Around 22m more people are now jobless in major economies than before the pandemic, according to new research by the OECD.
Of these 22m people living in rich countries that have been pushed out of work during coronavirus, 8 million are unemployed and over 14 million people are classed as inactive.
In its annual employment outlook, published today, the OECD said that the unemployment rate in rich countries has recovered by only half from its pandemic peak, with young people and low-skilled workers worst hit.
Among those holding only a low level of education, the impact of the crisis on hours worked was nearly three times that experienced by those with a high level of education, the OECD said.
The OECD forecast that the UK’s employment rate will return to pre-pandemic levels in Q4 2023 – recovering slower than the OECD average of Q3 2023, and at the same pace as the US forecast.
It is anticipated that the employment rate will decline again in the UK in Q3 and Q4 2021 before reaching an upward trend in 2022, the OECD said.
Advanced economies risk a sustained rise in long-term unemployment, the report warned, as those most vulnerable to job loss at the start of the pandemic – such as low-skilled workers, young people, and those on fixed-term contracts – will find it hardest to enter into sectors where hiring is strongest.
At the end of 2020, there were 60 per cent more people unemployed for at least six months, the OECD said. This figure has continued to grow in the first quarter of 2021.
Job retention schemes have been used in most countries during the pandemic and have helped to preserve jobs in the short-term, the report said.
But if used for too long, the OECD warned “there is a risk that they undermine job creation in the recovery and slow down the reallocation of jobs from low to high performing firms.”
This risks a gulf forming between those who have continued to work and those who lost their jobs at the beginning of the pandemic but are unable to re-enter employment.
“A widening gap may develop between those who have weathered the crisis through reduced hours and short periods on temporary lay-off, and those who have found themselves jobless — increasingly distant from the labour force, exhausting benefit entitlements and risking long-term scars,” the OECD said.
The full extent of the impact of Covid-19 on the global jobs market is “not yet behind us”, the report warned, and could depend on long-term shifts in consumer demand and technology.
“Tentative evidence” suggests that the pandemic has accelerated pre-existing trends towards automation and digitalisation, which is “profoundly reshaping the way companies produce and combine human labour with new technologies”, the report said.
The OECD also noted an increasing demand for professionals in the health care and green energy sectors in developed nations.