A record number of people have jobs, and companies are struggling to fill positions. But workers still aren’t getting raises.
A new report from the Organisation for Economic Co-operation and Development warns that positive employment trends are at risk of being overshadowed by “unprecedented” wage stagnation.
The OECD said Wednesday that the employment rate in developed economies averaged nearly 62% at the end of 2017, the highest level since the global financial crisis. There are record job vacancies in many markets.
But it cautioned that wage growth, which is growing only half as quickly as a decade ago, remains “remarkably more sluggish” than before the financial crisis. Stagnant wages are hitting lower earners particularly hard.
“This trend of wageless growth in the face of a rise in employment highlights the structural changes in our economies that the global crisis has deepened,” OECD Secretary General Ángel Gurría said in a statement.
The Paris-based group suggested that several factors are contributing to weak wage growth.
The first is that productivity gains and tech advances, which help spur higher wages, are being made by only a handful of “superstar” companies. Other businesses, and their workers, are being left behind.
Many firms are reluctant to invest in new technology and innovation because of growing geopolitical uncertainties. Some businesses worry about a possible trade war, while others fear the impact of Brexit.
The lack of innovation leaves workers producing less value. Companies with lower productivity can’t afford to increase wages.
The second big reason is that while the global economy is recovering, many workers are reluctant to ask for a raise or switch jobs after being scarred by unemployment following the financial crisis.
The OECD also said that jobs lost during the crisis are not necessarily the same as positions created since.
People who were laid off in 2008 may find that their skills don’t match new openings. The OECD said one in four workers doesn’t have basic digital skills, which prevents them from accessing good jobs.
Women have been hit particularly hard by sluggish wage growth.
The OECD said women often suffer from the double whammy of being less likely than men to change jobs, which slows wage growth over time, and more likely to work part time. Salaries paid to part-time workers have been growing at a slower pace than overall wages.
CNNMoney (London) First published July 4, 2018: 11:43 AM ET