The labor market recovery continues, and employment is expected to return to its pre-crisis level in 2017. However, wage growth remains weak, according to a new report published by the OECD. The unemployment rate in the OECD area is expected to fall to 6.1% by the end of 2017, but 39 million people will remain unemployed, which is 6.3 million more than before the crisis.
In the 2016 Employment Outlook, the OECD shows that, with the global economy stuck in a slow-growth trap, better use of skills and additional structural reforms are necessary to boost productivity, support job creation, improve job satisfaction, and raise living standards.
By the end of next year, the proportion of the active population aged 15 to 74 in employment will rise to 61% in the OECD area, which is slightly above the level recorded at the end of 2007. In several OECD countries, particularly Germany, Chile, and Turkey, the employment rate has already exceeded its pre-crisis level.
However, in some European countries, the employment gap compared to the end of 2007 remains significant, especially in Spain, Greece, and Ireland (at 8.5, 9, and 7.9 percentage points respectively).
Wage growth remains sluggish in many countries. Comparing real wage growth from 2000 to 2007 with that recorded during the 2008-2015 period, there is a clear slowdown. In 2015, real hourly wages in these countries were more than 25% lower than they would have been if wage growth had continued at the same pace as in 2000-2007.
The quality of jobs, and particularly the situation of certain population groups, is a source of concern. For instance, the proportion of young people not in education, employment, or training in the OECD area was still higher in 2015 than in 2007 (15% compared to 13.5%), with several countries experiencing even more marked increases. Additionally, inequalities persist between men and women in the labor market, and jobs occupied by women remain of lower quality than those held by men.
An appropriate skills policy is essential for reducing inequalities in the labor market and boosting productivity and wages.
Furthermore, to revive productivity, wages, and job creation, additional structural reforms in product and labor markets are required.
The 2016 Employment Outlook shows that it is possible to minimize or even eliminate the potential short-term costs on the labor market caused by structural reforms if they are implemented during a period of economic expansion – and if they are accompanied by more effective unemployment compensation.
