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Governments must do more to help workers adapt to new global economy, says
OECD
19/06/2007 - Rather than seeing globalisation as a threat, OECD governments
should focus on improving labour regulations and social protection systems to
help people adapt to changing job markets.
That is the message from the 2007 edition of the OECD's annual Employment
Outlook. It reviews the possibility that offshoring may have reduced the
bargaining power of workers, especially low-skilled ones. Whether real or
threatened, the prospect of offshoring may be increasing the vulnerability of
jobs and wages in developed countries.
Wage inequality is also rising. In 18 of the 20 OECD countries where data
exist, the gap between top earners and those at the bottom has risen since
the early 1990s. Ireland and Spain are the only exceptions to this trend (see
graph at http://www.oecd.org/dataoecd/26/35/38795690.pdf ).
The OECD report makes a number of recommendations on policies governments
should put in place to create more and better jobs.
In countries where social security contributions are high, such as Belgium,
France and Sweden, the OECD suggests moving to broader sources of financing
public social protection. Social contributions are largely based on wages and
act as a tax on labour, limiting job creation. Given the falling share of
wages in national income, it is key to reduce the role of social
contributions and increase that of broader tax bases, such as income taxes
and/or VAT, to fund social protection.
Globalisation requires mobility to ensure that workers are not trapped in
jobs with no future. The report praises the so-called "flexicurity" approach
adopted in Austria and Denmark to address this. In Austria, for example,
workers have individual savings accounts, instead of traditional severance
pay schemes, that move with them as they move jobs. If they lose their job,
they can choose to withdraw funds from the account or save the entitlements
built up towards a future pension.
Job losers should be compensated through social protection systems which are
employment-friendly, the report notes. This can be done by providing adequate
benefits hand-in-hand with "activation" policies which increase re-employment
opportunities. Experience of Nordic countries and Australia shows that such
policies, if well-designed, improve the job prospects of laid-off workers,
thereby easing their fears about globalisation.
OECD Employment Outlook 2007 is available to journalists from the OECD's
Media Division (tel.+ 33 1 45 24 97 00) or through the password-protected
website. The report can be purchased in paper or electronic form through the
OECD's Online Bookshop. Subscribers and readers at subscribing institutions
can access the online version via SourceOECD.
For further comment, journalists are invited to contact Raymond Torres in the
OECD's Employment, Labour and Social Affairs Directorate (tel. + 33 1 45 24
91 53).
For further information, please go to
http://www.oecd.org/els/employmentoutlook/2007
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