As illustrated throughout this report, the COVID-19 pandemic has laid bare the lack of mechanisms to support workers through mid-career transitions and to ensure worker well-being and livelihoods amidst disruptions. What is needed is fundamental reform—or, more accurately, a revolution in the way education and training systems operate, and in how they interact with labour market policies and business approaches to training workers with new skills. This section reviews the current public policy ecosystem for ensuring adequate social protection, including new temporary measures put in place since the onset of COVID-19.

Reacting to the current social and economic crisis, countries across the globe have announced packages of emergency fiscal and monetary measures of unprecedented scope, and the pandemic has led to the temporary adoption of measures enhancing social safety nets for workers and households in a number of economies. Governments and central banks have implemented fiscal and monetary packages of unique breadth and depth to counterbalance the economic impact of the pandemic as well as to protect workers and households. According to recent estimates by the IMF (International Monetary Fund), close to $11 trillion has been deployed through direct fiscal impulse and liquidity measures aimed at supporting households and businesses through the crisis.⁴¹ As illustrated by Figure 32, the fiscal measures implemented by G20 countries in 2020 are larger than those taken during and just after Global Financial Criss in 2007–2008.⁴² However, the breadth and scale of those policies remain out of reach for most developing economies, which have implemented less than half the number of measures implemented in developed economies. This continues to be a concern given that many developing economies still lack well-established health systems in addition to social safety nets.

In the immediate term it is possible to analyse the types of measures adopted and prioritized by different economies, while a longer-term horizon will allow a broader analysis of their overall efficacy. Data from the ILO presented in Figure 33 shows that more than 1,000 different policy measures have been implemented in more than 200 countries since the onset of the pandemic. They vary in focus and by instrument utilized. The majority of the measures observed span a range of agile policy solutions which have the capacity to protect the most vulnerable workers directly. While some instruments depend on in-kind services maintaining health, nutrition and having access to shelter, others focus on income stability, such as the widespread use of one-off cash transfers and allowances to subsidize household expenses, as well as a temporary extension and expansion of benefits to workers such as unemployment leave.

The timeliness and adaptability of cash transfer mechanisms have made them a critical tool to be deployed in the volatile context caused by COVID-19, which is why a number of governments across the world have expanded the provision and coverage of social protection schemes using this specific mechanism. However, the majority of the cash transfer measures implemented are time-bound and temporary and might not be the appropriate tool to provide the long-term economic relief necessary to vulnerable households. As illustrated in Figure 34, such mechanisms typically lasted one to three months, with only 16% of the programmes implemented as a result of the pandemic lasting longer than three months.⁴³ Going forward, an innovative approach to addressing the uncertain nature of recessions could be to introduce cash stimulus payments which would be “automatically triggered” by a deterioration in economic conditions, preventing administrative lag and indecision.⁴⁴

Note: Values include ‘above-the-line’ measures but exclude ‘below-the-line measures’ (equity injections, loans, asset purchase or debt assumptions, or guarantees).

Note: The values represent the distribution of 1,218 measures introduced across 203 countries.

Another set of key policies has been focused on preserving the retention of staff by businesses through wage compensation schemes as well as tax or payment deferrals. Figure 35 presents the unprecedented use of job-retention schemes across several countries—notably New Zealand, France, Switzerland and the United Kingdom—affecting close to 60 million workers across OECD countries.⁴⁵ While these measures have been broadly welcomed and have been effective at buffering unemployment, such schemes obscure the possible true impact of COVID-19 on the labour market. It is only as wage support and replacement mechanisms begin to expire that some of the damage to the labour market will be revealed.

Notes: Forecasts for Q4 2020 produced by the OECD assuming two waves of COVID-19, namely a “double hit” scenario.

While these temporary measures provide a lifeline to workers during this unprecedented crisis and ahead of a future recovery, the need for an urgent response should be transformed into an impulse to enhance permanent social protection mechanisms. New data from the OECD shows the projected employment growth of a number of economies in 2019–2020 if countries experience a potential second wave of COVID-19 infections. Figure 36 plots that possible new reality against the Social Resilience pillar of the World Economic Forum’s Global Social Mobility Index. The pillar score summarizes in one measure the level of social protection available in an economy alongside the presence of inclusive institutions. Countries that score high have well-developed social safety nets and protection as well as high levels of public service efficiency. Countries in the bottom-left quadrant of Figure 36 have low social resilience scores and at the same time are projected to experience lower economic disruption under this scenario. Countries in that quadrant include Mexico and the Republic of Korea. Those in the top-right quadrant can expect to see high disruption to employment but also have a high social resilience score. They include Ireland, the United Kingdom and Spain. Countries in the bottom-right quadrant can expect to see high labour market disruption and also have a low social resilience score. Those countries include Colombia, Turkey and the United States. In summary, scenarios such as these suggest that some economies will experience a ‘double-hit’ scenario—relatively low coverage of social protection mechanisms in place to protect workers heavily displaced from the labour market.

