Employment policy: Passing the stress test

More than 11 million workers joined the ranks of the unemployed in the OECD area in the year to April 2009, as companies cut production, closed factories and offices, and dismissed thousands of workers. Consistent with this historical tendency, unemployment for the OECD area is projected to continue to rise through 2010, approaching 10% in the second half of the year, an all-time high. While it is too soon to assess how well employment policy is performing in the current crisis, it is clear that governments have moved vigorously to reinforce their policies. But while policy responses appear sounder this time, much will depend on the crisis and the effectiveness of other policies to end it. The longer and more serious the downturn, the greater the temptation will become to give in to expedient measures, such as early retirement.