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OECD Employment Outlook: July, 1991.

Beginning in 1983, the Paris-based Organisation for Economic Co-operation and Development (OECD) has issued annual assessments of labor market developments and prospects in its Employment Outlook series. Each edition begins with an editorial policy statement, followed by an introductory chapter which analyzes the latest labor market trends and short-term forecasts for the 24 member countries. Other chapters examine key labor market subjects. In previous issues, these special chapters have covered such topics as long-term unemployment, unemployment benefit systems, occupational accidents and illnesses, women's labor force activity, child care arrangements, and educational attainment of the labor force. Each issue concludes with a statistical annex.

Because of its international orientation, the Outlook gives careful attention to conceptual and methodological questions to ensure that cross-country comparisons are enlightening rather than misleading. The OECD is in a position to make contacts with national statistical offices of member countries to obtain expert interpretations of definitions and methods used in statistical series. Where possible, data are adjusted for international comparability. When adjustment is not possible, the reader is generally cautioned about incompatibilities in the data. This careful and thorough presentation of international data is one of the great values of the Outlook.

The reforms now underway in the former Socialist countries of Central and Eastern Europe are likely to have a considerable impact on future developments in many OECD countries. Therefore, chapter 1 of the 1991 Outlook includes a special section devoted to recent developments in the labor markets in Bulgaria, Czechoslovakia, Hungary, Poland, and Romania. The former German Democratic Republic is not included because it faces a considerably different process of transition after unification with western Germany. Monitoring of labor market developments in the Central and Eastern European countries will become a regular feature of the Outlook.

Six special topics have been singled out for inclusion in the 1991 Outlook. Chapters on union membership, employer-based training and absenteeism are useful contributions to the knowledge in these areas. Each of these chapters gives the reader a synopsis of the current state of statistics in the field, and conclusions are drawn about international comparability of the data. The chapter on union membership presents data adjusted to common concepts so that international comparisons of union density ratios are facilitated. The other two chapters do not go that far because the state-of-the-statistics does not allow it.

The remaining chapters focus on the dynamic Asian economies, unemployment benefit rules, and a review of labor markets in the 1980's. Chapter 3 breaks new ground for the Outlook by extending labor market analysis to important non-OECD countries of the Pacific Rim. A more indepth review of the special chapters follows.

Labor markets in the 1980's

Chapter 2 summarizes developments in labor markets over the past decade. Although the focus is on the 1980's, the trends of that decade are also compared to those of the 1960's and 1970's to determine whether past trends have been continued or new directions established. Thus, this chapter provides a historical context for the short-term trends described in chapter 1.

The chapter begins with a review of population and labor force trends, and then proceeds to an examination of changes in employment and productivity, unemployment, and wages. Special emphasis is given to developments in migration and to the growth in "non-standard" forms of employment.

This summary analysis highlights the diversity of trends in the OECD member countries, and also points out the common ground. The 1980's were characterized, from 1983 onwards, by a sustained increase in employment and by wage moderation. However, these were accompanied by continuing high levels of unemployment and record levels of long-term unemployment, especially in Europe. In almost all countries, there was an increase in the number and diversity of nonstandard forms of employment (temporary and part-time jobs, self employment, homeworking, and concealed employment) and a slowing in the growth of government employment. At the end of the decade, there were signs of emerging labor shortages in some countries and the prospect of diminishing numbers of younger workers for some years to come.

An abundance of tables and charts assists the reader in following the analysis. One table, for instance, shows labor force growth trends for all three decades and all member countries, grouped by region; a chrt plots female participation rates from 1970 to 1989.

The chart clearly illustrates that the general rise in female participation rates continued during the 1980's, but at a slower pace than in the 1970's. By the end of the decade, the highest rates were in the Nordic countries, followed by North America and the United Kingdom. The increases in female participation rates were driven by gains in the middle age ranges, where mothers with young children showed particularly large increases.

