Unemployment in advanced economies will remain high until at least the end of 2013, with youth and the low-skilled hurt most by the weakest economic recovery in the past four decades, the Organization for Economic Co-operation and Development (OECD) said Tuesday.
In its annual report on the employment outlook, the Paris-based think tank said jobless rates in the 34-country OECD area will still be stuck at 7.7 percent at the end of next year, close to this May's 7.9 percent rate and leaving 48 million people out of work. The situation is even more discouraging in the euro area, where the unemployment rate is rising again -- reaching an all-time peak of 11.1 percent in May.
The fragile economic recovery has not generated sufficient employment opportunities, said OECD Secretary-General Angel Gurría, presenting the report in Paris. And recently we have seen clear signs of a further deterioration in global economic prospects.
The situation varies widely between countries. The OECD projects that by the end of 2013, Germany's jobless rate will fall to 5.2 percent from 5.4 percent. But excluding Germany, it sees the unemployment rate in the rest of the euro zone rising to 11.8 percent from 10.9 percent, with big increases projected for Spain, Greece, Portugal and Italy.
Persistently high unemployment could eventually result in discouragement and permanent withdrawal from the labor force.
A growing number of people, the young in particular, are becoming disconnected from labor markets, Gurría said. We need to avoid the risk of a lost generation by all means!
High Youth, Long-Term Unemployment
A lack of jobs for workers ages 15 to 24 could create a scarring effect on their long-term career paths and future earnings prospects, the OECD said.
Last year, about 18.6 percent of youth were neither employed nor in school or training programs across the OECD's 34 countries, the think tank said. In the U.S., that percentage was 14.8 percent.
The statistics are no better for the long-term unemployed.
Around 35 percent of all those unemployed had been out of work for a year or more in the last quarter of 2011. The share of long-term unemployed remains highest in EU countries, at around 44 percent on average.
Even more worrying, the number of people out of work for two years or more in the OECD area has grown by 2.6 million since 2007 to reach 7.8 million in 2011.
The U.S., in particular, has recorded an unprecedented increase in the share of long-term unemployed, from around 10 percent in 2007, to around 30 percent in the first quarter of 2012.
To get employment rates back to pre-crisis levels, about 14 million jobs need to be created in the OECD area.
Gurria said euro zone leaders should find a way to bring the currency area's long-running fiscal and banking crises to an end, and do more to stimulate their economies and create jobs.
It is absolutely imperative to guide the euro area out of the crisis and put the global economy firmly on the road to recovery, he said.