Job Creation & Local Economic Development 2020
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Presented by Anna Rubin during the meeting held in virtual format entitled, "Culture & jobs: rescue, support, unleash" from 27-28 January 2021 as part of the CULTURE, CREATIVE SECTORS AND LOCAL DEVELOPMENT Policy webinar series. Providing evidence and guidance to cities and regions on ways to maximize the economic and social impact of culture and support the creative economy.
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Job Creation & Local Economic Development 2020
- 1. Job Creation and Local and Economic Development 2020: Rebuilding Better Anna Rubin OECD Centre for Entrepreneurship, SMEs, Regions and Cities
- 2. © OECD | The impact on jobs has been 10 times bigger than of the global financial crisis Source: OECD Employment Out look 2020, Worker Security and the COVID-19 Crisis Job Creation and Local Economic Development 2020: Rebuilding Better Note: Latest available month corresponds to August for Italy and the United Kingdom, September for Japan and October for Australia, Canada and the United States. Economy-wide data for hours worked in all economies apart from the United States, which refers to total hours worked by private non-farm employees. For Japan, estimates are based on total employment and average monthly hours worked by employed persons. August estimates for Italy based on firms with more than 500 employees in industry and services. Source: OECD (2020), Economic Outlook, Volume 2020, Issue 2 Collapse in the number of hours worked Compared to 2008 crisis Country impacts, % change from Q4 2019
- 3. © OECD | How else is this crisis different? Scale much deeper and many countries hit around the same time Place (city versus rural) and sector dynamics of rebound (e.g. tourism) not the same People affected: usual suspects (youth, low skilled) but also new groups given sectoral hits (women) Digitalisation and automation measures “supercharged” given social distancing element of this crisis
- 4. © OECD | Regional divides already appearing in unemployment rates Job Creation and Local Economic Development 2020: Rebuilding Better United States: unemployment rate by state, 2020, age 15+ Source: US Bureau of Labor Statistics Tourist destinations Tourist destinations States with largest metropolitan areas Images: Flaticon.com
- 5. © OECD | 5 In addition to the COVID-19 tidal wave, will some undercurrents also change course or intensify? Automation & digitalisation Green transition Urbanisation Automation-related job losses will come sooner Expanded use of teleworking, e-commerce, and other digital tools Shift in consumer preferences for greener products Expanded public investment in green infrastructure ? Tension between preserving jobs and transitioning carbon-intensive sectors ? Large urban areas could see population decline ? New opportunities to attract workers and jobs outside of large metros ? A shift from mobility to accessibility Globalisation Managing supply chain risks could result in limited relocalisation Job Creation and Local Economic Development 2020: Rebuilding Better
Editor's Notes
- The number of working hours lost to the COVID crisis was 10 times worse than the loss during the first three months of the 2008 financial crisis as shown on the chart to the left (from July Employment Outlook) Some countries have been hit worse than others. The chart to the right shows how different countries have fared. The US performed slightly better than the Euro area overall, but worse than Germany, Australia and Japan (from December Economic Outlook) Use hours worked given that different measures of unemployment not capturing a lot of dynamics within and across countries The most recent Economic Outlook estimates that global GDP will decline by 4.2% this year, before rising by 4¼ per cent in 2021, and a further 3¾ per cent in 2022. Overall, by the end of 2021, global GDP would be at pre-crisis levels, helped by the strong recovery in China. However, performance would differ markedly across the main economies. Output is projected to remain around 5% below pre-crisis expectations in many countries in 2022, raising the risk of substantial permanent costs from the pandemic. Important to note that these projections are from early December 2020, and the context has rapidly changed since then as many countries entered a second period of strict containment measures.
