Editorial: Wageless growth: Is this time different?

298 Pages·08.835 MB·English

by  coll.

OECD Employment Outlook 2018
The 2018 edition of the OECD Employment Outlook reviews labour market trends and prospects in OECD
countries. Chapter 1 presents recent labour market developments. Wage growth remains sluggish due to
low inflation expectations, weak productivity growth and adverse trends in low-pay jobs. Chapter 2 looks at
the decline of the labour share and shows that this is partially related to the emergence of "superstar" firms,
OECD Employment Outlook
which invest massively in capital-intensive technologies. Chapter 3 investigates the role of collective bargaining
institutions for labour market performance. Systems that co-ordinate wages across sectors are associated with
better employment outcomes, but firm-level adjustments of sector-level agreements are sometimes required to 2018
avoid adverse effects on productivity. Chapter 4 examines the role of policy to facilitate the transition towards
new jobs of workers who were dismissed for economic reasons, underlying the need of early interventions in
the unemployment spell. Chapter 5 analyses jobseekers' access to unemployment benefits and shows that
most jobseekers do not receive unemployment benefits and coverage has often been falling since the Great
Recession. Chapter 6 investigates the reason why the gender gap in labour income increases over the working
life, stressing the role of the lower professional mobility of women around childbirth.
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OECD Employment
Outlook
2018
This work is published under the responsibility of the Secretary-General of the OECD. The
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Please cite this publication as:
OECD (2018), OECD Employment Outlook 2018, OECD Publishing, Paris.
http://dx.doi.org/10.1787/empl_outlook-2018-en
ISBN 978-92-64-30178-8 (print)
ISBN 978-92-64-30179-5 (PDF)
Series: OECD Employment Outlook
ISSN 1013-0241 (print)
ISSN 1999-1266 (online)
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FOREWORD │ 3

Foreword
The OECD Employment Outlook provides an annual assessment of key labour market
developments and prospects in OECD member countries. Each edition also contains
several chapters focusing on specific aspects of how labour markets function and the
implications for policy in order to promote more and better jobs. This year’s chapters
cover recent wage developments, drivers of the decline in the labour share, the impact of
collective bargaining on labour market performance, policies to smooth the transition
back into employment for workers who lost their job due to economic change, causes and
consequences of recent trends in unemployment benefit coverage, and an investigation of
the reasons why the gender gap in labour income increases over the working life.
The 2018 OECD Employment Outlook is the joint work of staff of the Directorate for
Employment, Labour and Social Affairs. The staff of the Economics Department and
Statistics and Data Directorate contributed to the preparation of Chapter 2. The whole
Outlook has also greatly benefited from comments from other OECD directorates and
contributions from national government delegates. However, its assessments of each
country’s labour market prospects do not necessarily correspond to those made by the
national authorities concerned.
This report was edited by Andrea Bassanini, and is based on contributions from
Alexandre Georgieff (Chapter 1), Cyrille Schwellnus, Mathilde Pak, Pierre-Alain Pionnier
and Elena Crivellaro (Chapter 2), Oliver Denk, Andrea Garnero, Alexander Hijzen
and Sébastien Martin (Chapter 3), Paul Swaim (Chapter 4), Rodrigo Fernandez,
Herwig Immervoll and Daniele Pacifico (Chapter 5) and Gwenn Parent (Chapter 6).
Research assistance was provided by Sylvie Cimper, Thomas Manfredi, Sébastien Martin
and Agnès Puymoyen. Pascal Marianna prepared the Statistical Annex with the assistance
of Dana Blumin and Sylvie Cimper. Editorial assistance was provided by
Brigitte Beyeler, Natalie Corry, Liv Gudmundson and Lucy Hulett.

