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OECD criticizes 'wage stagnation'

July 4, 2018

Wealthy nations are experiencing an unprecedented wage stagnation phenomenon, a fresh OECD employment report has said. The organization noted the current trend occurred despite falling jobless numbers.


The Organisation for Economic Co-operation and Development representing the group of 35 most industrialized countries warned Wednesday that wage hikes had been too modest to reflect recent developments on the labor market.

OECD researchers noted that unemployment rates in most member states were now below or close to the levels recorded before the start of the global financial crisis in 2007/2008.

Joblessness across the group is predicted to reach 5.3 percent at the end of 2018 and 5.1 percent in the following year.

But nominal wage growth in the last quarter of 2017 was only 3.2 percent, compared with a 5.8-percent increase in the second quarter of last year.

Usually in low-unemployment scenarios, not many workers compete for open positions, meaning companies often have to boost wage offers to lure suitable employees.

Impact not evenly felt

But this was not happening now, the OECD said in its latest employment report. It pointed out that wage stagnation was affecting median and low-paid workers much worse than high earners, warning that the slowdown "could undermine public belief in the recovery."

Researchers emphasized that tech companies had in no small way contributed to lowering average wage gains across OECD members. They said employees in innovative tech firms usually didn't adequately profit from productivity jumps as the companies in question tended to pass on a lot of the gains to investors. 

The organization called for coordinated collective bargaining systems with "strong and self-regulated social partners and effective mediation bodies."

Equal wages - but not for everyone

hg/jd (dpa, Reuters)

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