Back to work: re-employment, earnings and skill use after job - - PowerPoint PPT Presentation

Launch of analytical report on Displaced Workers Paris 16 17 May 2013 Paris, 16-17 May 2013

Back to work: re-employment, earnings and skill use after job displacement

D i ll V Gl d Q i ti i P li G d Danielle Venn, Glenda Quintini, Paulina Granados

Background: Displaced-Workers project

Project launched in June 2011 with Expert Group meeting

g p p j

Project launched in June 2011 with Expert Group meeting. Phase 1:

• Analytical report produced with the help of consultants
• Aims:

– Produce comparable statistics on job displacement and its consequences; – Explore issues rarely addressed in the literature: quality of post-displacement jobs and skills use

• Conference to discuss the draft report
• October 2013 analytical report published

Background: Displaced-Workers project (cont )

Phase 2:

(cont.)

• 9 country case studies:

– Report for Korea released soon and work has begun on Australia, Canada and Japan. – Still to come: Denmark, Finland, New Zealand, Sweden and the United States

Phase 3: Phase 3:

• A policy synthesis report is anticipated in 2015

Plan of the presentation

• Definition of displacement

p Definition of displacement

• Issues of cross-country comparability

K fi di

• Key findings: incidence, groups most affected, earnings

losses, job quality, changes in skill requirements (including additional material)

• (Preliminary) policy implications

Definition of displacement and sample restrictions

• Workers are defined as displaced if: i) they are employed in one year, and

either employed in a different job or not employed in the following year; and ii)

restrictions

either employed in a different job or not employed in the following year; and ii) the reason for the separation is: – Firm -identified displacem ent: job separations from firms that from one Firm identified displacem ent: job separations from firms that, from one year to the next, experience an absolute reduction in employment of five employees or more and a relative reduction in employment of 30% or more (m ass dism issal) or that ceased to operate (firm closure). – Self-defined displacem ent: job separations for economic reasons or dismissal for cause

• Sample restrictions:

– 20-64 year olds, minimum of one-year tenure, firms with more than 10 workers if firm-identified; multiple job holders and public sector excluded

Cross-country comparability

• Significant improvement in comparability

y p y

• But of data sources imply differences:

– firm-identified: exogenous event, large samples but few individual

characteristics hard to identify small-scale displacement includes characteristics, hard to identify small scale displacement, includes voluntary quits – tends to over-state displacement incidence;

– self-defined displacement: rich information on individuals, biased

towards more severe events with poorer post-displacement outcomes – towa ds

• e seve e eve ts w t poo e post d sp ace

e t outco es tends to under-state displacement incidence.

• And sample restrictions vary across countries

These issues m ust be kept in m ind when com paring results across countries

Incidence of displacement p

• Displacement is highly cyclical
• 2-7% of employees affected every year

Displacement rates, 2000-10a Percentage of employees aged 20-64 who are displaced from one year to the next, averages

6 7 6 7 % % 2000-08 2009-10 f 10 J P N Z F R C A R U A U K O D E S W D N P R F I U S G B 2000-08 2009-10 4 5 6 4 5 6 2 3 2 3 1 1 JPN NZL FRA CAN RUS AUS KOR DEU SWE DNK PRT FIN USA GBR Self-defined displacement Firm-identified displacement

Time-trends

• No upward trend in displacement over the past decade – longer trends (up

to three decades) available for fewer countries show similar picture

0.05 0.06 0.07 crisis AUS CAN KOR NZL FR RUS JPN

Self-defined

0.02 0.03 0.04

Self defined displacement

0.01 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0.08 0.09 crisis DNK FIN DEU PRT SWE GBR USA 0.04 0.05 0.06 0.07

Firm-identified displacement

0.01 0.02 0.03 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Groups most affected p

• Older workers and those

with low education have

• A. Men

(compared w ith w omen)

• B. Aged 20-24 years

(compared w ith 35-44 years)

• C. Aged 55-64 years

(compared w ith 35-44 years)