OECD EMPLOYMENT OUTLOOK 2018 © OECD 2018

TABLE OF CONTENTS │ 5

Table of contents
Editorial: Wageless growth: Is this time different? ......................................................................... 11
Acronyms and abbreviations .............................................................................................................. 15
Executive summary ............................................................................................................................. 17
Chapter 1. Still out of pocket: Recent labour market performance and wage developments ...... 21
Key findings ....................................................................................................................................... 22
Introduction ........................................................................................................................................ 23
1.1. Recent developments in key indicators of labour market performance ...................................... 23
1.2. Wage growth trends since the onset of the crisis ........................................................................ 28
1.3. Concluding remarks .................................................................................................................... 38
Notes .................................................................................................................................................. 41
References .......................................................................................................................................... 43
Supplementary material for Chapter 1 ............................................................................................... 45
Chapter 2. Labour share developments over the past two decades: The role of technological
progress, globalisation and “winner-takes-most” dynamics ........................................................... 47
Key findings ....................................................................................................................................... 48
Introduction ........................................................................................................................................ 49
2.1. The link between productivity and wages over the past two decades ......................................... 50
2.2. Technological progress, globalisation and the emergence of “winner-takes-most” dynamics ... 53
2.3. The central role of skills for broadly shared productivity gains ................................................. 64
2.4. Concluding remarks .................................................................................................................... 66
Notes .................................................................................................................................................. 68
References .......................................................................................................................................... 70
Chapter 3. The role of collective bargaining systems for good labour market performance ....... 73
Key findings ....................................................................................................................................... 74
Introduction ........................................................................................................................................ 76
3.1. The role of collective bargaining for labour market performance: An overview ....................... 77
3.2. The role of collective bargaining for employment and wage inequality: New evidence from
macro-data ......................................................................................................................................... 79
3.3. The role of collective bargaining for inclusiveness and flexibility: New evidence from
micro-data .......................................................................................................................................... 85
3.4. The role of workplace representation for the quality of the working environment .................... 97
3.5. Balancing inclusiveness and flexibility in collective bargaining systems ................................ 100
3.6. Concluding remarks .................................................................................................................. 109
Notes ................................................................................................................................................ 111
References ........................................................................................................................................ 115
Supplementary material for Chapter 3 ............................................................................................. 122
OECD EMPLOYMENT OUTLOOK 2018 © OECD 2018
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Chapter 4. Back to work: Lessons from nine country case studies of policies to assist
displaced workers .............................................................................................................................. 123
Key findings ..................................................................................................................................... 124
Introduction ...................................................................................................................................... 126
4.1. The policy challenge ................................................................................................................. 127
4.2. Prevention and early intervention measures ............................................................................. 140
4.3. Re-employment assistance including retraining ....................................................................... 150
4.4. Income support ......................................................................................................................... 162
4.5. Concluding remarks .................................................................................................................. 171
Notes ................................................................................................................................................ 173
References ........................................................................................................................................ 180
Chapter 5. Unemployment-benefit coverage: Recent trends and their drivers ........................... 185
Key findings ..................................................................................................................................... 186
Introduction ...................................................................................................................................... 187
5.1. Access to unemployment benefits: Recent trends ..................................................................... 188
5.2. Access to unemployment benefits: Driving factors .................................................................. 194
5.3. Concluding remarks .................................................................................................................. 203
Notes ................................................................................................................................................ 204
References ........................................................................................................................................ 207
Supplementary material for Chapter 5 ............................................................................................. 210
Chapter 6. Starting close, growing apart: Why the gender gap in labour income widens over
the working life .................................................................................................................................. 211
Key findings ..................................................................................................................................... 212
Introduction ...................................................................................................................................... 214
6.1. Gender differences in professional lives ................................................................................... 215
6.2. Women's professional trajectories and career path-dependency: the role of lost opportunities 226
6.3. Towards a broad assessment of labour market gender equality ................................................ 239
6.4. How can gender labour inequalities be overcome? .................................................................. 246
6.5. Concluding remarks .................................................................................................................. 250
Notes ................................................................................................................................................ 252
References ........................................................................................................................................ 257
Supplementary material for Chapter 6 ............................................................................................. 261
Annex A. Statistical annex ................................................................................................................ 263

