Brexit is likely to hit the UK’s short-term labour market bucking the trend among other member countries, which are set to return to pre-crisis employment highs, the OECD says.
An employment outlook released today says UK real GDP growth is set to drop 0.5 percentage points in 2017 and 2018 resulting in a culmulated loss of 3 per cent by 2020.
“Brexit therefore represents a cloud over the UK’s recent ability to create jobs,” the outlook said.
Data from insight and technology company CEB TalentNeuron shows the number of jobs advertised in the UK almost halved from 1.5m to 820,000 in the period from 23 June, the day of the Brexit vote, to 4 July.
The OECD average employment rate is set to return to pre-crisis levels in 2017, the OECD says. In the UK, unemployment had fallen to 5 per cent, its lowest level since 2005.
“The UK’s short-term labour market prospects are likely to be negatively affected by the recent referendum decision to leave the EU,” the outlook says.
The OECD adds that a reduction in foreign direct investment could worsen already weak labour productivity growth. This grew 2 per cent between 2010 and 2015, meaning the UK was only ahead of Hungary, Italy and Greece.
The report says the UK could improve its productivity performance by improving workforce skills and through better use of skilled workers.
While the reading skills of existing workers in England and Northern Ireland are slightly above the OECD average, literacy and numeracy proficiency in younger people was “much lower in the UK than many other OECD countries”.
The report says the number of young people neither employed nor in education or training (NEETs) was 4.7 per cent, lower than the 5.6 per cent OECD average. Nearly 60 per cent of NEETs lived in jobless households, which may put them at risk of poverty. It is the highest proportion among EU countries.