Wage Growth Is ‘Missing in Action’ and Workers Are Not Happy

(Bloomberg) -- The weak wage growth that’s characterized global labor markets since the financial crisis has hit poorer workers most, compounding inequalities and fueling dissatisfaction, according to the OECD.

The Paris-based body said pay increases are “missing in action,” even with rising employment, and any gains haven’t been equally distributed. In its Employment Outlook, the OECD said real labor incomes of the top 1 percent of earners have risen much faster than those of median full-time workers.

The squeeze on workers and the perception of losing out has bred resentment, contributed to the rise of populism and the backlash against globalization. Donald Trump was elected after a campaign that blamed workers’ ills on immigration and global trade policies, Italy’s new deputy premier, Matteo Salvini, has made curbing immigration a priority, and the issue has even threatened the Germany’s Angela Merkel.

“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 Re-Define, 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 a number of reasons for the broad wage weakness, including a slowdown in productivity growth, with increases concentrated among the most innovative companies and little spillover to those not on the vanguard. Additionally, low-skilled workers haven’t been able to advantage of a changing workplace, and curbs on unemployment benefits mean some are forced to take jobs with sub-par pay.

Another culprit is an increase in temporary or part-time 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 is needed to improve workers’ 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, rather than just school leavers and university students, so that workers can freshen up skills throughout their working lives, thereby keeping them attractive to employers and reducing the likelihood of long-term joblessness.

To contact the reporters on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net;Fergal O'Brien in Zurich at fobrien@bloomberg.net

To contact the editors responsible for this story: Simon Kennedy at skennedy4@bloomberg.net, Zoe Schneeweiss, Brian Swint

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