Tables
Table 4.1. A taxonomy of public and private measures to reduce the labour market adjustment costs
borne by displaced workers ......................................................................................................... 137
Table 4.2. Prevention and early intervention measures for displaced workers: Policy goals and
types of policy measures ............................................................................................................. 140
Table 4.3. Income support for displaced workers: Sources of income loss, types of policy measures
and selected policy design issues ................................................................................................ 163
Table 4.4. Characteristics of severance pay schemes for displaced workers in selected
OECD countries .......................................................................................................................... 168

OECD EMPLOYMENT OUTLOOK 2018 © OECD 2018
TABLE OF CONTENTS │ 7

Figures
Figure 1.1. Employment performance is back to pre-crisis levels ........................................................ 24
Figure 1.2. Contrasting trends in job quality ......................................................................................... 26
Figure 1.3. In spite of more inclusive labour markets, poverty remains a concern ............................... 27
Figure 1.4. The recovery in wage growth lags behind the decline in unemployment ........................... 30
Figure 1.5. The slowdown in wage growth was widely spread ............................................................. 31
Figure 1.6. Low inflation and the productivity slowdown have both driven wage growth down since
the crisis ......................................................................................................................................... 32
Figure 1.7. The incidence of involuntary part-time employment increased following the crisis until
the early recovery, but then started to decline ............................................................................... 34
Figure 1.8. Broad composition effects of part-time employment have continuously driven wage
growth down since the crisis ......................................................................................................... 36
Figure 1.9. The lower differential growth between full-time and part-time wages reflected the
expansion of involuntary part-time employment in the early recovery ......................................... 37
Figure 1.10. Broad composition effects of unemployment experience have driven wage growth
down since the crisis ...................................................................................................................... 39
Figure 2.1. Real median wages have decoupled from labour productivity ........................................... 52
Figure 2.2. Falls in labour shares coincided with falls in relative investment prices and the
expansion of global value chains ................................................................................................... 53
Figure 2.3. Large cross-country heterogeneity in labour share developments ...................................... 54
Figure 2.4. Estimated contributions to aggregate OECD labour share decline ..................................... 58
Figure 2.5. Average wages and productivity in the best firms and the rest ........................................... 61
Figure 2.6. Net entry fully explains the decoupling of wages from productivity in leading firms........ 62
Figure 2.7. Labour shares in leading and other firms, 2001-13 ............................................................. 63
Figure 2.8. Real value added in leading and other firms ....................................................................... 64
Figure 2.9. High routine intensity does not imply low skill intensity ................................................... 65
Figure 2.10. High skills reduce capital-labour substitution ................................................................... 66
Figure 3.1. Collective bargaining, labour market performance and inclusive growth .......................... 78
Figure 3.2. Collective bargaining systems and employment outcomes................................................. 84
Figure 3.3. Collective bargaining and wage dispersion ......................................................................... 85
Figure 3.4. Composition-adjusted wage dispersion by level of collective bargaining .......................... 89
Figure 3.5. Wage returns by level of collective bargaining ................................................................... 90
Figure 3.6. Accounting for the differences in wage dispersion with and without collective
bargaining ...................................................................................................................................... 91
Figure 3.7. Wage premium by level of collective bargaining ............................................................... 92
Figure 3.8. Elasticity of wages with respect to productivity across sectors: Country estimates ........... 93
Figure 3.9. Elasticity of wages with respect to productivity across sectors: The role of collective
bargaining ...................................................................................................................................... 95
Figure 3.10. Negotiated wages in the euro area .................................................................................... 97
Figure 3.11. Employee representation is linked with a higher-quality work environment ................. 101
Figure 4.1. Between 1% and 7% of workers lose their jobs to economic change every year ............. 129
Figure 4.2. Job displacement is only one (particularly disruptive) form of worker turnover .............. 130
Figure 4.3. Displaced workers find new jobs much more rapidly in some OECD countries than in
others ........................................................................................................................................... 133
