Labour market outlook in OECD´s countries
The 2022 edition of the OECD Employment Outlook reviews the key labour market and social challenges for a more inclusive post-COVID‑19 recovery. While the recovery post COVID-19 crisis was stronger than expected, the labour market progress remains uneven across countries and groups of workers and it has been undermined by the current cost of living crisis and the uncertain economic outlook. The report provides some recommendations to governments to cope with the increasingly difficult current context and a detailed country-by-country analysis.
Main take aways from the report:
- Labour market conditions continued to improve across the OECD in the first half of 2022: 57 million jobs were lost as the Covid-pandemic and 66 million new jobs were created in OECD countries since the beginning of the recovery post-COVID.
- Tight labour markets and a shortage of workers have been a defining characteristic across much of the OECD: in June 2022, OECD countries registered an overall net gain of over 9 million jobs compared to pre-pandemic levels. Labour shortages have been particularly intense in some low-pay sectors, such as food and accommodation.
- Despite increasing labour market tightness, nominal wage growth generally remains well below the high inflation of the first half of 2022, causing real wages to fall. The risk of a wage-price inflationary spiral is lower than in the past. Key structural changes in the labour markets in recent decades – namely, the removal of wage indexation and an increase in employer market power – now mean less upward pressure on wages The decline in the real value of wages is expected to continue over the course of 2022.
- The impact of rising inflation on real incomes is larger for lower-income households. Data from the six largest European countries show the bottom fifth of households by income have had to increase household expenditure by about 50% more than the top fifth in response to the supply shocks in energy and food.
- The report recommends three areas where governments could focus on to minimise the negative impacts on the most vulnerable:
- Strengthening collective bargaining is key to ensuring a fair distribution of the inflation shock between workers and employers.
- Targeted support for low-income groups from rising energy and food prices even as their wages stagnate – and provide support for those most exposed to high debt levels and rising interest rates.
- Better employment reskilling and training services