What are the best practices or policies to address hidden unemployment?

1 Measure hidden unemployment

The first step to address hidden unemployment is to measure it accurately and consistently. Different countries and organizations may use different definitions and methods to calculate unemployment and labor force participation rates, which can affect the comparability and reliability of the data. Moreover, some forms of hidden unemployment may be difficult to capture or estimate, such as informal or irregular work, or the potential labor supply of people who are not actively seeking work. Therefore, it is essential to use standardized and comprehensive indicators and surveys that can capture the various dimensions and aspects of hidden unemployment, such as the U6 measure in the US, which includes the unemployed, the underemployed, and the marginally attached workers.

3 Stimulate labor demand and supply

The third step to address hidden unemployment is to stimulate both the demand and supply of labor, especially in sectors and regions that have high potential for growth and development. This can be done through various fiscal and monetary policies that can boost aggregate demand, investment, and consumption, and create more jobs and income opportunities. For example, infrastructure spending, tax incentives, subsidies, and credit facilities can support the expansion and diversification of productive sectors, such as manufacturing, services, or green industries. On the supply side, policies that can enhance the quantity and quality of labor, such as education, health, social protection, and labor standards, can increase the employability, productivity, and mobility of workers, and reduce the barriers and costs of participation.

4 Promote inclusive and flexible labor markets

The fourth step to address hidden unemployment is to promote inclusive and flexible labor markets that can accommodate the diverse needs and preferences of workers and employers. This means ensuring that labor markets are accessible, fair, and responsive to the changing economic and social conditions, and that they offer adequate protection and security for workers. For example, anti-discrimination laws, affirmative action programs, minimum wage policies, and collective bargaining can help prevent and reduce the exclusion and exploitation of vulnerable groups, such as women, youth, minorities, or migrants. Similarly, flexible work arrangements, such as part-time, temporary, or remote work, can help balance the trade-off between work and family responsibilities, and increase the options and satisfaction of workers.

5 Support entrepreneurship and innovation

The fifth step to address hidden unemployment is to support entrepreneurship and innovation that can generate new sources of value and competitiveness in the economy. This means fostering a conducive environment and culture that can encourage and enable people to start and grow their own businesses, or to create and apply new ideas and solutions in their work. For example, policies that can support entrepreneurship and innovation include reducing regulatory barriers and costs, providing financial and technical assistance, facilitating access to markets and networks, and promoting education and research. These policies can help unleash the potential and creativity of workers, and create more jobs and wealth.