Stuart Sykes and Kaili Lévesque, Policy Research Initiative
Stuart Sykes and Kaili Lévesque are Policy Research Officers with the Policy Research Initiative.
By way of evidence-based policy discussions, the OECD significantly influences the conceptualization of socio-economic policy debates in both member and nonmember states around the world. As such, the Organization’s recently declared intention to re-evaluate the fundamental assumptions and principles that underpin its Jobs Strategy, a document that for the past 10 years has served as the foundation for its annual Employment Outlook, is cause to take notice.
The reassessment of core assumptions is largely driven by shifts within the labour markets of member states. A decade ago, the OECD Jobs Strategy was crafted with the intent of outlining reforms that would slash high and persistent unemployment in OECD member states. At that time, major structural reforms regarding employment protection legislation, pension systems, and employment supports (such as unemployment insurance and active labour market measures) were seen as vital. The Employment Outlook has provided annual reports on the implementation of these reforms and on labour market developments and trends in OECD member states.
Although traditional employment concerns, such as unemployment and economic stagnation, remain important, new challenges, such as population aging are becoming increasingly central policy considerations. Additionally, the implementation of many responses to previously identified challenges has led to structural changes that now require evaluation. For these reasons, the time has come for modernization of the OECD Jobs Strategy.
However, such socio-economic shifts are not the only drivers for change. For years, there has been concern among analysts that many international organizations, including the OECD, have failed to address gaps in their diagnostics or recognize negative socio-economic distortions that can result from their policy prescriptions. The narrow, market-based approaches frequently used by many international organisations have also increasingly come under scrutiny. As time has passed, these criticisms have become increasingly difficult to ignore.
Emerging Themes for the Review
The 2004 Employment Outlook identifies a number of issues for review. A key concern to be addressed by the new Jobs Strategy is the projected increase in dependency ratios that could result from an aging population. While the urgency of this challenge varies across countries, much of the OECD’s focus in addressing this issue is aimed at increasing employment.
This concern was not entirely neglected in the current Jobs Strategy and previous issues of Employment Outlook. Groups targeted to effect reform in this area also remain largely unchanged from previous OECD documents, namely those most likely to be excluded from the labour market (women, lower-skilled workers, and youth), the employment of whom would support the costs of aging societies.
However, never before has this challenge been made so central to the analysis. Three other fundamental philosophical shifts are also apparent within the themes of the OECD’s review process, suggesting that the new Jobs Strategy could differ significantly from the current document.
Increased Appreciation of Demand- Side Issues
Whereas policy prescriptions in the current Jobs Strategy and past issues of Employment Outlook focused on managing the supply of labour (through education, more restrictive benefits, etc.), the 2004 edition of the Employment Outlook argues that issues of job quality (e.g., wage levels, benefits) must also be addressed. This acknowledgment of demand-side issues, which effectively increase the draw and value of employment as regards individuals, marks a significant break from past approaches.
The Relevance of Social Objectives
For perhaps the first time, the OECD explicitly acknowledges in the 2004 Employment Outlook that measures to improve employment must be reconciled with social goals, leading to concerns about job security, work-life balance and widening disparities in earnings. This shift reflects the dilemmas faced by states grappling with a wide array of social and economic challenges. With the addition of this new dimension, the OECD also acknowledges that some of its past policy recommendations, if imprudently or partially applied, could have deleterious social effects. For example, the OECD notes that the rise of precarious employment is in part due to the many reforms made to employment protection legislation in OECD countries during the 1990s.
Different Policy Contexts Among Member Countries
In part reflecting the above two shifts, the OECD acknowledges that policy interactions and complementarities need to be better understood to determine why various countries, despite different policy contexts and institutions, achieve similar employment outcomes. Subsequently, unlike the current Jobs Strategy, which effectively established a single set of institutional arrangements and targets for all states, it is now recognized that alternate policy packages that are sensitive to state-specific conditions and objectives may be more effective.
