Report prepared for the G20 Labour and Employment Ministerial Meeting. Melbourne, Australia, 10-11 September 2014 The persistence of high levels of unemployment following the crisis in many advanced economies and in some emerging economies, as well as the build-up of long-term unemployment, have raised concerns around a possible rise in structural unemployment – i.e. the permanent or persistent component of unemployment that is invariant to the economic cycle. At the same time, many emerging economies have struggled with chronically high levels of underemployment, with many workers trapped in low-paid, informal jobs which fail to fully utilise their skills. These trends have resulted in significant social and economic costs. Besides the tremendous hardship it has caused to individuals and families, it presents a waste of scarce economic resources, including human capital, and reduces the long-run growth potential of economies.

This paper starts by setting out the key challenges faced by policy-makers in G20 countries both in the short-term as a result of the crisis and sluggish recovery in many G20 countries, and in the longer term as a result of ongoing economic, demographic and social transformations. The second part of the paper then sets out the policy responses that should be considered to address these challenges. While the choice and combination of measures will depend on each country’s specific institutions and circumstances, a blend of short- and long-run measures is likely to be needed that simultaneously seek to strengthen growth and encourage job creation, while also tackling structural barriers in the labour market.