The employment rate in the OECD area rose to 67.4 % in the second quarter of 2021

The employment rate, which is the percentage share of the working-age population with jobs, rose to 67.4 % (from 66.9 % in the previous quarter) in the OECD area in the second quarter of 2021. Increases were reported in more than four-fifths of OECD countries. There was also an increase in the OECD area labour force participation rate – the share of the working-age population that is either employed or unemployed – to 72.2 %, up from 71.8 % in the first quarter of 2021 (see Table 4). In the second quarter of 2021, the OECD area employment rate rose at broadly the same pace for women (to 60.1 %, from 59.6 % in the first quarter of 2021) and men (to 74.7 %, from 74.3 %), while it increased faster for youth (aged 15 to 24), from 39.9 % to 40.8 %, than for other age groups.

While this quarter’s rise in employment suggests a continued overall recovery towards pre-pandemic rates (see Table 1), care is needed in interpreting the latest OECD area employment rate. Methodological changes to the EU Labour Force Survey[1] blur the comparison between the fourth quarter of 2020 and subsequent quarters for EU countries. In addition, a large part of the increase in the third and, to a lesser extent, fourth quarter of 2020 reflects the return to work of furloughed workers in Canada and the United States, where they are recorded as unemployed, whereas in most other countries, including European member states, they are recorded as employed.

In the euro area, the employment rate increased to 67.6 % in the second quarter of 2021, from 67.0 % in the first quarter, with increases of 1.0 percentage point or more in about half of the countries, including rises of more than 2.0 percentage points in Greece (to 56.4 %) and Slovenia (to 71.7 %). Diverging from the majority, there was a noteworthy fall in the employment rate for Estonia (from 74.1 %, to 72.9 %)

The employment rate increased by 0.4 percentage point in the United Kingdom (to 75.1 %), and by more than 1.0 percentage point in Denmark (to 75.4 %), Iceland (to 79.3 %) and Norway (to 75.9 %). By contrast, it declined by 0.6 percentage point in Switzerland (to 78.6 %).

In Mexico, the employment rate increased by a further 1.5 percentage points (to 61.1 %), while it declined in Costa Rica (to 55.6 %, from 56.0 %) and Colombia (to 59.6 %, from 60.8 %), after three quarters of recovery. The rate increased slightly in Japan, to 77.7 %, only 0.3 percentage point below the pre-pandemic rate (the fourth quarter of 2019), while the employment rate for Australia (up by 0.9 percentage point) reached 75.3 %, exceeding the pre-pandemic rate by 1.0 percentage point. In spite of increases, the employment rate in the United States (up to 68. 9, from 68.4 %) and Canada (up to 72.4 %, from 72.1 %) remained respectively 2.7 and 1.7 percentage points below the pre-pandemic rate. Nevertheless, more recent data for the third quarter of 2021 show that the employment rates increased further in the United States (to 69.7 %) and Canada (to 73.8 %).

Note: Employment and unemployment statistics during the COVID-19 crisis

The broad comparability of unemployment data across OECD countries is achieved through the adherence of national statistics to International Guidelines from the International Conference of Labour Statisticians (ICLS) – the so-called ILO guidelines.

Departures from these guidelines may however exist across countries depending on national circumstances (e.g. statistical environment, national regulations and practices). Typically, these departures have only a limited impact on broad comparability of employment and unemployment statistics. However, the unprecedented impact of Covid-19  is amplifying divergences and affects the cross-country comparability of unemployment statistics in this news release.

This concerns in particular the treatment of persons on temporary layoff or employees furloughed by their employers. These are persons not at work during the survey reference week due to economic reasons and business conditions (i.e. lack of work, shortage of demand for goods and services, business closures or business moves).

According to ILO guidelines, ‘employed’ persons include those who, in their present job, were ‘not at work’ for a short duration but maintained a job attachment during their absence (ILO, 2013 and 2020). Job attachment is determined on the basis of the continued receipt of remuneration, and/or the total duration of the absence. In practice, formal or continued job attachment is established when:

o            the expected total duration of the absence is up to three months (which can be more than three months, if the return to employment in the same economic unit is guaranteed and, in the case of the pandemic, once the restrictions in place – where applicable – are lifted)

OR

o            workers continue to receive remuneration from their employer, including partial pay, even if they also receive support from other sources, including government schemes.

In turn persons are classified as ‘not employed’ if: 

o            The expected total duration of absence is greater than three months or there is no or unknown expected return to the same economic unit

AND

o            People in this condition do not receive any part of their remuneration from their employer.

Not-employed persons are classified as ‘unemployed’ if they fulfil the criteria of active “job search”  and “availability” specified for the measurement of unemployment.

However, departures from these guidelines in national practices do exist. In particular, in North America persons on temporary layoff are considered to be “only weakly or not at all attached to their job and are to be counted as unemployed” (Sorrentino, 2000). In the United States, people on temporary layoff are classified as ‘unemployed’ if they expect to be recalled to their job within six months.  If they have not been given a date to return to work by their employer and if they have no expectation to return to work within six months, they need to fulfil the “job search” criteria to be classified as ‘unemployed’.  For the latest US figures “people who were effectively laid off due to pandemic-related closures were counted among the unemployed on temporary layoff” without further testing for their return to their previous job (BLS, 2020). In Canada, persons in temporary layoff are also classified as ‘unemployed’ if they have a date of return or an indication that they will be recalled by their employers.

Conversely, persons on temporary layoff are classified as employed (not at work) in Europe, as recommended by the ILO Guidelines (Eurostat, 2016). In practice, formal job attachment is tested on the basis of (i) an assurance of return to work within a period of three months or (ii) the receipt of half or more of their wage or salary from their employer. Somewhat stricter than ILO guidance, absences during COVID-19 crisis whose duration is unknown are treated as absences longer than three months. Those failing to satisfy these two criteria are classified as unemployed if they are “available to start work” (over the next two weeks) and have actively searched for a job in the last four weeks. All other persons on layoff are classified as inactive.

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