Relative displacement rates by personal and job characteristics, 2000-2010

with low education have higher displacement risk, take longer to get back to work and suffer greater earnings losses

1.0 2.0 2000-2008 2009-2010 1.0 2.0 4.0 2000-2008 2009-2010 1.0 2.0 4.0 2000-2008 2009-2010

earnings losses

• Youth have higher risk of

displacement but find work quickly often in

• E. Tenure 1-4 years

(compared w ith 10-19 years)

• D. Less than secondary education

(compared w ith post-secondary education)

• F. Firm size 10-49 employees

(compared w ith 500+)

0.5 AUS CAN FRA JPN KOR NZL RUS DNK FIN DEU PRT SWE GBR USA Self-defined displacement Firm-identified displacement 0.5 AUS CAN FRA JPN KOR NZL RUS DNK FIN DEU PRT SWE GBR USA Self-defined displacement Firm-identified displacement 0.5 AUS CAN FRA JPN KOR NZL RUS DNK FIN DEU PRT SWE GBR USA Self-defined displacement Firm-identified displacement 2000-2008 2009-2010 2000-2008 2009-2010 2000-2008 2009-2010

work quickly, often in better jobs

• Workers in small firms,

with short tenure in

1.0 2.0 4.0 8.0 2000 2008 2009 2010 2.0 4.0 2000 2008 2009 2010 2.00 4.00 8.00

with short tenure, in temporary contracts are at higher risk of displacement

0.5 AUS CAN FRA KOR NZL RUS DNK FIN DEU PRT SWE Self-defined displacement Firm-identified displacement 1.0 AUS CAN FRA KOR NZL RUS DNK FIN DEU PRT GBR Self-defined displacement Firm-identified displacement 1.00 AUS CAN FRA JPN KOR RUS DNK FIN DEU PRT SWE GBR Self-defined displacement Firm-identified displacement

Variation across regions and industries g

• Displacement rates vary

0.08 MEAN MAX MIN

Displacement rate by region of residence, 2000-2008

p y significantly across regions, with the largest differences in Korea and Portugal and very little

0.04 0.05 0.06 0.07

g y variation in Denmark and Japan.

• Manufacturing and

0.01 0.02 0.03 AUS CAN FR JPN KOR NZL RUS DEU DNK FIN GBR PRT SWE USA Self-defined Firm-identified

• Manufacturing and

Construction stand out as the two sectors with highest incidence of displacement

Displacement rate for Construction and Manufacturing Difference with respect to the average displacement rate 2000-2008

0.04 0.05

Manufacturing Construction

displacement

0.01 0.02 0.03

• 0.02
• 0.01

0.00 AUS CAN KOR NZL FR RUS JPN DNK FIN DEU PRT SWE GBR Self-defined Firm-identified

Re-employment rates p y

• Re-employment rates one year after displacement vary from above 70% in

Nordic countries and the United States to 40% or below in France, Portugal and the United Kingdom;

• Rates improve in the second year after displacement
• Re-employment chance were lower in all countries during the crisis

100 100 % % Re-employed within one year (2000-08) Re-employed within two years (2000-08) Re-employed within one year (2009-10) fc 100 FRA KOR CAN JPN RUS USA NZL AUS PRT GBR DEU DNK USA FIN SWE Self-defined displacement Firm-identified displacement Re-employed within one year (2000-08) Re-employed within two years (2000-08) Re-employed within one year (2009-10) 60 70 80 90 60 70 80 90 20 30 40 50 20 30 40 50 10 10 FRA KOR CAN JPN RUS USA NZL AUS PRT GBR DEU DNK USA FIN SWE Self-defined displacement Firm-identified displacement

Regional mobility and re-employment g y p y

• Regional mobility after displacement (for work or to look for work) varies

across countries and is highest in the United States and Russia; g ;

• Mobility has increased in the US, Korea and Denmark during the crisis but

remained relatively stable in most other countries (declined in Canada)

