Global wage growth ‘missing in action’

The weak wage growth that’s characterized global labour markets since the financial crisis has hit poorer workers most, compounding inequalities and fuelling dissatisfaction, according to the OECD.

The Paris-based body said pay hikes are “missing in action,” even with rising employment, and any gains haven’t been equally distributed. In its Employment Outlook, the OECD said real labour incomes of the top one per cent of earners have risen much faster than those of median full-time workers.

The squeeze on staff and the perception of losing out has bred resentment, added to populism’s rise and the globalization backlash. Donald Trump was elected U.S. president after a campaign that blamed workers’ ills on immigration and global trade policies.

“Populism of both the far right and far left variety is rising, partly in response to the crisis,” Sony Kapoor, managing director of think tank ReDefine, wrote this week. “The electorate is more dissatisfied after what amounts to an almost lost post-crisis decade in which few saw an increase in their real wages, with many more experiencing economic and other forms of insecurity.”

The OECD cites numerous reasons for the broad wage weakness, including a slowdown in productivity growth, with hikes concentrated among the most innovative companies. Additionally, low-skilled workers haven’t been able to take advantage of a changing workplace, and curbs on unemployment benefits mean some are forced to take jobs with subpar pay. Another culprit is an increase in temporary or parttime work, an issue that’s come to a head in Italy, with businesses clashing with the new government over plans to restrict temporary contracts. The government says the change will improve job security.

There’s a “growing dissatisfaction by many about the nature, if not the strength, of the recovery,” the OECD said on Wednesday. “While jobs are finally back, only some fortunate few at the top are also enjoying improvements in earnings and job quality.”

It proposes that training schemes are expanded to all workers, so that they can freshen up skills throughout their working lives.