Unemployment has soared in OECD countries in recent years, from 5.6% in 2007 to 8.3% in 2009. Recent OECD analysis suggests a further rise in the past two years. In 2009, regional differences in unemployment rates within OECD countries were almost two times higher (28 percentage points) than differences among OECD countries (15 percentage points).
Regional disparities in unemployment were already high before the economic crisis in countries such as Canada, Germany, Italy, Spain and the Slovak Republic. Overall the economic downturn has aggravated problems of the most fragile regions. The Gini index gives a measure of differences in unemployment rates among all regions in a country. According to this measure Belgium, Germany, Italy and the Slovak Republic displayed the highest inequalities among OECD countries. Large regional differences were also found in China and the Russian Federation (Figure 22.1).
Young people have been hit hardest by the economic crisis: youth employment fell by 8% between the end of 2008 and the end of 2009, nearly four times the decline in overall employment. Unemployment among young people in OECD countries was high at 16.7% in 2009.
Youth unemployment is of particular concern in Italy, France, the Slovak Republic, Turkey, Poland and Spain, where regional differences are high and some regions display a youth unemployment rate over 30% (Figure 22.2). These regions display also higher than average early leavers from education and training, suggesting that specific policies to improve the employability of these people through training and apprenticeship are needed.
Among the unemployed, the long-term unemployed (i.e. those who have been unemployed for 12 months or more) are of particular concern to policy makers both for their impact on social cohesion and because those individuals become increasingly unattractive to employers. The regional long-term unemployment is, therefore, an indicator of labour-market rigidity. Moreover, it highlights areas with individuals whose inadequate skills prevent them from getting a job.
In almost 40% of the regions considered one out of three unemployed was out of the labour market for more than a year (Figure 22.3).
Similarly, the long-term unemployment rate showed large regional variations not only in dual economies such as Italy or Germany, but also in Spain, the Slovak Republic, -Belgium, Turkey and Hungary (Figure 22.4).
Unemployed persons are defined as those who are without work, who are available for work and have taken active steps to find work in the last four weeks. The unemployment rate is defined as the ratio between unemployed persons and labour force, where the latter is composed of unemployed and employed persons.
The youth unemployment rate is defined as the ratio between the unemployed persons aged between 15 and 24 and the labour force in the same age class.
The long-term unemployment rate is defined as the ratio of those unemployed for 12 months or more out of the total labour force.
The incidence of long-term unemployment is defined as the ratio between long-term unemployed and total unemployed.
The Gini index is a measure of inequality among all regions of a given country (see Annex C for the formula). The index takes on values between 0 and 1, with zero interpreted as no disparity. It assigns equal weight to each region regardless of its size; therefore differences in the values of the index among countries may be partially due to differences in the average size of regions in each country.