OECD-wide employment is projected to keep expanding in 2023 and 2024. In May 2023, the OECD unemployment rate remained at its record low of 4.8 per cent for the third consecutive month. The unemployment rate was stable compared with April 2023 in 14 OECD countries including France, Germany, and Japan, while it declined in 13 including Austria, Colombia, Greece, Italy, and Norway. However, it rose in five OECD countries including Canada and the US, according to the OECD Employment Outlook 2023.

The OECD-wide unemployment rate is expected to increase slightly to 5.2 per cent by the fourth quarter of 2024, though with relatively larger rises of around 0.75 percentage point or more expected in Australia, New Zealand, the UK, and the US.

Real hourly wages have fallen in many industries and OECD countries, and the cost of living has risen. In the first quarter of 2023, despite the pick-up in nominal wages, real annual wage growth was negative in 30 of the 34 countries with available data, with an average decline of 3.8 per cent.

Analysis indicated that profits have often risen more than labour compensation. Evidence suggested there is some room for profits to absorb further wage adjustments to recover some of the losses in purchasing power gradually without generating significant price pressures or resulting in a fall in labour demand.

The loss of purchasing power is particularly challenging for workers in low-income households. To support low-paid workers, minimum wages and collective bargaining can help mitigate losses in purchasing power. Governments can also provide targeted support through the tax and benefit system to raise low-income households’ net income. Broad fiscal support should be unwound given the decline in energy prices from their 2022 peaks.

This year’s Outlook edition also analysed the impact of artificial intelligence (AI) on the labour market. While firms’ adoption of AI is still relatively low, rapid progress in the technology, falling costs, and the increasing availability of workers with AI skills suggest that OECD countries may be on the brink of an AI revolution.

“Labour markets have shown remarkable resilience over the past year and remain tight, though high inflation and the rising cost of living have eroded real incomes,” said OECD secretary-general Mathias Cormann. “The recent acceleration of generative AI-related developments and tools marks a technological watershed with material implications in many workplaces. There is a real need to consider longer term policy frameworks on the use of AI in the workplace and to continue to foster international cooperation to maximise the benefits while appropriately managing the downside risks.”

Taking the effect of AI into account, occupations classified to be at the highest risk of automation account for about 27 per cent of employment. High-skill occupations, despite being more exposed to recent progress in AI, are still at least risk of automation.

Fibre2Fashion News Desk (NB)