Unemployment rising fast in OECD

The developed world has entered recession and labour market conditions are rapidly deteriorating in many countries, according to the latest economic outlook from the OECD.

OECD projections indicate that the average unemployment rate in the OECD area may reach 6.3% in the last quarter of 2008, from 5.5% a year earlier.

The unemployment rate is projected to increase further in the next 18 months and peak at 7.3% in the second quarter of 2010.

Overall, these projections suggest that jobless numbers in the OECD area could rise to 42m by 2010 from 34m in 2008.

In the EU unemployment is rising at a slower pace than in the US. In Ireland and Spain unemployment rose significantly in 2008 but France and Germany have not yet seen a sizeable increase in the number of jobless.

“Workers holding temporary contracts are also particularly vulnerable to an economic downturn.

By the end of 2009, the unemployment rate is expected to be at least 2 percentage points higher than at the end of 2007 in the US, UK, Iceland, Ireland, New Zealand and Spain.

Historical experience suggests that youth, immigrants, low-skilled and older workers are more likely to bear the brunt of rising unemployment. Workers holding temporary contracts are also particularly vulnerable to an economic downturn.

The slowdown is also disproportionately affecting workers in certain industries. Construction is among the most affected sectors.

Job losses are spreading to the car industry, because sales have fallen sharply in response to declining consumer confidence and toughening terms for consumer credit.

Employment in the US auto sector in October was down almost 14% over the previous year. The OECD expects significant job losses in the European auto sector in the months to come.