Wages stagnate, says OECD report

The economy of developed countries has regained its momentum with, among other things, employment levels at least equal to those of before the Great Recession of 2008, reports the OECD. And yet, the increase in wages still fails to resume its pace of yesteryear. Worse still, this stagnation in earnings is particularly hard on workers who were already the least paid.

At 2.6% on average last year, and probably still around 2.5% next year, economic growth in rich countries may not break records, but still displays good stability that has not been seen for a long time, observes the Organization for Economic Co-operation and Development (OECD) in a report unveiled Wednesday,

This improvement is particularly beneficial to the job market, which has never appeared so vigorous since the beginning of the last economic crisis ten years ago. The proportion of the population aged 15 to 74 who were employed was even two percentage points higher at the end of the year, at 61.7%, than it was before the outbreak of the Great Recession. The unemployment rate is similar, averaging only 5.9% in OECD countries in 2017, compared with 6.2% in 2006. Moreover, "Some of the most notable improvements concern disadvantaged groups, such as older workers, mothers of young children, young people or immigrants."

And yet, the annual growth rate of nominal wages was still only 3.2% in the last quarter of 2017, almost half the rate when the average unemployment rate was the same in 2007 (5.8%). Not only "wage growth remains much more gloomy than before the financial crisis," says the OECD, but "stagnant wages affect low-paid workers far more than those at the bottom of the wage scale. ". It's not just wages that do not improve at the same pace as the rest of the economy, it says. There is also the quality of the general conditions of work which pulls back.

The reasons for this stagnation

This phenomenon is mainly attributed to three factors: the low level of inflation , "A marked slowdown in productivity" and the growth of low-wage jobs. If the small rise in the cost of living is not necessarily a bad thing, it is different with the slowdown in productivity, which is one of the main factors in creating new wealth. Not only are productivity gains lower, the OECD experts note, but their economic spin-offs return less to workers' pockets, with about half of this lost wealth benefiting the richest and the other half going to the bottom. business development where technology and globalization are gaining importance at the expense of the labor force

Low-skilled workers are particularly vulnerable to technological shocks. Every year between 1% and 7% of the labor force in developed countries loses their jobs for economic reasons; of these, half will not have found a job again after one year in countries such as Canada and the United States. In this context, repeats the OECD, the best insurance policy remains the education and continuing training of workers so that they can adapt more easily to the changes under way.

Trade unions requested

In the meantime, those who find themselves out of work have also seen their government, since the crisis, continue to significantly reduce the coverage of employment insurance programs. In OECD countries, where "less than one in three unemployed workers receive unemployment benefits on average".

Workers are also victims of the decline of trade unions, the report says. OECD. The working conditions of only one-third of them are still governed today by collective agreements, almost half as many as in the mid-1980s. Well-designed collective bargaining systems, however, both favor, at the same time, More Equitable, More Productive, More Inclusive and More Efficient Economies,

In this overall picture, Canada appears neither better nor worse than the others. While the quality of jobs and the inclusiveness of the labor market are slightly better than average, the proportion of low-income households is also higher. Its employment insurance program is even less generous than the others, but there are also interesting requalification policies in Ontario and Quebec.