LATEST LABOUR MARKET DEVELOPMENTS AND POLICY CHALLENGES Council meeting, 18 February 2014 Mark Pearson Deputy Director Employment, Labour and Social Affairs OECD

2 Latest labour market developments: the recovery continues, but unevenly OECD unemployment was 7.1% in December; down from its crisis peak of 8.5%, but there are still 10.5 million more people unemployed than before the crisis: – Euro-area unemployment peaked in the second half of 2013 and is now slowly easing. However, it is still very high at 11.4% and also varies a lot: The unemployment rate has begun to fall in Greece and Spain, but approximately one in four active persons continue to be unemployed. Unemployment also continues to be very high in a number of other European countries, including Portugal (13.4%), Italy (12.9%) and France (10.3%). Unemployment is low at around 5% in Austria and Germany. – Labour market conditions also vary widely outside of the Euro area, but unemployment rates are considerably lower on average. Unemployment rates were under 4% in Japan, Korea and Norway, and only moderately higher in Mexico and Switzerland. – US unemployment was 5.7% in January and the average monthly employment growth rate in 2014 was 260 thousand, the highest value since 1999.

3 80% more long-term unemployed than in 2007, but the total may have finally peaked Long-term unemployed (more than one year) as a percentage of total unemployed, Q Q a,b Note: Countries are shown in ascending order of the incidence of long-term unemployment in Q a) Data are not seasonally adjusted but smoothed using three-quarter moving averages. OECD is the weighted average of 33 OECD countries excluding Chile. b) 2013 for Israel. Source: OECD calculations based on quarterly national labour force surveys.

4 Unemployment is both a cause and a consequence of mental ill-health Job loss adversely effects mental health – Being unemployed often means financial strain, social isolation, a loss of self-esteem,…. – Long-term unemployment can be particularly detrimental to mental health – The long-term unemployed also face other barriers to getting back into work, such as stigma with potential employers and skill attrition – Mental ill-health among the unemployed is thus one of channels impeding full labour market recovery from the crisis New OECD evidence shows a strong link between mental health and better labour market outcomes – Good mental health is crucial for sustainable employment – Work is crucial for recovery and mental health – Increasing recognition that policy has a major role to play in supporting this link

5 A rising share of disability benefit caseload Share of disability benefit caseload due to mental ill-health Source: OECD (2015), Fit Mind, Fit Job: From Evidence to Practice in Mental Health and Work.

6 The costs of mental ill-health are high for all benefit systems Share of people with mental ill-health on the main social benefits (average, minimum and maximum) percentages across nice OECD countries, latest available year Source: OECD (2015), Fit Mind, Fit Job: From Evidence to Practice in Mental Health and Work.

7 Mental ill-health is much more prevalent among the unemployed than the employed Percentage of people with mental disorder in each labour force category, latest available year Source: OECD (2012), Sick on the Job? Myths and Realities about Mental Health and Work.

8 Employment gaps are considerable for people with mental ill-health Employment-population ratio by severity of mental ill-health, latest available year Source: OECD (2015), Fit Mind, Fit Job: From Evidence to Practice in Mental Health and Work.

9 Workers with mental ill-health who attend work show less productivity Workers who have not taken sick leave but report reduced productivity in the past four weeks due to an emotional or physical health problem, by mental health status, 2010 Source: OECD (2015), Fit Mind, Fit Job: From Evidence to Practice in Mental Health and Work.

10 The costs of mental ill-health for the economy as a whole are high Costs of mental disorders as a percentage of the country’s GDP, 2010 Source: OECD (2015), Fit Mind, Fit Job: From Evidence to Practice in Mental Health and Work.

11 Mental health and work: key challenges and the way forward New OECD work shows that mental ill-health is a key issue for labour market and social polices 9 in-depth country studies examine the link between mental health and work – Intervention often comes too late – Key stakeholders are left out – Different institutions tend to work in isolation Key results of the study – Are presented in the forthcoming publication Fit Mind, Fit Job: From Evidence to Practice in Mental Health and Work – Will be discussed on 4 th March at a High-Level Policy Forum in The Netherlands (The Hague), when the report will be launched

12 Thank you Contact: OECD Directorate for Employment, Labour and Social Affairs, via 4 March 2015, The Hague, Netherlands OECD Employment Outlook, via OECD Employment database, via OECD Mental Health and Work Review, via work.htm work.htm Follow us on Twitter,