The section on nonstandard jobs exemplifies the careful treatment of data comparability in the Outlook. The beginning paragraph states: "At the international level, data are rarely available on a consistent basis for a wide range of countries." The analysis also cautions that the data on trends in the size and composition of part-time work are not suitable for making level comparisons between countries because of definitional differences. Therefore, there OECD analysis correctly focuses on comparing trends in, rather than levels of, part-time work and other nonstandard jobs.

The reader is referred to annexes in the 1989 and 1990 issues of the Outlook for further details about sources and definitions. This is the usual way the OECD handles technical information. The casual reader is not overburdened by such details, but the more technically oriented reader can delve deeper by consulting the annexes.

Dynamic Asian economies

Chapter 3 examines labor markets in the dynamic Asian economies--defined as the newly industrialized economies of South Korea, Taiwan, Hong Kong, and Singapore, plus the ASEAN-2 (Association of Southeast Asian Nations) of Thailand and Malaysia. Devoting a chapter of the Outlook to the dynamic Asian economies gives recognition to their rapid development and current importance in international trade with the OECD area.

This chapter, as indicated in its title, is devoted primarily to examining these economies' labor markets, including "to what extent the evolution of their labour markets has resembled that experienced by OECD countries." It includes many citations to the work of others and a bibliography.

Chapter 3 looks at economic growth in the dynamic Asian economies and then at various social indicators, such as life expectancy, crude birth rates, per capita income, and school enrollment, to see if the rapid rates of economic growth these economies have experienced have been accompanied by improvements in their standards of living. Unfortunately, the comparisons of gross national product or gross domestic product per capita are misleading, at least among the selected OECD countries shown, because the data have been converted to U.S. dollars at current market exchange rates rather than using purchasing power parity. For example, Japan's per capita gross domestic product figure for 1989 is shown as $22,896, compared with $20,629 for the United States. Measured at the yen purchasing power parity rate for 1989, as published elsewhere by the OECD, the Japanese figure is $15,501. The per capita figure shown for South Korea is $4,400. The OECD does not calculate data based on purchasing power parities for non-OECD countries. However, the Bureau of Labor Statistics also prepares comparisons of gross domestic product per capita for selected countries, including Korea, based on purchasing power parities. The BLS 1989 figure for Korea is $7,200.

Labor force participation rates and measured unemployment are examined in this chapter. The author provides some cautions on the strict comparatibility of the data, and there is a useful annex on sources and definitions of the labor force statistics in each of the dynamic Asian economies. The analysis of the data for the dynamic Asian economies is interesting and appears to have been carefully done. However, a comparison is made to overall labor force participation rates in the OECD area which have not been calculated on the same basis. The participation rates calculated for the dynamic Asian economies are based on the total population 15 years of age and over, whereas the figures cited for OECD countries use a population denominator of 15 to 64 years of age, thereby overstating their rates relative to the dynamic Asian economies. For example, Norway's participation rate is listed at more than 80 percent, whereas the figure for the population 15 years of age and older is 64 percent.

The changing structure of employment by industry, occupation, and status and the evolution of wages are also discussed. The section on wages focuses largely on the BLS comparative series on hourly compensation costs for manufacturing production workers, which includes the four newly industrialized economies, but not Malaysia and Thailand.

The chapter concludes: "there remain many differences across the six [dynamic Asian economies] in terms of level of economic development and labor market structure. However, at least for several fo the [newly industrialized economies], growth in per capita income, increases in participation rates of women, the relative shift of employment out of agriculture into industry and services, and some movement out of unpaid family work and self-employment into wage and salary work are patterns that most OECD countries have experienced or are experiencing."

Union membership

Chapter 4 presents the pathfinding work on union membership statistics by OECD consultant Jelle Visser. The chapter summarizes and updates the historical series on union membership developed by Visser in his book, European Trade Unions in Figures (Boston, Kluwer Law and Taxation Publishers, 1989). Although Visser's book covered only 10 European countries, chapter 4 of the Outlook includes other countries of OECD-Europe as well as non-European members such as the United States, Canada, and Japan. All OECD members are covered except Portugal.