The political will to expand social protection has often been deadlocked, driven by concerns about the long-term impact on labour market participation, the efficiency of current tools and the capacity of government to deliver these public services with the adequate efficiency at scale. Given the large-scale disruption to workers from both the pandemic-driven recession and the accelerated pace of technology adoption, the question cannot be ‘if’ but should be ‘how’ to expand some of these essential protections.

Research shows that wages have, for some time, been misaligned from productivity and that wage level can be as much determined by the structure of local labour markets or disadvantaged by race or gender as they are by workers receiving a reasonable return on their skills and productivity.⁴⁶ When it comes to preserving worker’s ability to save, governments can cap the erosion of wages, ensuring that all workers are able to gain a living wage. The economic strain on families subsisting on low wages is not conducive to maximizing long-term human potential and leaves workers vulnerable to disruptions. Legislating against bias on the basis of gender, race or other characteristics protects the connection between employment, wages and the skills and capabilities of workers—guaranteeing that the talents of all parts of the population are used and can drive further growth and prosperity in the economy.

Past research has shown that long-term displacement from the labour market has a persistent, negative effect on workers.⁴⁷ When social protection mechanisms are lacking, individuals in the midst of a career transition are forced to maintain a dual focus—on the one hand trying to preserve their quality of life and keep poverty and potential destitution at bay, and on the other hand attempting to successfully transition to a new role. For those with historically low wages, it is much more likely that basic needs such as health, nutrition and access to shelter become paramount and overwhelming concerns during such periods detract from productive and successful transitions to new roles. An individual’s capacity to manage this labour market transition can thus be undermined, leading to rushed and potentially sub-par redeployment and re-employment.

While some social protection policies are remedial and short term, not all support can be temporary in nature. When it comes to long-term sick leave, disability leave or long-term unemployment, social protection becomes a fundamental pillar of the support for its citizens on an ongoing basis. For the purposes of this report we have focused on supporting the bounceback of those who are or will be unemployed in the short term due to the recession and technological change. To expand safety nets in the medium to long term, societies will need to rebalance current public spending and consider expanding fiscal room through effective and appropriate taxation.

Governments can proactively shape the preconditions for effective labour market transitions and worker productivity by strengthening the link between skills, wages and employment. This can be achieved through policies that fund reskilling and upskilling of workers who are mid-way through their career and will need further skills to secure employment in the future of work, policies which ensure that workers are able to create cash reserves during periods of employment, and policies which legislate against bias in hiring, firing and setting wages. Reskilling and upskilling policies that have been utilized to date span the conditionality of unemployment benefits on taking up new re-skilling and up-skilling, providing wage subsidies to companies which extend reskilling and upskilling to workers, providing online learning accounts to citizens, and starting to fund online learning in addition to university degrees, TVET and school tuition.

A number of countries have in recent years developed innovative funding mechanisms to finance reskilling of workers. Singapore recently complemented its pioneering Skills Future Initiative through the deployment of Enhanced Training Support Package (ETSP)⁴⁸ to support workers and organizations in sustaining investment in reskilling and upskilling during COVID-19. The package includes a significant increase in funding for Absentee Payroll Support and Course Fee Support among industries severely hit by the pandemic. At the end of 2019, France created an individual skills account with an integrated mobile application dedicated to vocational training and lifelong learning. Under the “moncompteformation.gouv.fr” (“MySkillsAccount”) scheme, 28 million eligible full- and part-time workers will receive €500 annually directly into their skills account to spend on upskilling and continuous learning, with low-skilled workers and those with special needs receiving up to €800 annually, capped at a total of €5,000 and €8,000, respectively. The Danish Ministry of Employment has introduced a number of measures aimed at providing additional opportunities for upskilling and job-focused education aimed at workers furloughed following as a consequence of the economic impact of the pandemic. First, both skilled and unskilled workers who pursue a vocational education are being provided with 110% of their usual unemployment benefits. Additionally, the Danish government expanded the scope of its current apprenticeship scheme, at the same time as prolonging its job rotation scheme, making it possible for more unskilled workers to have access to upskilling and reskilling opportunities.