Executive summary

Eight years after the global financial crisis, GDP growth remains below pre-crisis rates in most countries, leading to concerns that the global economy has been stuck in a “low-growth trap”, with the post-crisis period being described by some analysts as the “decade of lost growth”. A striking feature of the post-crisis period has been a continuation of a long-term slowdown in productivity growth that has gone hand-in-hand with weak levels of investment. This matters because, as an important driver of growth, productivity has also been an important driver of improvements in living standards primarily through higher wages. But significant declines in labour’s share of income and a decoupling of labour productivity growth and real wage growth in many economies over the last two to three decades suggest that stylised assumptions about the relationship between labour productivity growth and wage growth may no longer hold, raising concerns about inequalities: labour income tends to play a larger role as a source of income among lower-income households and, so, a decline in the labour share may widen overall income distribution.