Growth in real wages

Productivity growth has continued to slow in the post-crisis period, limiting the scope for improvements in material well-being, and the impact of the slowdown has been exacerbated by a decoupling of wage and productivity growth in many countries, which may also be driving income and wealth inequalities.

Key findings

Recent years have seen a slowdown in real average compensation growth compared with the pre-crisis period in most countries and in both manufacturing and services activities. In some countries, such as Greece, Italy, Portugal, Spain and the United Kingdom, real average compensation fell over the period 2010-2017.

Definition

Compensation of employees is made up of two components: wages and salaries, and social contributions payable by employers. Wages and salaries are payable in cash or in kind and include the values of any social contributions, income taxes, etc., payable by the employee even if they are actually withheld by the employer and paid on behalf of the employee. The value of social contributions payable by employers include actual social contributions payable by employers to social security schemes or to private funded social insurance schemes and imputed social contributions to unfunded schemes.

Compensation of employees is not payable in respect of unpaid work undertaken voluntarily, including work done by members of a household within an unincorporated enterprise owned by the same household. Any income generated through these activities is recorded as mixed income in the national accounts, which also includes income earned by the self-employed.

For Korea, as total hours worked by employees are not available at industry level, the number of employees is used to compile average real compensation per employee in Figure 6.2.

Business services excluding real estate, as shown below, include wholesale and retail trade, repair of motor vehicles and motorcycles; transportation and storage; accommodation and food services; information and communication services and professional, scientific, administrative and support activities.

Comparability

Compensation of employees does not represent the entire value of the contribution of labour to production. Mixed income also reflects a labour income component. In some countries, and notably in some sectors, the shares of self-employed in the labour force may be significant and, so, differences in the shares of compensation of employees across countries may reflect institutional differences, for example tax incentives, to be self-employed or otherwise. This can also have implications in a temporal context. For example, increases in average compensation per employee at the total economy level may merely reflect compositional effects, as would be the case if employees in lower paid activities shifted to self-employed status.

References

OECD Employment and Labour Market Statistics (database), http://dx.doi.org/10.1787/data-00313-en.

OECD National Accounts Statistics (database), http://dx.doi.org/10.1787/na-data-en.

OECD Productivity Statistics (database), http://dx.doi.org/10.1787/pdtvy-data-en.

OECD (2017), OECD Compendium of Productivity Indicators 2017, OECD Publishing, Paris, http://dx.doi.org/10.1787/pdtvy-2017-en.

Figure 6.1. Growth in real average compensation per hour worked (employees)
Total economy, CPI all items-deflated, percentage change at annual rate
Figure 6.1. Growth in real average compensation per hour worked (employees)

 StatLink http://dx.doi.org/10.1787/888933969143

Figure 6.2. Growth in real average compensation per hour (employees) in manufacturing and business services
Total economy, CPI all items-deflated, percentage change at annual rate
Figure 6.2. Growth in real average compensation per hour (employees) in manufacturing and business services

 StatLink http://dx.doi.org/10.1787/888933969162

End of the section – Back to iLibrary publication page