Displaced workers who stay in the labour force and change region

20 Unemployed 2000-08 Employed 2000-08 Total active movers 2009-10 12 14 16 18 6 8 10 2 4 USA CAN AUS KOR RUS SWE FIN DNK Self-defined displacement Firm-identified displacement

Earnings losses g

• Low in Nordic countries, much larger elsewhere
• Largest losses for men, older workers and the least educated

g ,

Earnings changes before and after displacement

As a percentage of pre-displacement earnings

• A. Annual earnings
• B. Monthly earnings

10 SWE DNK DEU FIN USA 10 PRT GBR DEU

• 20
• 10
• 20
• 10

60

• 50
• 40
• 30

60

• 50
• 40
• 30
• 60
• 2
• 1

DY +1 +2 +3 +4

• 60
• 2
• 1

DY +1 +2 +3 +4

Earnings losses (Cont.)

• Losses mostly due to time out of work

Monthly earnings and wage changes before and after displacementa

As a percentage of pre-displacement earnings

• A. Germany
• B. Portugal
• C. United Kingdom
• 10

10 Earnings Wages

• 5

5 Earnings Wages

• 10
• 5

5 Earnings Wages

• 40
• 30
• 20
• 25
• 20
• 15
• 10
• 30
• 25
• 20
• 15
• 60
• 50
• 2
• 1

DY +1 +2 +3 +4

• 35
• 30
• 2
• 1

DY +1 +2 +3 +4

• 40
• 35

30

• 2
• 1

DY +1 +2 +3 +4

Job quality after displacement q y p

• Part-time or non-permanent jobs more likely than prior to displacement,

and fewer hours worked on average;

• Also more likely: work at non standard times; non-availability of paid

leave; lack of managerial responsibilities;

• Part of effect on job quality may be due to the loss of seniority

Part of effect on job quality may be due to the loss of seniority.

Working hours and job security after displacement

30 2000-2008 2009-2010 5 10 15 20 25 30

• 10
• 5

Part-time Casual Fixed-term Self-emp Part-time Temporary Self-emp + self-emp Part-time Fixed-term Other Self-emp Part-time Agency Other Self-emp Part-time Temporary Daily hire Self-emp Part-time Part-time Fixed-term Self-emp Informal Part-time F Temporary F F AUS CAN FRA JPN KOR NZL RUS USA

Changes in skill requirements: methodology methodology

• Data on occupations (ISCO98) before and after displacement linked

with detailed information on skill requirements by occupation (O*NET)

• Each occupation is associated with measures of:
• required maths, verbal, cognitive, interpersonal, craft, and gross and fine

q g p g physical skills (mean zero, std=1; normalised on CPS 1992); and

• number of years of education required
• Key skill switch m easure used: change in ranking and size of top

skill factor – the main skill requirement based on its score before the occupational change moved down by at least two positions and its score changed by at least half of a standard deviation.

• Skills upgrading: skill switch accompanied by an increase in

required education of at least one year; skill downgrading: skill switch accompanied by a decrease in required education of at least

• ne year.

Changes in skill requirements g q

• Most re-employed displaced workers find work in jobs that use

similar skill sets

Changes in occupation and skills set after displacement, 2000-10 Percentage of displaced workers who change occupationa and skills setb

60 70 % Change of occupation Change in ranking of top skill factor Change in ranking and size of top skill factor Change in size of top three skill factors 30 40 50 10 20 CAN KOR AUS USA FRA GBR PRT SWE DNK FIN Self-defined displacement Firm-identified displacement

Changes in skill requirements g q

• Many re-employed displaced workers move to jobs with higher skill

requirements but several suffer professional downgrading

Incidence of professional upgrading and downgrading following displacement, 2000-2010 Percentage of re-employed displaced workers

8 9 % Downgrading Upgrading 4 5 6 7 1 2 3 4 USA AUS KOR FRA CAN SWE GBR DNK PRT FIN Self-defined displacement Firm-identified displacement

Changes in skills requirements (Cont.) g q

• Those who suffer

Average change in each skill factor (units of a standard deviation)

