The Gap Between Top and Bottom Performers Is Widening
Over the last five years, the resilience scores of the top-performing countries have improved, while the rest did not exhibit any pronounced dynamics. The top 10 countries succeeded in avoiding major disruptions in their labour markets, owing to strong institutional capacities to absorb, adapt, and transform in the face of shocks, and consequently began their recovery ahead of others. The other group of countries experienced severe labour-market disruptions following the outbreak of COVID-19, on account of their weak cyclical capabilities.
Too Many Countries Are Left Behind
More than one-third of the countries: 49 out of 136, score less than 50 out of 100 on labour-market resilience. All of these are in the lower- and middle-income groups, and more than half (30) are in the Sub-Saharan region. Their low GLRI scores and rankings are driven mainly by weaknesses in their adaptive capabilities. Failing to improve labour-market resilience is a cause for concern, as many nations did not have the tools or capabilities in place to cope with COVID-19 and its aftermath.
A two-speed post-pandemic recovery of global labour markets is underway, and it is worsening inequalities.
Countries are manifesting divergent recovery paths: some, mostly developed, are rapidly returning to pre-crisis levels of employment, while others, mostly developing, still suffer from relatively large and persistent employment deficits. Resilience is not just about how labour markets respond to and recover from short-term shocks like COVID-19; it is also about countries' ability to prepare for the future of work.
The digital transformation of labour markets will continue to accelerate and test resilience. Governments and policymakers must respond by equipping their workforce with the right skills, capabilities, and knowledge, turning this transformation into an opportunity. The green transition, too, offers a substantial opportunity for labour markets and must sit at the heart of economic growth plans, failing to align labour markets with these trends will reduce resilience, increase vulnerabilities, and jeopardise growth.
The Right Policies Enable Quick Recovery
Denmark ranks first in this year's GLRI, occupying first place in its cyclical pillar and fourth in its structural pillar. This allowed Denmark to absorb and adapt to the COVID-19 shock, its unemployment rate rose by just one percentage point, less than in most OECD countries, following a temporary job-retention scheme that reduced job losses while allowing people to return to work quickly once the economy improved. Post-COVID-19, Denmark is enjoying the quickest recovery among OECD countries.
Resilience Calls for Citizen-Centricity
Real-world experience shows that countries can build institutions and enact policies that create resilient labour markets, but their design must consider the absorptive capacity of the people. The traditional approach of formulating policy in isolation from the individuals it is meant to impact can only have a limited influence. Instead, a more pronounced focus on the citizen and the worker would improve the conditions of the future workforce through targeted training, upskilling, and re-skilling. To do so, a systematic appraisal of key skills is needed to effectively shape the future state of human capital.
