Back to Work

English
ISSN: 
2306-3831 (online)
ISSN: 
2306-3823 (print)
http://dx.doi.org/10.1787/23063831
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Workers who are involuntarily displaced from their jobs can face long periods of unemployment. Wages also tend to be lower once they find a new job, especially when they are unable to find a new job in the same occupation as their pre-displacement job or in occupations using similar skills. Helping displaced workers back into work quickly and minimising the income losses they face is therefore an important challenge for employment policy. This series of reports provides new empirical evidence from a comparative perspective on the incidence of displacement and the risk displaced workers subsequently face of a long spell of unemployment and large wage losses when re-employed. It also identifies the main labour market programmes providing help to these workers and assesses how adequate and effective they are. Policy recommendations for further action are presented.

 

Nine countries are participating in the review: Australia, Canada, Denmark, Finland, Japan, Korea, New Zealand, Sweden and the United States.

 
Back to Work: Australia

Back to Work: Australia

Improving the Re-employment Prospects of Displaced Workers You do not have access to this content

English
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    http://oecd.metastore.ingenta.com/content/8115311e.pdf
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Author(s):
OECD
06 Apr 2016
Pages:
140
ISBN:
9789264253476 (PDF) ;9789264253438(print)
http://dx.doi.org/10.1787/9789264253476-en

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Job displacement (involuntary job loss due to firm closure or downsizing) affects many workers over their lifetime. Displaced workers may face long periods of unemployment and, even when they find new jobs, tend to be paid less and have fewer benefits than in their prior jobs. Helping them get back into good jobs quickly should be a key goal of labour market policy. This report is the fourth in a series of reports looking at how this challenge is being tackled in a number of OECD countries. It shows that many displaced workers get new jobs relatively quickly in Australia, mostly thanks to a flexible and dynamic labour market. A small minority of displaced workers receive special support via the labour adjustment programmes, but some displaced workers who would need specific assistance, in particular in the older worker and/or low-educated groups, do not get sufficient support or only too late. There is room to improve policies by moving away from the current sectoral approach to special assistance programmes for workers collectively dismissed, towards an approach covering all sectors of the economy, with the intensity of intervention tailored to the circumstances and needs of the displaced workers. Expanding the training component for displaced workers and making use of skills assessment and training to better target the training and enhance its effectiveness would also help displaced workers transition to sustainable jobs of a certain quality.

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  • Foreword

    OECD labour markets are characterised by their dynamism. Each year, more than 20% of jobs, on average, are created and/or destroyed, and around one-third of all workers are hired and/or separated from their employer. These large job and worker flows are driven by a continuous process of labour reallocation, both across industries and between declining and growing firms within the same industry. This reallocation is an important source of productivity gains, since more productive firms expand at the expense of less productive firms and earnings rise on average for workers changing jobs, particularly workers who voluntarily quit one job in order to move to another. However, high job turnover is also a source of insecurity for workers, especially those who are displaced from their jobs because their employer downsizes its workforce or goes out of business altogether. A common challenge facing OECD governments is thus to nurture labour market dynamism while keeping the adjustment costs that are borne by displaced workers as low as possible.

  • Acronyms and abbreviations
  • Executive summary

    Workers who involuntarily lose their jobs can face substantial economic and non-economic costs. On average, each year around 2.3% of Australian workers with at least one year of tenure experience job loss due to economic reasons such as corporate downsizing or firm closure. In an international comparison, Australia has been rather successful at providing new jobs relatively quickly to these workers, as 70% become re-employed within one year and almost 80% within two years, even if new jobs are sometimes of poorer quality.

  • Assessment and recommendations

    Job displacement as a consequence of economic restructuring is common in the Australian labour market. Each year, on average during 2002-13, 2.3% of employees with at least one year of tenure lost their job for economic reasons such as corporate downsizing or plant closure. This is a high share relative to other OECD countries with comparable data. The displacement rate surged in 2009 with the global financial crisis (GFC), but fell back to its previous level very quickly. However, with the marked softening of labour market conditions since 2012, the displacement rate increased strongly again in 2013. Some workers are particularly vulnerable to displacement, notably older workers, workers with a low education level and casual workers, as well as workers with short tenure and those employed in small firms.

  • Job displacement in Australia and its consequences

    This chapter examines the prevalence and consequences of job displacement in Australia. Australia’s flexible labour market shows up in a somewhat higher risk of job loss due to redundancy than in a number of other OECD countries for which comparable data is available. But it also shows up in a more rapid rate of re-employment. However, some groups of workers are more vulnerable to displacement, notably men, low-educated workers and short-tenure workers in small and medium-sized enterprises. Moreover, older workers, women and workers previously employed in casual jobs face greater difficulties finding a new job than other displaced workers. In addition, for a sizeable minority, the new jobs that displaced workers find are of poorer quality than the jobs they lost. Many displaced workers are not well equipped in terms of skills to switch to sustainable quality jobs in the service sector.

  • Mainstream income support and re-employment services for Australian displaced workers

    Many displaced workers in Australia who do not quickly find jobs are likely to be ineligible for income assistance for an extended period of time following their redundancy. This is consistent with the Australian social assistance approach which restricts income support to persons most in need. Since access to more intensive re-employment services is conditional on the receipt of income support, this also implies that a majority of displaced workers do not qualify for these services. Even those who qualify mostly receive only basic support during the first year of unemployment. By this time, a number of displaced workers who did not find a new job may have become demotivated or even have exited the labour force, making a return to work more difficult. This approach minimises the inefficient use of resources on displaced workers who do not need help, but can be problematic for those who face more difficulties in finding a new job, notably older displaced workers. Moreover, the incentive structure for employment service providers is tilted more to getting the unemployed quickly back into work than investing in training, which may further reduce the likelihood of low-qualified or long-tenured displaced workers switching to new jobs in sectors and occupations in demand.

  • Managing restructuring: Labour adjustment programmes for displaced workers in Australia

    Australia relies on a flexible labour market to promote worker transitions from declining firms and sector to expanding ones, and, consequently, government actions to prevent dismissals are relatively limited. There are few legislative restrictions on employers wishing to retrench employees, except with respect to unfair dismissals, and there is no short-time work scheme to prevent layoffs due to cyclical downturns. When workers are displaced, targeted assistance is restricted to sectors covered by structural adjustment programmes, thus reaching a small minority of displaced workers. This may be particularly damaging for the re-employment chances of older and less-educated displaced workers not covered by these programmes. Early intervention by the public authorities to provide assistance to workers at risk of being retrenched requires early notification of redundancies. However, in Australia, the statutory notification period is low relative to most other OECD countries for individual dismissals and there is there is no legislated additional notification period in case of mass layoffs. There is also scope to improve the co-ordination of assistance measures provided by the employer, the federal and state governments. Australia is quite advanced in providing recognition of prior learning to displaced workers covered by structural adjustment programmes, but there is room to increase investment in effective training for displaced workers. More generally, the coverage of displaced workers benefiting from these programmes remains limited. A more systematic approach should be taken to providing specialised intensive employment services based on an assessment of the risk of displaced workers not successfully transitioning into a sustainable new job.

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