• A new report singles out Australia’s policy approach as the most successful among wealthy nations.
• The OECD’s annual employment report found that despite “slow progress in its vaccination campaign,” Australia’s JobKeeper scheme enabled a faster economic recovery than any comparable nation.
• “A rapid and substantial initial policy response and strict containment measures have contributed to Australia’s swift labour market recovery,” the report said.
• Visit Business Insider Australia’s homepage for more stories.

An OECD report shows the Australian government’s actions to support workers and businesses last year led to a rapid economic recovery well ahead of any comparable nations.

In its annual Employment Outlook report, released on Wednesday, the Organisation for Economic Co-operation and Development (OECD) said that despite “slow progress in its vaccination campaign,” the country’s economic policies meant its recovery now placed it years ahead of rich-country peers.

While Australia and Japan regained pre-pandemic employment rates in the June quarter, the Paris-based organisation forecast the US and UK would return to the same point by 2023.

On Tuesday Reserve Bank governor Philip Lowe said the economy “has bounced back earlier and stronger than expected” and highlighted the ongoing strength of the labour market.

The report notes Australia’s employment rate fell by 3% in the three months to June of 2020, compared to the OECD average of 4.9%, and the decline in hours worked was small compared with the US, Canada and Britain.

It said the country’s unemployment rate returned to pre-pandemic levels of 5.1% in May, with the number of people employed now at a record high.

Additionally, when the federal JobKeeper scheme ended on March 31, it resulted in only a small fraction of the 150,000 job losses the Treasury had anticipated.

“A rapid and substantial initial policy response and strict containment measures have contributed to Australia’s swift labour market recovery, the report’s country notes said, “despite slow progress in its vaccination campaign.”

“Australia successfully ran a job-retention scheme that helped support a large number of jobs during the Covid-19 crisis. By April/May 2020, 30.5% of workers were employed on the scheme,” the report said.

The report showed that at the peak of the crisis, job-retention schemes supported about 60 million people in OECD countries, amounting to about 20% of all jobs; more than 10 times as many as during the global financial crisis.

It showed that by early this year the take-up had fallen to around 6%, with estimates suggesting the schemes saved up to 21 million jobs.

However in May there were still 22 million more people without jobs in OECD countries than before the pandemic began, while globally more than 114 million jobs disappeared.

ABS data released on Thursday tracking employment in the first year of the pandemic complicated the suggestion Australia had returned to pre-pandemic employment levels, with figures showing almost nine out of ten, or 88% of unemployed people reported having difficulty finding work in February 2021, up from 86% in February 2020.

The figures showed that in February 2021, there were 2.2 million people who were not working but wanted to work, up from 2.1 million people in February 2020.

Pandemic an opportunity for continued government intervention, OECD says

The OECD also noted evidence that additional investments in labour market programs were essential to support the growing number of job seekers moving from declining to growing sectors.

It highlighted the Morrison government’s $89 billion JobKeeper scheme as a success, and recommended the government evaluate its performance to see if a permanent version of the wage subsidy would continue to help struggling companies.

“Given the improvement of the health and economic situation, the scheme has now ended. A careful evaluation of its strengths and limitations would offer valuable insights on whether the Australian labour market might benefit from a structural scheme to help support firms facing temporary difficulties,” the report said.

Stefano Scarpetta, OECD director for employment, labour and social affairs said governments should see the challenges of the pandemic, along with looser budgetary conditions and low borrowing costs, as an incentive to become more interventionist.

Scarpetta said countries should see this as a chance to “build a more productive, rewarding, greener and inclusive world of work,” and that this would require the financial resources, “in particular for strengthening active policies, lifelong learning, and social protection.”

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.