1. Bringing everyone along: facilitating labour market adjustment
Integration versus isolation: strengthening communications on the impacts of trade OECD, Paris, April 20176
Bringing everyone along: facilitating labour market adjustment
Mark Keese
Head of the Skills and Employability Division
Directorate for Employment, Labour and Social Affairs

2. Overview of presentation
Helping displaced workers (DWs): general insights
Are special measures needed for trade-displaced workers?
Taking a broader approach to fostering labour market inclusiveness
Helping displaced workers (DWs): general insights
Nearing end of multi-year project on displaced workers
Will summarise key policy lessons
Are special measures needed for trade-displaced workers?
Are trade-displaced workers different from other job losers?
What is the experience with specialised measures for trade-displaced workers?
Taking a broader approach to fostering labour market inclusiveness
More comprehensive and pro-active range of policies required
The new OECD Jobs Strategy

3. OECD review on displaced workers
Phase 1: Analytical report focusing on comparable statistics on job displacement and its consequences (chapter in the Employment Outlook 2013)
Phase 2: 9 country policy case studies: Australia, Canada, Denmark, Finland, Japan, Korea, New Zealand, Sweden and the United States
Phase 3: Policy synthesis (chapter in the Employment Outlook 2018)
Definition of job displacement: Workers with at least one year of job tenure dismissed from their jobs for economic reasons such as plant closures, business downturns and changes in production technology

4. Around 2-7% of workers are displaced each year
Percentage of workers aged displaced from one year to the next, averages
Source: OECD (2013), Employment Outlook, Chapter 4

5. Large differences in re-employment rates
Percentage of displaced workers reemployed within one year, averages
Source: OECD (2013), Employment Outlook, Chapter 4

6. Job quality worsens after displacement: Persistent declines in wages
Earnings changes before and after displacement Percentage of pre-displacement earningsa
DY: Displacement year. a) Pre-displacement earnings refer to average earnings in the year prior to displacement (-1 in figure). Source: OECD (2013), Employment Outlook, Chapter 4

7. And more precarious employment
Changes in employment shares between pre-and-post-displacement jobs
Percentage points
Source: OECD (2013), Employment Outlook, Chapter 4

8. Key policy messages for assisting displaced workers
Avoid excessive displacement
Respond early when jobs are no longer economically viable
Make sure ALMPs are well adapted to meet the needs of displaced workers
Ensure adequate income support for DWs, while not discouraging re-employment
Avoid excessive displacement (judicious use of EPL and STW to protect jobs that are viable in long-run)
Respond early when jobs are no longer economically viable (advance notification leading rapidly to counselling, re-training etc.)
Make sure ALMPs are well adapted to meet the needs of displaced workers (who have distinct needs compared with other jobseekers who are more distant from the labour market)
Ensure adequate income support for DWs, while not discouraging re-employment (UI is the first line of defence, but also a role for SA and maybe even “wage insurance”)

9. Effective activation policies are essential
Key elements of successful activation policies
INSTITUTIONS AND POLICIES
Opportunities
Inclusive and resilient labour markets
Well-designed activation policies can help and encourage job losers back into work and reduce the costs of displacement.
Successful activation strategies are built on three key pillars: i) maintaining and strengthening the motivation of jobseekers to look actively for work; ii) increasing employability; and iii) expanding employment opportunities.
With effective labour market institutions and policies as the keystone.
Motivation
Employability

10. Good practice policy examples for assisting displaced workers
Job Security Councils:
Sweden
Effective coordination of severance payments with activation:
Germany & Switzerland
Skills audits and skills gap training:
Australia
Job Security Councils (Sweden):
Set up through collective bargaining by social partners
Provide job search assistance, re-training, etc. beginning during the notice period
Stand out for very rapid re-employment and constructive employer engagement
Effective coordination of severance payments with activation:
Severance can help avoid excessive displacement while providing compensation for long-tenure displaced workers
But often delays adjustment, especially where UI eligibility is delayed until the severance allowance has been spent
Germany and Switzerland reduce the delay in starting job search by requiring workers notified they will be laid-off to register with the PES and begin job search
Skills audits and gap training (Australia):
DWs’ skills are documented and matched against the skill requirements of available jobs, including jobs they could qualify for with a little upskilling
Offering training modules to workers that fill their skills gaps in the minimum time possible.

