Support business dynamism and inclusive labour markets

This chapter starts from the trend of sluggish productivity growth that is slowing wage growth, and then elaborates on how ongoing economic transformations are likely to impact the productivity-inclusiveness nexus.While some countries have made progress, high levels of income and non-income inequalities hamper economic growth in most OECD countries. In the context of weak productivity growth in OECD countries, growing wage differences between and within firms have spurred market-income inequality. Concentration has increased in the manufacturing and services sectors in many OECD countries. While employment-to-population rates have increased in several OECD countries, some groups have been left behind. Women, young people and the older population, in particular, do not participate equally in labour and capital markets and find it difficult to start and run business in most countries.Both structural and fiscal policies are needed to align better growth and inclusiveness objectives - for example, to foster competition and enabling policy frameworks that can open up markets and encourage investment in people, cities, infrastructure and skills. Better coordination of product and labour market policies (also at the international level) would ease implementation of reforms, maximise their impact on growth, job-creation and equity. Labour market policies and institutions are needed to strengthen workers’ bargaining position. Shifting part of the financing of social programmes to general tax revenue can help to raise labour market participation, reduce labour market duality and boost labour productivity and economic growth, while at the same time extending support to a larger fraction of society and also covering atypical jobs. The new OECD Jobs Strategy sets out a state of policy principles for promoting a more inclusive labour market that is more resilient and adaptable and built upon more and better jobs.The Inclusive Growth Framework for Policy Action on Inclusive Growth consolidates some of the key policy recommendations to sustain and more equitably share the gains of economic growth from related OECD work, around broad principles to support business dynamism and inclusive labour markets through:(i) broad-based innovation and technology diffusion (ii) strong competition and vibrant entrepreneurship (ii) access to good quality jobs, especially for women and under-represented groups and (iv) enhanced resilience and adaptation to the future of work.