This 30th edition of the OECD Employment Outlook examines recent labour market trends and short-term prospects in OECD countries. It finds that the recovery from the recent economic and financial crisis has been slow and uneven. Unemployment remains unacceptably high in many countries and long-term unemployment has risen, increasing the risk of higher unemployment becoming entrenched. An analysis of how labour markets weather economic shocks shows that policies to lower structural unemployment also help to dampen the adverse effects of economic downturns on unemployment, earnings losses and earnings inequality. The report documents the decline in the labour share of national income that has been occurring in many OECD countries, primarily as a result of globalisation and technological change. Enhanced investment in education and better targeted tax and transfer programmes can help to ensure that the fruits of economic growth are more broadly shared. Finally, the impact of climate-change mitigation policies on the labour market is examined. Some sectors could experience large employment changes even if the impact on the overall level of employment may only be small. As for other structural shocks, policies should be put in place to facilitate labour market mobility.
- 10 July 2012
Labour Losing to Capital: What Explains the Declining Labour Share?
During the past three decades, the share of national income represented by wages, salaries and benefits – the labour share – has declined in nearly all OECD countries. The chapter examines the drivers of this decline, stressing the role played by factors such as increased productivity and capital-deepening, increased domestic and international competition, the reduction of workers’ bargaining power and the evolution of collective bargaining institutions. The decline of the labour share went hand-in-hand with greater inequality in the distribution of market income, which might endanger social cohesion and slow down the current recovery. Enhanced investment in education and use of the tax and transfer system can effectively reduce these risks.