Visser has compiled a data set on trade union membership and density ratios (membership as a percent of wage and salary workers). While his book shows figures back to 1913, the Outlook focuses on data for the last 20 years. The great value fo this work is in Visser's emphasis on international comparability. He has developed a series of adjusted data which provide a better basis for comparison than the regularly published statistics on union membership.

This data base serves as important background information for assessing how relationships between labor and management have evolved over the past two decades. Industrial relations arrangements and practices differ widely among the developed countries, as do unionization rates. The comparative density rates are a shorthand way of assessing the relative role of trade unions in different countries and their trends ae initial measures of power shifts in industrial relations.

An excellent summary of issues of comparability and interpretation precedes Visser's presentation of adjusted statistics and comparative trends. An annex contains further details on sources and methods used in compiling and adjusting the statistics for each country.

Only a few countries, including the United States, have experimented with household surveys to obtain union membership statistics. In general, annual time series data on union membership are administrative data based on union reports. The main disadvantage of the union reports is that they reflect many different practices in counting members both within and across countries, and they are not comparable internationally. However, Visser provides adjustments to enhance the comparability of the administrative data. Essentially, he deflates the data to an employed wage and salary worker basis by excluding retired, unemployed, and self-employed union members.

The adjusted density ratios tend to move in the same direction over time as the unadjusted ratios (although there are some significant exceptions); however, the unadjusted ratios distort level comparisons across countries. Removal of retired, unemployed, and self-employed union members from the Italian data resulted in a decline in the density ratio from 63 to 40 percent. For Belgium, the ratio was deflated from 78 to 53 percent. For most other countries, the gap between the net and gross ratios was 10 percentage points or less.

Adjusted union density ratios ranged from 12-16 percent in the United States and France to 75-85 percent in Denmark and Sweden. The United States remains a counry of comparatively low union density, but the gap between the United States and other countries narrows somewhat after the foreign data are adjusted.

Visser gives greater depth to his analysis by also presenting comparative trends in union membership distributed over various industries, between male and female workers, and between the public and private sectors of the economy. These breakdowns are helpful in explaining the wide variations in union density among the developed countries. Swedish and Danish unions, in particular, have been highly successful in recruiting women and members in the growingservice sector. They are among the few countries which have maintained high levelsfo unionization in the private sector. More commonly, private sector unionization is in decline.

The chapter concludes with hypotheses for further study. Visser recommends further research into the nature of the international changes in unionization which his data help to describe. He would like to see research in such areas as the impact of growth of the small firm sector, part-time jobs, and changes in occupational structure. Worker and employer attitudes and the impact of union policies also bear further investigation. His work provides an excellent starting point for this research.

Enterprise-related training

Many OECD countries have been attempting to measure the extent to which employers have been providing training to their employees. In the United States, current and projected mismatches between the skills employers need and those of new entrants to the work force have sparked tremendous interest in worker training. Moreover, changes in technology and global competitiveness have made all of the OECD countries interested in finding the best ways to develp "adaptable and broadly skilled workforce[s]."

Chapter 5 of the Outlook provides a detailed look at efforts by OECD countries to measure worker training. The chapter first presents a broad conceptual framework forunderstanding training in different countries. This initial section emphasizes differences between countries' social and economic systems, providing interesting discussions on issues of equity and access to training, firms' training decisions, and different institutional and legal contexts of training.

The chapter describes efforts to measure both the incidence and cost of employer-provided training. A very detailed section gets to the core of measurement problems, discussing both definitional and measurement issues in general and extending those to difficulties with international comparisons. Despite the difficulties of developing meaningful comparative data, the chapter, when possible, offers direction for future policy and research work.

A major issues is the enterprise-sponsored training itself is not a precise concept: "Alternative modes of training may lie on a continuum from quite formal classroom-based [training] to quite informal interactions among coworkers or may even include situations where new hires simply ask questions or watch others do the work." Some training will occur jointly with production, and where one stops and the other starts is problematic. The questions asked in training surveys do not often make such distinctions. An annex outlines the key features of the training surveys conducted in each country, including the questions asked in the various surveys.

