OECD Member Country Economic Organizations Say "'COVID-19 Impact' Employment Market Recovery Likely to Take Over a Year"

[Asia Economy Reporter Jeong Hyunjin] Economic organizations of OECD member countries expect that it will take more than a year for the employment market, which was hit by COVID-19, to recover, forecasting that the recovery speed will be slower than that of the economy. While most of them believe that the business environment has significantly improved compared to last year, they expressed concerns about the lack of post-COVID-19 measures such as exit strategies and structural reforms.

According to the Federation of Korean Industries on the 19th, the OECD Business and Industry Advisory Committee (BIAC) held its regular general meeting and released the results of the '2021 Economic Policy Survey' involving economic organizations from 28 member countries. Regarding the timing of 'when the Gross Domestic Product (GDP) will recover to pre-COVID-19 levels,' 48% answered 'mid this year,' which was the highest proportion. This was followed by 24% for mid next year, 12% for the end of next year, 11% for the end of this year, and 6% for after next year.

(Data provided by the Federation of Korean Industries)

Regarding the timing of employment market recovery, 78% responded that it would take 'about one year or more' to reach pre-COVID-19 levels. For the timing when the unemployment rate will recover to pre-COVID-19 levels, 49% expected it to be by the end of next year, and 40% anticipated it to be after the end of next year. BIAC analyzed, "Youth unemployment is particularly problematic," and emphasized that "companies' hiring incentives and skills-focused education needed on the ground are necessary."

Regarding the overall business environment this year, 60% responded positively, showing an overall optimistic outlook on the global business environment this year. The proportion of those viewing the business environment negatively was 28%, which is a significant improvement compared to last year's survey where 95% responded negatively.

Regarding public support measures to overcome COVID-19, 47% responded that they are 'somewhat excessive,' which was more than the 33% who said 'the current scale of public support is appropriate.' Additionally, they generally saw a need for improvement in the design of public support measures currently being implemented by various countries. The area most in need of improvement was 'selection of support recipients,' with 51% responding, followed by 'limitation of support duration' at 33%.

Economic organizations expressed the opinion that appropriate government-level exit strategies are necessary. Only 3% responded that exit strategies have currently been prepared, while 68% said that 'only slight discussions are underway' regarding exit strategies for COVID-19 government support measures. Regarding responses to the increase in debt, 81% answered that 'there is currently no response strategy.' BIAC emphasized, "While pointing out the urgent need to prepare exit strategies for fiscal expansion policies pursued by countries worldwide, precise strategies are needed to prevent widespread bankruptcies among small and medium-sized enterprises and others."

BIAC stated, "Large-scale COVID-19 support measures by countries over the past year were essential for short-term economic recovery, but fundamental economic recovery depends on private sector recovery such as domestic demand and investment," emphasizing the importance of the private sector for economic recovery. Regarding the current global economic situation, BIAC added, "There is no time to be complacent," and stressed the need for pro-growth policies that promote productivity and job creation in the private sector from a long-term perspective, including resolving the increased public and private debt and structural reforms.

Meanwhile, Kim Yoon, Chairman of Samyang Holdings, attended the 2021 BIAC regular general meeting held via video conference on the afternoon of the 19th as the Korean director of BIAC.

This content was produced with the assistance of AI translation services.