Unemployment rates are at or near record lows in many countries, including Canada and the U.S, with the share of people with a job is now higher than it was before the financial crisis. In Canada, there are supposedly some 400,000 unfilled jobs.
With employers desperate to hire, pay should be rising rapidly these days. But instead, wage growth is “missing in action,” the OECD reported in its latest employment outlook, with the world’s developed countries seeing “unprecedented wage stagnation.”
In fact, wage growth is just half what it was in comparable times before the financial crisis. In 2007, when unemployment rates in the 35 relatively wealthy OECD member countries were roughly what it is today, wage growth clocked in at 5.8 per cent. In the fourth quarter of 2017, it came in at just 3.2 per cent.
The slowdown in Canada’s wage growth wasn’t quite as steep, but neither is it as strong as the OECD average. Between 2007 and 2017, Canadian wages grew an average of 1.1 per cent per year, down from an average of 1.6 per cent in the period before that.
Well-targeted policy measures and closer collaboration with social partners are needed to help workers adapt to and benefit from a rapidly evolving world of work, to achieve inclusive growth.”
The OECD report offers several explanations for the stagnating wages, one being lower productivity. Another is that the quality of jobs available has worsened since the financial crisis, with people often taking on work for less pay than their previous position.
The share of people working part-time jobs has risen, and the share of working people living in poverty has also risen — to 10.6 per cent of all employed people, from 9.6 per cent before the crisis.
Companies are facing slower productivity growth, the OECD said, meaning they are having a harder time extracting more profit from their employees. That makes them reluctant to raise wages. -CINEWS