In the first few years of the 21st century, the OECD average figure stayed relatively stagnant, with a moderate unemployment rate that sat between 6.14% and 6.61%.2
The Russian financial crisis in 1997 kick-started a period of economic inactivity that continued through to the start of the new century.3
Despite the Global Financial Crisis (GFC) occurring from 2007 – 2008, the mid-late 00s saw the average OECD unemployment figure improve from 6.6% to an impressive 5.96%. The world economy was in a state of positive growth, particularly with growing employment and falling unemployment rates.12 The effects of the GFC didn’t appear full force for many countries until a few years later.
Interestingly, when the earlier effects of the GFC started to kick in, the construction industry was more highly affected in countries such as Ireland and Spain due to a large boom in residential construction.13 Sharply rising housing prices meant that the construction industry was in strife even before there was a decline in total employment.
Spain was one of the first countries to quickly fall into recession as a result of the GFC and to this day, still hasn’t clawed its way back to the rates it held before the crisis.14 The figure from 2008 (as seen below) reflected a 3% leap from 8.2% the previous year.
After slowly improving over the previous few years, both Poland and Slovak Republic made a considerable improvement in 2007.
Germany had a 1.6% decrease in figures, allowing Turkey to appear for the first time with only a slight rise of 0.1% from the previous year.
Before COVID-19, the major worldwide economic event of the 21st century was the Global Financial Crisis – or the GFC. According to the Reserve Bank of Australia, increased borrowing and more relaxed loan processes from US lenders were significant factors that led to the GFC.16
While it began in the United States, foreign banks were also involved in these lending practices within the American housing market, which in turn led to other nations being affected.17
The GFC left a lasting impact on several countries for years to come – especially those in Europe.
The next few years became tangled up in a major global recession, which brought the OECD average from 5.96% to 8.16% in a single financial year (2008 – 2009).
2014 saw the beginning of financial recovery and a positive transformation in the average unemployment rate, which would only continue to improve every year leading up to the present.
Apart from Greece and Spain, every OECD member country that experienced a downturn directly after the GFC have seen their unemployment rates decrease to levels close to where they were before the crisis. In some instance, they’re even lower.
In 2014, more than a quarter of Greece’s population aged between 15 and 29 were neither employed nor in education or training.22 Despite showing improvements in employment figures, the country still had an alarming number of people out of work.
After showing similar figures for the previous two years, 2016 sees Italy knock Portugal out of the top 3 highest unemployment figures. Both countries were in a period of steady improvement as the economic effects from the GFC started to recede.
In 2018, over 85 per cent of temporary workers in Spain were in such employment because they were unable to find permanent work.23 In addition to this, 19.9% of youth (aged 15 to 29 years) were not in employment, education or training.24 Despite this, the economy continued to slowly improve, including the placement of 200,000 new jobs in the first half of the year.25
Deteriorating labour market conditions in Turkey lead towards the country making an appearance in the top 3 for 2018.26
Turkey shows a considerable jump from the previous year, regardless of the OECD average moving in the opposite direction. The continuation of a currency and debt crisis pushes the country further into recession.27
By studying OCED data it can be seen that unemployment spikes occur, on average, every 10 years. Although we are only 5 years from the last peak in figures, we can’t ignore the scale of COVID-19 and the implications it is likely to have on the global economy.
In comparison, the 1918 influenza (Spanish Flu) saw a minimum of 20 million deaths.28 This led to a shortage in labour availability resulting in higher wages.29