These themes did not develop overnight. They had been alluded to in a more cursory manner in 2003, suggesting an under appreciation of their relevance rather than a lack of awareness of their existence. Elevation of these themes in the 2004 Employment Outlook, however, has transformed the criteria against which past policies and future proposals must be measured. As a result, the 2004 edition reads very differently than its predecessors, and includes discussions touching on a number of social issues of importance to the issue of poverty, such as diverging wages, job quality, and making work pay.
Moving Forward: Issues and Options
In placing new emphasis on issues, such as population aging and the need for flexible work arrangements, the OECD must determine which conceptualizations of employment are still appropriate, and which require complete refurbishing to maintain their relevance. The OECD’s success in doing this over the twoyear review process will determine if the new employment strategy is truly fresh and responsive to the abovedescribed challenges and issues.
In the 2004 Employment Outlook, labour market integration remains the key unit of analysis. Target groups remain unaltered, and activation policies remain central to the policy prescriptions aimed at addressing underemployment. This focus on activation appears still to be limited by the underlying assumption that those not engaged in the labour market choose not to be. Structural barriers to participation, such as a lack of available child care, remain marginal to the analysis. Despite the themes driving the review, much of the basic diagnostic and underlying approach of the report appears unchanged.
However, there are other signs that significant analytical shifts are taking place. Even as those outside the labour market remain the priority group of focus, there have been slight modifications to the definitional aspects of employment policies, and there has been an alteration of the understanding of issues to be addressed, such as the supply of, and demand for, labour. The role of training and education has also been recast. No longer portrayed as a silver bullet for increasing individual employability, the role of education is being repositioned within a life-long learning approach. This approach, is intended to help mitigate the labour market effects of an aging work force, improve employment security (if not job security), make individuals less vulnerable to the pitfalls of precarious employment and address a number of other socioeconomic challenges. In short, education is now portrayed as underpinning a multidimensional approach to addressing a number of societal needs rather than employability.
These are significant shifts that, in part, explain why the feel of the 2004 Employment Outlook is so different from its predecessors. However, two other philosophical shifts also warrant particular attention.
Job Quality Is About More than Earnings
Quality of employment in previous issues of Employment Outlook was based on two indicators: having a job, and the level of income earned in employment. However, there is now a clear awareness that this approach fails to take into consideration other factors, such as job satisfaction, work-life balance, and the role of employment in achieving individual and social goals. In the 2004 Employment Outlook, individuals are recognized as having many concurrent goals that are not mutually exclusive, such as achieving gainful employment while having a family and participating in community activities.
Not all of these goals are quantifiable, nor do they all contribute to a traditional understanding of employment benefits. They are, however, now recognized, and the OECD has pledged to place part of its strategy focus on making work more flexible and appealing to a broader segment of the population, including older individuals.
Quality of Life Is More than Having a Job
The role of employment within society and an individual’s life has fundamentally shifted. Before, overall levels of employment and average income levels were seen as appropriate indicators of the overall performance of the employment market. The diagnostic in the 2004 Employment Outlook does not adopt this position. Instead, the labour market is viewed only as one aspect of a country’s socioeconomic structure, and a job is now only one part of a person’s life. This fundamental shift results in past policy approaches often being cast in a completely new light.
For example, although a training program targeted at lone parents may not lead them directly into paid employment, it may lead to improvements in broader social goals, such as increases in social capital and community involvement. These have not been quantified as have traditional indicators, such as income and employment, but the OECD acknowledges the importance of understanding the achievement of broader social goals as policy successes in and of themselves.
There is no doubt the new diagnostic research themes identified earlier are beginning to assert themselves. Marked changes, especially regarding the underlying assumptions and approaches that ground much of the OECD Jobs Strategy and past issues of Employment Outlook, are apparent. While the 2004 Employment Outlook appears to retain much of the current Jobs Strategy, this is not conclusive evidence that this exercise is merely window dressing. No one should want to see solid diagnostic and analytical work abandoned just because it is no longer fashionable.
The key challenge within the review will be balancing new and old. Retained ideas will have to remain consistent with emerging diagnostic themes if the document is to be coherent. The OECD’s success in doing this will determine if the Jobs Strategy that emerges in two years is truly new wine or whether it is the same old vintage in a shiny new bottle.