The chapter provides a basic analysis of existing statistics on who receives training. Any international comparisons that can be made are included in this section. In both text and tables, the Outlook is very careful to caution readers against making comparisons between countries with different kinds of training systems or surveys. While this section focuses more on existing statistics than on policy recommendations, patterns in training by demographic group, tenure, and educational levels imply directions for future work. This section also presents data on who provides worker training. Differences in training provision and expenditures by industry and firm size are discussed. A detailed description of training in France, a country that has completed several established surveys on worker training, is provided.

In summary, chapter 5 provides excellent overciews of both conceptual issues regarding worker training and definition and measurement problems faced by OECD countries trying to understand the skills development of their work forces. The chapter takes a first step in analyzing existing data and drawing comparisons between countries where possible. Finally, Chapter 5 makes general suggestions for both future policy study and data research, and calls for the development of international standards. Without such efforts, comparative statements about training "largely remain in the realm of interesting conjectures."

Absence from work

Chapter 6 compiles the data on work absence available from labor force surveys in 20 OECD countries. The chapter covers absences across the full spectrum of possible reasons: labor dispute, bad weather, illness and injury, reduced working hours, flexitime, plant breakdown, business slack, temporary lay off, start or end of job, training, vacations and holidays, parental and maternity leave, military service, and other unspecified reasons.

Absence data are important in analyzing variations in annual work hours as they relate to international competitiveness. In addition, absence statistics help to explain international differences in labor market variables such as the employment-population ratio and the labor force participation rate. In some countries, a significant portion of employees surveyed are absent from work during the entire reference week. They are classified as "with a job but not at work," and hence, are counted as in the work force. In Sweden, for example, formal job attachment may be maintained during long periods of absence from work. Paid parental leave is provided for a period of 1 year, and during this time the parent is reported as absent from work. In most other countries. someone away from work that long would no longer be counted as in the work force. This situation helps to explain the very high labor force participation rate recorded in Sweden in comparison with other countries.

This chapter briefly examines the conceptual issues and problems involved in measurement, given the international differences in definitions of work absence. An annex presents more detailed information on the sources and methods used in each country. The study cautions that there are a number of factors which affect the comparisons, including differences in national absence classifications, survey timing, coverage, and job attachment criteria. Statistical tables show the distribution of absence by reason for 20 OECD countries and 1988 data on incidence of absence by full-week and part-week absence.

The full-week absence rate for Sweden, at 17.1 percent of total employment is more than twice as high as reported for any other country. If employment were defined in terms of having been actually at work for a minimum of 1 hour in the reference week, Sweden's exceptionally high labor force participation rate would fall to levels comparable with those in a number of other countries. In contrast, the Netherlands has the next highest rate of full-week absence, but a relatively low participation rate.

At the Fourteenth International Conference on Labour Statistics in 1987, the International Labour Organization (ILO) proposed a framework for identifying absence from work, but no international recommendations were agreed upon. Work on definitional questions continues. This OECD chapter should provide a good basis for this further work on the international standards.

Unemployment benefit rules

Unemployment benefit systems were last described in chapter 4 of the 1988 Outlook. Chapter 7 of the 1991 Outlook goes quite a bit further in documenting and analyzing the wide differences in the systems which countries have developed to support the income of unemployed people. The chapter also looks at the relationship of administration of benefits to other labor market policies, such as job creation and retraining schemes. A concluding section provides a commentary on policy options in the light of the practices described, recognizing that differences in political and institutional background may allow a given policy to work well in one country and not at all in another.

There is tremendous diversity in unemployment support systems in the developed countries. These differences are factors which help to explain international differences in unemployment rates and the duration of unemployment. Although unemployment benefit systems most directly have an impact on registered unemployment, they also have some effect ont he survey-based unemployment data which are used in international comparisons.

