Paris, 9 July 2024
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OECD labour markets remain tight, with total employment higher than before the COVID-19 pandemic and the OECD unemployment rate close to its lowest level since at least 2001. Jobs growth has slowed, however, and real wages have recovered to pre-2020 levels in only 19 of the 35 OECD countries with available data, despite some catching up in the past quarters. Gender employment participation gaps are narrowing, with female employment up by about 5% in May this year from December 2019, compared with 3% for men.
The OECD Employment Outlook 2024 estimates that OECD-wide employment, which reached 662 million in May 2024 – up by about 25% since 2000 – is expected to grow at around 0.7% per annum over 2024-25. The OECD-wide unemployment rate stood at 4.9% in May 2024, and is projected to inch up slightly. It was 0.2 percentage points higher for women than for men.
Real wages have been catching up on the lost ground in 2022 and the first part of 2023. By the first quarter of 2024, annual real wage growth was positive in 29 of the 35 OECD countries for which data are available, with an average increase across all countries of 3.5%. Analysis in this Employment Outlook indicates a reversal of recent trends that saw profits growing faster than wages. Wages are now recovering some of the lost ground, while there is room for profits to provide additional buffering for wage growth given the significant growth in profits over the past two to three years.
Minimum wages are above 2019 levels in real terms in virtually all OECD countries. In May 2024, the real minimum wage was 8.3% higher than five years earlier at the median across the 30 OECD countries with a national statutory minimum wage, thanks to significant nominal increases of statutory minimum wages to support the lowest paid during the high inflation period over the past two to three years. Evidence suggests that wages have been performing better in the lower part of the wage distribution, with nominal wages growing more in lower-pay industries and occupations and among workers with low education.
This year’s edition also analyses the impact that ambitious climate change mitigation packages aimed at achieving net-zero greenhouse gas emissions by 2050 will have on labour markets and on the jobs of millions of workers worldwide.
“Strong labour markets, with strong jobs growth, have been central to the economic resilience of OECD countries over the past several years. In the period since the pandemic, OECD employment has increased to a record high, despite the challenges posed by inflation and slow productivity growth,” OECD Secretary-General Mathias Cormann said. “The climate transition will lead to significant shifts in labour markets, from high-emissions industries towards new opportunities in green-driven jobs. Policy priorities should be to enable the necessary jobs mobility, including through effective training programmes in impacted sectors, to support workers who have lost their job or whose jobs are at risk through the transition and to promote green-focused innovation, entrepreneurship and jobs.”
While aggregate employment effects of the climate transition are estimated to be limited in the short run, the Employment Outlook notes that the climate transition is expected to lead to significant shifts and disruptions. Jobs will be lost in the shrinking greenhouse gas-intensive industries, while many others will be created in expanding low-emissions activities. About 20% of the OECD workforce is employed in green-driven occupations that will likely be positively impacted by the climate transition. This includes jobs that directly contribute to emissions reductions and also those that produce intermediate goods and services for environmentally sustainable activities. High-skill green-driven jobs usually pay higher-than-average wages, but low-skill green-driven jobs tend to have worse job quality than other low-skill jobs, suggesting that these sectors may be a relatively unattractive option for low-skilled workers.
Workers in shrinking high-emissions industries – which account for 80% of all greenhouse gas emissions but only 7% of employment – face 24% larger earnings losses on average during the six years following a mass layoff than in other industries. Women are less likely to work in green-driven occupations but, at the same time, men are more likely to work in declining high-emissions sectors. The current underrepresentation of females in science, technology, engineering and mathematics (STEM) educational fields and enduring gender stereotypes raise concerns about women’s capacity to benefit from high-skill green-driven jobs.
Policies should help facilitate job transitions and accompany workers towards new opportunities in green-driven jobs while mitigating earnings losses of displaced workers. These include early intervention measures, effective training programmes and targeted in-work support approaches such as time-limited wage subsidy schemes.
Full data and projections from the Employment Outlook 2024 are available at: oe.cd/employment-outlook.
Source – OECD