A public policy blog from the TUC
    Sep 16th 2009, 6:34 pm

    […] seem to believe that the Prime Minister is uniquely and personally responsible for the recession. As Tim has pointed out, today’s OECD Economic Outlook is a useful corrective to the parochialism of British […]