A table presents a highly simplified comparison of unemployment benefit rules as they apply to a prime-age worker (40 years old) who has lost a job. (An annex gives many further details and explanations.) The table illustrates the great variation in replacement rates, qualifying conditions, duration of benefit payments, and types of benefits in 21 OECD countries.

The maximum duration of unemployment benefits ranges from a low of 26 weeks in the United States to a high of 3 years in the Netherlands and no limit at all in Belgium. Although several other factors may be involved, this is one explanation for the long duration of unemployment in these two countries, compared with the very short duration recorded in the United States. In 1988, more than three-quarters of all unemployed persons were jobless for more than 1 year in Belgium, half of all unemployed were in this long-duration group in the Netherlands, and only 7 percent in the United States.

Initial gross pretax replacement rates for a single worker ranged from 15 percent of former wages in Italy to 90 percent in Sweden. Tax treatment of benefits, eligibility criteria, waiting periods, availability and job search criteria, and frequency of contact with the employment service are also investigated in this chapter, with similar wide differences among the countries.

The chapter also reviews individual country studies on the effect of unemployment benefits on unemployment. Some of these studies have shown a slight effect of increased spells of unemployment related to increases in levels of benefits or their duration. Other studies have found no effect. International comparisons are a useful addition to the evidence on this point. The analysis finds no cross-country correlation between benefit levels and unemployment rates. Some countries with fairly high unemployment--the United Kingdom, Ireland--have low benefits replacement rates. Others with average or low unemployment--Germany, Sweden--have high replacement rates. A weak correlation was found between long-term unemployment and eligibility for benefits among the long-term unemployed.

The frequency and content of contacts of unemployed persons with the employment service varies widely across countries. This section looks at the practices of "signing on" (where the unemployed person comes to the employment office to confirm that he or she is still unemployed) and personal interviews. Studies from a number of countries suggest that higher levels of contact with unemployed peope help to shorten unemployment durations.

The core work of the employment service is to match unemployed people with available jobs. It is relatively rare in some countries, but common in others, for a person registered as unemployed to be actually invited to apply for a job. This section presents an indicator of how often this may have occurred, using job vacancy and registration data, where both are available. The countries where job matching is most likely to occur are Japan, Norway, Sweden, and Switzerland. Matching was much less likely in Belgium, France, and Spain. The evidence presented indicates that in many European Community countries, large numbers of people who became unemployed in the 1980's were not contacted by the employment service to apply for a specific job during their first year of unemployment. This was a considerate change from the low unemployment years of the 1960's.

This study shows that labor market policies in the Nordic countries have had the clearest impact on unemployment. The employment services in these countries generally prevent entry into long-term unemployment by offering places in labor market training or job creation programs. After a certain duration of unemployment, jobless persons are pressured to join these programs. In other countries, there is relatively less pressure on the unemployed to enter labor market progkrams, and there may be fewer programs available to the unemployed.

The policy comments in the concluding section logically follow from the material presented in the chapter. The OECD notes that it is "difficult to justify unemployment benefits as support for job search when their duration extends to several years." This form of support probably slows down labor market adjustments. The conclusion recommends that unemployment duration criteria be used as the basis for requiring indepth interviews at the employment service and induction into labor market schemes.

THE FULL REPORT, OECD Employment Outlook, July 1991 (Paris, France, Organisation for Economic Co-operation and Development), is available for $48 from OECD Publications and Information Center, 2001 L Street N.W., Suite 700, Washington, DC 20036. Telephone number: (202) 785-6323.

Constance Sorrentino is an economist in the Division of Foreign Labor Statistics, Bureau of Labor Statistics. Arthur Neef, chief of the same division, and Diane E. Herz, an economist in the Division of Labor Force Statistics, contributed to this report.
COPYRIGHT 1991 U.S. Bureau of Labor Statistics
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Author:Sorrentino, Constance
Publication:Monthly Labor Review
Article Type:Book Review
Date:Sep 1, 1991
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