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Back to Work: Australia

Improving the Re-employment Prospects of Displaced Workers

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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.

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