- As we saw on previous slide, scale much deeper . . . Sectors: Tourism is one of the hardest hit sectors. Estimates from the OECD Tourism Committee suggest that international tourism has declined 80% in 2020. Domestic tourism has restarted and is helping to sustain jobs and businesses in some countries, but real recovery will only be possible when international tourism returns (from October version of their note) Many communities (particularly in Greece, Spain and Portugal) used tourism to support the recovery form the 2008 crisis, which has put them particularly at risk this time around. People: Like previous crisis, low-wage/skilled and workers in non-standard employment (e.g. self-employed) have been particularly exposed to the shock. As of November, employment rates for low wage workers in the US were 20% below January levels, while they had recovered for high-wage workers over the same period following a low in April. Young people are also taking big hits again. This year’s graduates face poor chances to secure a job, or even an internship, while their older peers are facing the second crisis in their formative working years. Already in countries such as Spain Italy and Turkey, youth unemployment exceeded 25% in 2019 before the COVID crisis hit, still above 2007 levels. As of August, youth unemployment exceeded 40% in Spain. Unlike previous crises, women have so far experienced greater declines in employment than men, due to their relatively high share of employment in many of the service sectors that were hit hard. Closures in schools and childcare have likely amplified their unpaid work burden at home, and evidence suggests causing many women to drop out of the labour force all together. Recent study highlighted that 1 in 5 dropped out since pandemic, 2 in 5 for those with kids under 2 Automation tends to accelerate during crisis, but this time it is supercharged given physical distancing requirements
- Hard to compare unemployment figures across countries because of differnces in national responses (e.g. job retention schemes vs. expanded unemployment benefits), as well as differences in survey methodologies. So just took the US here as one example. For the places that we expected to be most at risk we are already seeing unemployment spike. Here we show data for the US through September of last year. You can see unemployment spiked considerably in Hawaii and Nevada (where Las Vegas is), two major tourist destinations. New York, California and Illinois also saw considerable increases, the states which have the largest metropolitan areas in the United States. We see similar patterns elsewhere. For example, in France, the Paris region (Ile de France) had the highest rates of participation in short-term work schemes. In the UK, online job postings have decreased the most in London.
- Automation Evidence suggests that automation tends to speed up during recessions (at least in the US, trends in other OECD countries may differ) and the specific nature of the COVID crisis may further accelerate it. Some low-hanging fruit in terms of automation, but more capital-intensive investments may take more years to come to fruition. From a review of the historical rate of adoption of previous technologies from McKinsey,, the time from commercial availability to 90 percent adoption ranges from approximately eight to 28 years (https://www.mckinsey.com/~/media/mckinsey/featured%20insights/Digital%20Disruption/Harnessing%20automation%20for%20a%20future%20that%20works/MGI-A-future-that-works-Full-report.ashx) Green transition Particularly in the EU, big push in stimulus packages to support the green transition. The Recovery and Resilience Facility (the Facility) will make €672.5 billion in loans and grants available to support reforms and investments undertaken by Member States, with a target of a minimum of 37% for green investments and reforms. Trade / globalisation Global trade sharply declined, but is now slowly recovering Global trade volumes contracted sharply in the first half of 2020, with merchandise trade falling by 16% from its pre-pandemic level, and international travel and tourism being largely curtailed. However, it is now slowly recovering: a pick-up in activity during reopening has been reflected in trade and container port traffic, especially in China, Korea and a number of smaller Asian economies such as Vietnam, helped by the rise in global demand for masks and other personal protective equipment, and teleworking-related goods, including IT equipment. The recovery in industrial production in China has also boosted demand for many raw materials in commodity exporting economies, particularly metals. Survey measures of global export orders have recovered from their trough in April, but remain soft. Air passenger traffic and travel also remain exceptionally weak (Figure 1.7, Panel B), hitting export revenues in tourism-dependent economies. Relocalisation – examples of policies Japan – recently announced $653 million in subsidies to 87 companies to relocate from China to Southeast Asia (30 projects) or back to Japan (the other 57). (https://www.csis.org/analysis/decoupling-kabuki-japans-effort-reset-not-end-its-relationship-china) France – Part of France’s “Plan Relance” includes the relocalisation of production. As of 4 December . . . Sur le volet relocalisation dans les secteurs critiques : près de 800 dossiers complets ont été déposés et 24 entreprises sont déjà lauréates de l’appel à projet, pour un montant total de 64 M€ de subventions, qui ont soutenu à des investissements industriels d’un montant total de 530 M€. (source: https://www.economie.gouv.fr/plan-de-relance/suivi-mesures-indicateurs) Urbanistion Jury still out on how COVID will shift patterns of urbanisation. Lots of anecdotal evidence of people leaving cities, but the data on real estate prices, etc remains mixed. Looking at pre-COVID trends, In almost 80% of OECD countries, the share of national populations living in urban regions has increased between 2008 and 2018. Yet, these trends are not universal. In almost one in four cities (23%) with more than 50 000 inhabitants in the OECD has shrunk in population since 2000. Smaller cities (i.e. less than 250 000 residents) account for the bulk of cities losing population (OECD, 2019[87]). In contrast, in the United States, the three biggest metropolitan areas – New York City, Los Angeles and Chicago – have all registered population declines in recent years (US Census Bureau, 2019[88]). Metropolitan areas in OECD countries have already experienced a trend towards suburbanization before the onset of the pandemic. Over the last decades, commuting zones have grown faster than city centres in most countries (in close to 90% of all metropolitan areas with growing population between 2000 and 2015), a trend that may accelerate if remote working remains widely accessible.