Global Labour Resilience Index© 2021 ranking

Whiteshield launched in March 2021 its annual report on labour market resilience entitled “Global Labour Resilience Index 2021: The resilience of work amid COVID-19 “. This is the context of a global pandemic that rapidly became the most significant job crisis since the Great Depression.

​Our world faces an unprecedented crisis with considerable long-term ramifications for which it is not prepared. Some of the critical insights addressed in this year’s report include:

• A new capabilities framework for measuring labour market resilience
• It is not only the quantity of work that is important but the quality and inclusiveness. In the top 10, Germany has experienced a jump in labour market resilience.
• Small countries have a resilience advantage, as do countries with higher levels of decentralisation.

A capability-based framework for understanding and assessing labour market resilience

The 2021 edition of the Global Labour Resilience Index (GLRI) introduces a new framework for labour market resilience that emphasises the key capabilities required for countries to better prepare for shorter-term shocks such as COVID-19 and longer-term stresses such as technological disruptions and green transitions.

Resilience can be defined as the capability to withstand all disruptions. However, the specific capabilities that make a system resilient can vary depending on the type of disruption. For instance, the capabilities needed to ensure labour market resilience to long-term stress such as technological disruption will differ from those required during a short-term shock such as COVID-19.

GLRI 2021 framework

Resilient labour markets display a high quantity and quality of jobs

A low unemployment rate alone is not indicative of a resilient labour market. Here again, the USA is a case in point. The unemployment rate jumped from a 50-year low of 3.5% in February 2020 to 14.7% in April, the highest level since January 1948. However, by November 2020, it was down to 6.7%. The persistently high unemployment level is partly explained by structural challenges related to increased numbers of low-skilled, expendable workers in highly vulnerable roles to economic shocks. There is a strong correlation between performance in the GLRI 2021 and a combined metric of unemployment rates and labour productivity (a proxy for labour market performance).

European countries dominate the GLRI top 10

Switzerland tops the GLRI 2021 rankings based on its strong and balanced performance across framework dimensions of labour market resilience. Germany is ranked second overall with an outstanding performance on the structural front (1st) cemented by high economic complexity. The Netherlands has entered the top three most resilient labour markets because of structural improvements related to greater economic diversification and a leading position in Revealed Comparative Advantage (RCAs). Singapore (4th) is the only non-European country to rank in the top 10, ranking highest on absorptive capabilities. The Nordic countries of Denmark and Sweden rank 5th and 6th respectively. Austria ranks 7th, benefiting in part from a relatively younger population compared to its European neighbours. Finland, Luxembourg, and Norway complete the index ranking 8th, 9th, and 10th.

The small country advantage

The top 10 ranking of the GLRI is dominated by smaller countries, with the exception of Germany. On the one hand, smaller countries seem to enjoy a number of cyclical resilience advantages. This can be explained by several factors ranging from lower spatial disparities, greater government closeness to the population, and the relative speed and ease of regulation and policy implementation. Smaller countries in the top 10 perform particularly well on their transformation capabilities demonstrating a strong orientation towards innovation, digital and green transitions.

On the other hand, the small size of a country can be a threat to labour market resilience by increasing risk exposure and dependency on other countries which can translate into structural vulnerabilities. For instance, a simple comparison between Singapore and the Netherlands, two top 5 GLRI performers, indicates how small countries might be exposed to higher structural risks. While Singapore ranks higher than the Netherlands on absorptive, adaptive, and transformative capabilities, it ranks lower in structural capabilities (8th against 2nd) due to higher trade vulnerability with relatively low export diversification (62nd). Singapore also demonstrates how small countries can face higher vulnerabilities through global linkages in areas beyond trade such as continued access to a skilled labour force.