Figure 4.4. The depth and persistence of the reduction in earnings following displacement varies
considerably across OECD countries .......................................................................................... 134
Figure 4.5. The impact of job displacement on earnings is highly variable ........................................ 135
Figure 4.6. Legally mandated notice periods vary widely................................................................... 147
OECD EMPLOYMENT OUTLOOK 2018 © OECD 2018
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Figure 4.7. The re-employment assistance available to jobseekers is influenced by overall spending
on active labour market programmes .......................................................................................... 152
Figure 4.8. Unemployment benefit schemes are a key source of income support .............................. 167
Figure 5.1. Benefit receipt rose quickly at the onset of the crisis, then dropped while unemployment
remained high .............................................................................................................................. 189
Figure 5.2. Unemployment-benefit receipt rose following the financial and economic crisis ............ 189
Figure 5.3. Pseudo-coverage rates across OECD countries ................................................................ 190
Figure 5.4. Different labour-market groups receive unemployment benefits ..................................... 193
Figure 5.5. Only a minority of jobseekers receive unemployment benefits ........................................ 194
Figure 5.6. Drivers of unemployment benefit coverage ...................................................................... 195
Figure 5.7. Benefit access provisions vary widely across countries.................................................... 196
Figure 5.8. Some groups of jobseekers are more likely to receive benefits than others...................... 198
Figure 5.9. Positive and negative composition effects: An illustration ............................................... 198
Figure 5.10. Coverage trends in selected OECD countries ................................................................. 200
Figure 5.11. Observable changes driving coverage in six OECD countries ....................................... 201
Figure 6.1. The working lives of women start differently than those of men ..................................... 218
Figure 6.2. Women's professional careers are not linear and combine several different working
lives ............................................................................................................................................. 219
Figure 6.3. Gender disparities in full-time earnings remain considerable ........................................... 223
Figure 6.4. The gender earnings gap grows until the middle of the career and then stabilises or falls 225
Figure 6.5. The inverted U-curve of the gender wage gap is more pronounced for low-educated
workers ........................................................................................................................................ 227
Figure 6.6. Professional transitions of women are of a different nature than those of men ................ 229
Figure 6.7. In-work transitions have a positive impact on earnings, but mothers are missing many
of these opportunities for advancement for several years after childbirth ................................... 231
Figure 6.8. Women adapt their labour supply to childbirth very differently in different countries .... 234
Figure 6.9. Withdrawal from the labour market at childbirth can have long-lasting effects on
women's careers ........................................................................................................................... 235
Figure 6.10. Long-term effect of childbirth on women’s in-work transitions ..................................... 236
Figure 6.11. After childbirth, re-entry into the labour market can be made through part-time work .. 237
Figure 6.12. Women's careers are one-third shorter than men's and four times more intensive than
men’s in part-time work and flexible working time arrangements.............................................. 239
Figure 6.13. The gender gap in labour income significantly decreased over the past decade driven
by the enhanced participation of women to the labour force....................................................... 241
Figure 6.14. Low-educated women face higher gender gaps in labour income mainly driven by
considerable employment gaps .................................................................................................... 243
Figure 6.15. Labour markets are more egalitarian at earlier stages of the career, but can become
particularly gender-biased as professional paths move forward.................................................. 245

Boxes
Box 2.1. The link between decoupling of median wages from productivity and labour shares ............ 51
Box 2.2. Methodology underlying the industry-level analysis .............................................................. 56
Box 2.3. Methodology and data underlying the firm-level analysis ...................................................... 59
Box 3.1. Empirical approach to adjust wages and wage dispersion for differences in composition ..... 87
Box 3.2. Empirical approach to estimate the role of collective bargaining for wage-productivity
alignment ....................................................................................................................................... 93
Box 3.3. Negotiated wages in euro area countries ................................................................................ 96
Box 3.4. Collective bargaining and productivity growth ...................................................................... 98
Box 3.5. An alternative to sector-level bargaining? The case of Modern Awards in Australia .......... 105
OECD EMPLOYMENT OUTLOOK 2018 © OECD 2018