Human capital loss following displacement, 2000-2010

professional downgrading move to jobs with much lower

Displaced workers suffering professional down-gradinga All re-employed displaced workers

1 4 1.6 1.8 Craft Fine physical Gross physical 1 4 1.6 1.8 Craft Fine physical Gross physical

math, verbal and cognitive requirements

0.2 0.4 0.6 0.8 1.0 1.2 1.4 0.2 0.4 0.6 0.8 1.0 1.2 1.4

• 0.2

0.0 KOR USA AUS FRA CAN PRT GBR SWE DNK FIN Self-defined displacement Firm-identified displacement 0.0 0.2 Math Verbal Cognitive Interpersonal

• 0.2

0.0 KOR USA AUS FRA CAN PRT GBR SWE DNK FIN Self-defined displacement Firm-identified displacement 0.0 0.2 Math Verbal Cognitive Interpersonal 1 4

• 1.2
• 1.0
• 0.8
• 0.6
• 0.4
• 0.2

1 4

• 1.2
• 1.0
• 0.8
• 0.6
• 0.4
• 0.2
• 1.8
• 1.6
• 1.4

KOR USA AUS FRA CAN PRT GBR SWE DNK FIN Self-defined displacement Firm-identified displacement

• 1.8
• 1.6
• 1.4

KOR USA AUS FRA CAN PRT GBR SWE DNK FIN Self-defined displacement Firm-identified displacement

Changes in skills requirements (Cont.) g q

• Changes in skills use

Denmark Finland

same industry/ no skills switch change in industry/no skills switch same industry/skills switch same industry/ no skills switch change in industry/no skills switch same industry/skills switch

• Changes in skills use

explain earnings losses along with changes in industry

• 2%

0% 2% 4% y change in industry/skills switch

• 2%

0% 2% 4% y change in industry/skills switch

industry

• 10%
• 8%
• 6%
• 4%
• 2
• 1

DY +1 +2 +3 +4

• 10%
• 8%
• 6%
• 4%
• 2
• 1

DY +1 +2 +3 +4

Portugal United Kingdom

20% same industry/ no skills switch change in industry/no skills switch same industry/skills switch change in industry/skills switch 10% same industry/ no skills switch change in industry/no skills switch same industry/skills switch change in industry/skills switch

• 15%
• 10%
• 5%

0% 5% 10% 15%

• 50%
• 40%
• 30%
• 20%
• 10%

0%

• 30%
• 25%
• 20%
• 2
• 1

DY +1 +2 +3 +4

• 80%
• 70%
• 60%
• 2
• 1

DY +1 +2 +3 +4

Policy implications y p

Only prelim inary policy im plications can be drawn from this analysis m ore to com e in country reviews and synthesis analysis, m ore to com e in country reviews and synthesis

• Helping people return to work quickly, especially for women, older workers and the low skilled, is

very important to limit earnings losses and skill depreciation after displacement

• Targeting is key if resources are scarce – for instance, while young people (20-24) have a higher risk

Targeting is key if resources are scarce

for instance, while young people (20 24) have a higher risk

• f displacement than prime-aged workers, they fare better afterwards. Young workers generally find work

relatively quickly after displacement, often in jobs with greater skill requirements than their previous jobs.

• Workers in smaller firms have a much higher risk of displacement than those in

larger firm and therefore general active labour market programmes, such as job- g g p g , j search assistance and retraining programmes, may be the most efficient way to reach workers rather than subsidising outplacement services provided by firms;

• Not all displaced workers will need retraining to find a new, high-quality job as not

all changes in industry or occupation after displacement lead to a significant change all changes in industry or occupation after displacement lead to a significant change in the skills used at work. However:

– for a subset of displaced workers who experience professional downgrading – mostly women, older and mid- to-high-skilled workers – displacement can cause substantial human capital losses. Th k ff i ifi t d ti i th f th ti b l d iti kill – These workers suffer a significant reduction in the use of mathematics, verbal and cognitive skills. – Where necessary, retraining programmes for displaced workers should focus on these key generic skills.

Thanks