The countries in this top group maintained exceptionally low unemployment rates, despite the pressure of worldwide economic crisis.
In the case of Norway and Denmark, the “flexicurity” model weathered the crisis well, although slightly lower labor policy scores as compared to the SGI 2009 in each case show the emergence of weaknesses that have yet to be addressed.
While the overall models are different, flexible hiring and firing rules aided both the Nordic countries and Switzerland. New Zealand took a more activist role in combating the crisis, successfully holding unemployment in check with a wide range of fiscal and active labor policies.
Countries in the upper middle group struggled to contain the effects of the economic crisis, but successful labor-market policies often mitigated the effect of serious economic declines.
Most have underlying weaknesses or rigidities that were exposed by the crisis. In most cases, governments have begun addressing these issues, but without unambiguous success.
Germany’s striking improvement in labor market scores, despite a sharp GDP decline, validates a model different from the Anglo-Saxon or Nordic “flexicurity” approaches. By contrast, the UK’s labor market model, while performing better than many predicted, has lost luster.
Stimulus policies in Japan and South Korea helped keep unemployment down, but both countries have seen disturbing rises in irregular employment, threatening the economic security of a generation of workers.
Despite excellent scores in some employment indicators, Mexico’s lack of progress in modernizing its corporatist, heavily informal economy is reflected in the persistence of a poor policy score.
Counties in this group include once-strong economies undermined severely by the economic crisis, and some that continue to show a significant constellation of weaknesses.
Iceland and the USA are the standouts here, both stellar economies before the crisis whose labor market policies proved unable to prevent sharp, sustained increases in unemployment.
Poland is by contrast one of the SGI 2011’s most improved in this area, starting from a low level but gaining ground in every labor market indicator following implementation of a new government’s active labor market policies.
France and Italy continue to struggle with tightly regulated labor sectors, while Belgium and the Czech Republic have been unable to transcend regional divisions. Chile’s high structural unemployment and large informal sector undermines a relatively strong crisis response, while Portugal’s temporary halt in unemployment growth came to an ominous end.
The bottom group is split between the financial crisis’ worst victims and countries whose labor markets were anemic to start with.
Ireland and Spain have tumbled far from their former economic heights, with Spain’s construction-boom collapse exposing substantial weaknesses in the country’s labor market. Ireland’s labor flexibility helped transmute economic chaos quickly into an employment crisis.
Greece’s debt crisis has helped boost already-high unemployment, with massive reforms needed. Hungary, Slovakia and Turkey have seen long-term structural issues worsened by the effects of global crisis.