Saturday 27 January 2007
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OECD chief warns on youth unemployment

By Edmund Conway
Last Updated: 1:26am GMT 26/01/2007

The head of the international club of rich nations has warned that high levels of youth unemployment in the UK and across Europe are becoming a major concern.

Angel Gurria, secretary general of the Organisation for Economic Co-operation and Development, warned that European economies would continue to trail the US as long as they failed to get enough people into work, and also pointed out ballooning levels of economic inactivity.

Speaking on the fringes of the World Economic Forum conference in Davos, Mr Gurria, who last year took charge of the Paris-based OECD, also played down expectations that this week would see a dramatic breakthrough in the Doha Round of world trade talks.


He said problems in the labour market - particularly in the eurozone - were the chief reason why the area had failed to keep pace with growth elsewhere in the world.

"I am extremely worried about the level of participation of the workforce," he said. "Europe has been lagging the US for over 20 years now, and what's responsible? Education, research and development, poor university funding, as well as a lack of labour market flexibility and product market flexibility."

"The numbers of people receiving sickness and disability benefits is now larger in the OECD than those who are actually unemployed.

"Youth unemployment is three times higher than overall unemployment."

"You can do all you like about productivity, about research and development and about levels of education, but first of all you have to get the people into the workplace. Too many people are staying at home. This is a problem in Europe, and also in the UK, although the labour laws are more flexible there."

In the UK, there is growing disquiet with the levels of unemployment among those aged between 16 and 24. Recent figures showed that more people are out of work in this age group now than when Labour came into power, despite the party's promises to cut the total number of the young jobless.

Statistics also show that the number of people classed as economically inactive – which includes disabled, students and the long-term unemployed – now accounts for a fifth of the working-age population in the UK.

While many at the WEF meeting in the Alpine Swiss village of Davos are anticipating that trade ministers - including European Commissioner Peter Mandelson - will get the stricken Doha round of talks back on track, Mr Gurria was less optimistic.

"I don't think there's going to be a dramatic breakthrough here in terms of something magical happening," he said. "But you have to take advantage of the time.

"We have to get it together. Doha is the low hanging fruit. If you look at it from the point of view of multilateral achievements, how can we tackle poverty, or the middle east or any of these other things if we can't do Doha?

"I am worried because we are already seeing not only trade protectionism but investment protectionism. This is a big test for politicians and the world economy."

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