LATEST LABOUR MARKET DEVELOPMENTS IN THE OECD AREA
RECENT WAGE DEVELOPMENTS
Council Meeting, 23 February 2016
Stefano Scarpetta Director
Employment, Labour and Social Affairs OECD
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Latest labour market developments in the OECD area: the recovery continues, but unevenly
• OECD unemployment remained stable at 6.6% in December 2015, down from a peak of 8.5%, but there are still 7.9 million more people unemployed than before the crisis:
– Euro-area unemployment remains high at 10.4% but is now falling quite rapidly:
• Some of the countries where unemployment remains very high have seen large reductions in the past year (2.8, 1.5, 1.4 and 1.4 %pts reductions in Spain, Greece, Italy and Portugal, respectively)
• German unemployment fell by only 0.4 %pts. in the past year, but is very low at 4.5%.
– Unemployment rates are under 4% in Japan and Korea, and only moderately higher in Iceland, Mexico, Norway and Switzerland.
– US unemployment returned to its pre-crisis level of 4.9% in January 2016, down 0.7 %pts. from 1 year earlier. While unemployment is back to its pre-crisis level, employment and participation remain well below their pre-crisis levels.
– Unemployment rose during the past year in Canada, Finland and Norway, but
joblessness remains low in Norway.
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The labour market impact of the crisis and recovery has been highly uneven across countries, but unemployment is now falling in all of the hardest hit countries
Harmonised unemployment rate, percentage of the labour force, Q4 2007
a-Q1 2015
bNote: Countries shown in ascending order of the unemployment rates at their peak.
a) Q2 2007 for Switzerland.
b) Q3 2015 for Estonia, Greece, Hungary, Norway, Switzerland, Turkey and the United Kingdom.
Source: OECD calculations based on the OECD Short-Term Labour Market Statistics (database), http://dx.doi.org/10.1787/data-00046-en.
0 5 10 15 20 25 30
%
Q4 2007 Peak Q4 2015
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Long-term unemployment is also retreating from its recent peak, but more slowly than total
unemployment
Long-term unemployed (more than one year) as a percentage of total unemployed, Q4 2007 and Q3 2015
a,bNote: Countries are shown in ascending order of the incidences of long-term unemployment at their peak.
a) Data are not seasonally adjusted but smoothed using three-quarter moving averages. OECD is the weighted average of 33 OECD countries (Chile not included).
b) 2014 for Israel.
Source: OECD calculations based on quarterly national Labour Force Surveys (Cut-off date: 11 January 2016).
0 10 20 30 40 50 60 70 80
%
Q4 2007 Peak Q3 2015
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The post-crisis surge in unemployment led to slower nominal wage growth, but this effect has now been reversed in some countries
Wage-Phillips curves: the relationship between nominal wage growth and the change in the unemployment rate since the start of the crisis, Q4 2007-Q3 2015
aa) Nominal wage growth: year-on-year percentage change in nominal hourly wage (defined as total wages divided by hours worked of employees); unemployment gap: percentage- points change in the unemployment rate since the start of the crisis in Q4 2007.
b) Unweighted average of 17 euro area countries (including Austria, Belgium, Estonia, France, Finland, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Portugal, the Slovak Republic, Slovenia and Spain).
Source: OECD calculations based on quarterly national accounts and the OECD Short-Term Labour Market Statistics (database), http://dx.doi.org/10.1787/data-00046-en.
Euro area
aUnited States
Greece Spain
Q4 2007
Q3 2015
-3 -2 -10 1 2 3 4 5 6 7
-2 -1 0 1 2 3 4 5 6 7
Nominal hourly wage growth, %
Unemployment gap, percentage-points change
Q4 2007 Q3 2015
-3 -2 -10 1 2 3 4 5 6 7
-2 -1 0 1 2 3 4 5 6 7
Nominal hourly wage growth, %
Unemployment gap, percentage-points change
Q4 2007
Q3 2015 -8
-6 -4 -2 0 2 4 6 8
-2 0 2 4 6 8 10 12 14 16 18 20
Nominal hourly wage growth, %
Unemployment gap, percentage-points change
Q4 2007
Q3 2015
-8 -6 -4 -2 0 2 4 6 8
-2 0 2 4 6 8 10 12 14 16 18 20
Nominal hourly wage growth, %
Unemployment gap, percentage-points change
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Real wage growth has been less affected by the crisis due to slowing price inflation
Average annualised percentage growth rate in real hourly earnings
aa) Total wages divided by total hours worked of employees deflated using the private consumption price index.
b) Q1 2000-Q4 2007 refers to Q1 2002-Q4 2007 for Poland; and Q4 2012-Q3 2015 to Q4 2012 to Q2 2015 for Belgium..
c) OECD is the weighted average of the 26 OECD countries shown (not including Latvia).
Source: OECD calculations based on quarterly national accounts.
-12 -8 -4 0 4 8 12
% Q1 2000-Q4 2007 (↗) Q4 2007-Q1 2009 Q1 2009-Q4 2012 Q4 2012-Q3 2015
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Wage moderation contributed to slower growth of nominal unit labour costs
Index Base 100 in 2000
The blue shaded area refers to the period since the onset of the global financial crisis in Q4 2007.
a) Total wages in nominal terms divided by real GDP.
b) Real GDP divided by total hours worked.
c) Total wages divided by total hours worked of employees in real terms (deflated using the private consumption price index).
Source: OECD calculations based on quarterly national accounts.
Euro area
aUnited States Japan Greece
Ireland Italy Portugal Spain
60 80 100 120 140 160 180
60 80 100 120 140 160 180
60 80 100 120 140 160 180
60 80 100 120 140 160 180
60 80 100 120 140 160 180
60 80 100 120 140 160 180
60 80 100 120 140 160 180
60 80 100 120 140 160 180 60
80 100120 140 160
180Unit labour costᵃ Hourly labour productivityᵇ Nominal hourly earningsᶜ
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Adjustments in nominal unit labour costs, output price and employment in the euro area
a) Countries are classified according to their structural current account balance at the onset of the global financial crisis in 2007.
b) “Tradable sector” refers to manufacturing; trade sector; transport and communication; financial and business activities; and real estate activities. “Non-tradable sector” refers to construction; accommodation and food services; education; personal services; and public administration.
Source: OECD calculations based on annual national accounts.
-50.050.00.0
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0
Countries with current account balance surplusᵃ Countries with current account balance deficitᵃ
A. Cumulative change in nominal unit
labour costs by period
Percentage change, 2000-14B. Cumulative change in nominal unit labour costs by sector
b Percentage change, 2009-14C. Total change in employment by sector
bPercentage change, 2009-14
AUT BEL DEU
FIN LUX
NLD
ESP
EST FRA
GRC IRL
ITA
LTU LVA
PRT SVK
SVN
-30 -25 -20 -15 -10 -5 0 5 10 15 20
-30 -25 -20 -15 -10 -5 0 5 10 15 20
Non-tradable sector
Tradable sector
AUT BEL FIN DEU NLD
ESP
EST FRA
GRC IRL
ITA LTU LVA
PRT SVK
SVN
-30 -25 -20 -15 -10 -5 0 5 10
-30 -25 -20 -15 -10 -5 0 5 10
Non-tradable sector
Tradable sector AUT BEL
DEU FIN
LUX NLD
ESP EST FRA
IRL GRC
ITA LTU LVA PRT
SVK SVN
-80 -70 -60 -50 -40 -30 -20 -10 0 10 20
-20 -10 0 10 20 30 40 50 60 70 80
2009-14
2000-09
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