11. Are trade-displaced workers (TDWs) different from other DWs?
Trade only one of many drivers of job losses
TDWs represent only a modest share of all DWs
Only 2-3% of mass lay-offs in US because of trade
But difficult to assess role of trade behind each lay-off
Longer spells out of work & greater wage loss in new job
TDWs represent only a modest share of all DWs:
Trade only one of many drivers of labour market restructuring (new technologies, shifting consumer demands, etc.)
US data for mass layoffs – Managers attributed only 2.3% of job losses to increased imports or overseas relocation
Often difficult to assess how big a role increased international competition plays in causing any particular layoff
TDWs experience greater adjustment difficulties on average than other DWs:
Longer average time to re-employment and greater wage losses once re-employed
Largely reflects concentration of TDWs in declining industries and regions, so that few openings for similar jobs are available
TDWs also tend to be older manual workers with relatively low educational attainment
TDWs experience greater adjustment difficulties
TDWs concentrated in declining sectors and regions
TDWs often manual workers with few qualifications

12. What role for adjustment assistance programs targeted to TDWs?
DWs can face different barriers to finding work than most other PES clients
Use general labour market programs but some role for specialised measures for DWs
Specialised services for DWs particularly useful when mass layoffs occur
TAA in the US illustrates benefits and drawbacks
Delays in eligibility, arbitrary decisions
Inequity in giving more assistance to TDWs than to other DWs
General labour market programmes should be used as much as possible, but there is some role for specialised measures for DWs:
DWs face somewhat different barriers than most other PES clients to re-entering employment (e.g. the need to document skills learned on the lost job)
Specialised services for DWs are particularly pertinent when mass layoffs occur
The case for special measures targeted on TDWs appears to be much weaker:
The Trade Adjustment Assistance programme in the US illustrates both the benefits and drawbacks of this type of programme
Two main drawbacks:
Eligibility determination creates delay and cannot avoid arbitrary decisions
Evident inequity in providing more assistance to TDWs than to other DWs facing the same difficulties
Could be a second-best case for targeted programmes for TDWs, especially as a first step to developing good adjustment assistance for all DWs.
Case weaker for special measures targeted on TDWs
Second-best case for targeted programs, especially as step towards assistance for all DWs

13. Trade just one factor behind economic and social discontent
Global-isation
Digital-isation
Ageing societies
Rising inequality
Stagnant real wage growth
Greater job insecurity

14. A broader approach is needed to facilitate LM adjustment
Direct
Indirect
Industry redevelopment or rationalisation programs( tax subsidies, public-private partnerships , etc.)
Special adjustment assistance or income support for all displaced workers
Targeted
Local economic development
Special adjustment assistance for specific groups, e.g. in firms/sectors facing intense import competition
More “social” trade policy measures (but potentially high efficiency costs if very restrictive)
Macroeconomic policies conducive to strong growth and high employment
Unemployment insurance and other benefits available to all unemployed workers under common rules
General
Framework conditions to facilitate labour mobility (EPL, wage-setting institutions, housing policies, etc.)
Active labour market programs available to all unemployed workers under common rules
Education and life-long learning programs to upskill the work force

15. The new OECD Jobs Strategy framework
Enhance inclusive growth and well-being
Objective
Dimensions
of labour market performance
More & better jobs
Resilience & adaptability
Inclusiveness
Labour market policies and institutions, and other structural & macroeconomic policies
Policies

16. For further information:
Contact:
OECD Directorate for Employment, Labour and Social Affairs:
OECD work on displaced workers:
OECD Employment Outlook:
@OECD_Social