Around 22 million people in advanced countries have lost their jobs in 2020 due to the pandemic’s impact, according to the report “Employment Outlook 2021” by the Organisation for Economic Cooperation and Development (OECD).
The OECD goes on to say that possibilities of economies regaining their previous employment rate even by the end of next year are slim. Out of the 22 million jobs lost, 8 million are unemployed, while the remaining 14 million are considered inactive.
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Recovery not to be achieved by the end of 2022
Globally, the pandemic’s toll on the labor market resulted in the loss of some 114 million jobs in 2020. The OECD warns that by the end of last year developed countries were still halfway to full recovery of employment levels, anticipating that “recovery to pre-pandemic levels will not be achieved by the end of 2022.”
CNBC reports that job retention schemes have saved some 21 million jobs, but rich countries face the threat of rising long-term unemployment rates.
Still, despite the OECD unemployment rate falling to 6.6% in May from 6.7% in April, it remains 1.3% above the pre-pandemic level of February 2020, with 43.5 million unemployed, compared to 35.4 in February 2020.
In this sense, the unemployment rate among those under 25 years of age stood at 13.6% in May 2021, still above the 11.4% prior to the pandemic, although with substantial divergences between countries.
The OECD asserts that, at the height of the crisis, job retention plans supported some 60 million jobs, more than ten times more than during the financial crisis, thus contributing to saving around 21 million.
Withdrawing support too soon could jeopardize recovery
According to OECD data, youth employment took a whole decade to return to normal levels after the 2008 Global Financial Crisis. Stefano Scarpetta, director of employment at the organization asserted that the key message is “to do better this time. We cannot have young people so severely affected.”
In this line, OECD’s general secretary Mathias Cormann said, "Withdrawing support too soon could jeopardize the recovery.”
In the meantime, the U.S. Federal Reserve is moving closer to tapering asset purchase ahead of schedule, since the rebound in inflation and the steady economic upturn are leading investors to speculate on an early withdrawal of stimulus.
Cormann underlines that the short-term costs of financial support measures can be mitigated by improving the targeting of aid to the most vulnerable sectors, companies, and households, while promoting the creation of new businesses and job creation.