OECD highlights labor market strength in 2024

Year-on-year #inflation in the OECD as measured by the Consumer Price Index (CPI) increased slightly in May 2024, to 5.9% from 5.7% in April.

🔗 https://t.co/xXkMMxWGfh | #OECDstats @OECD_Stat pic.twitter.com/xxh3uhOCzN

— OECD ➡️ Better Policies for Better Lives (@OECD) July 10, 2024

The Organisation for Economic Co-operation and Development (OECD) released its Employment Outlook 2024 report, focusing on the impact of the transition to net-zero emissions by 2050 on labor markets. The report highlights strong labor market performance, with many countries experiencing high employment levels and low unemployment rates. As of May 2024, the OECD unemployment rate was 4.9%, with women’s employment rates increasing more significantly than men’s since pre-pandemic levels. Real wage growth has turned positive year-on-year in most OECD countries, largely due to declining inflation. However, real wages remain below 2019 levels in many nations.

Statutory minimum wages are above 2019 levels in virtually all OECD countries.

Learn more about minimum wages in your country: https://t.co/HbS63ozKMJ | #EmploymentOutlook | @OECD_Social pic.twitter.com/ox1vqq6Cjx

— OECD ➡️ Better Policies for Better Lives (@OECD) July 10, 2024

As real wages recover, profits have started to buffer some of the rising labor costs, with no immediate signs of a price-wage spiral. The transition to net-zero emissions is set to affect more than a quarter of jobs across the OECD.

Statutory #MinimumWages are above 2019 levels in virtually all countries.

Learn more about minimum wages in your country with OECD’s #EmploymentOutlook.

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— OECD Social (@OECD_Social) July 10, 2024

Currently, 20% of the workforce is employed in green-driven occupations, while around 7% of jobs are in greenhouse gas (GHG)-intensive sectors. Workers in high-emission industries face greater earnings losses when displaced, with an average decrease of 36% over 5-6 years post-displacement, compared to 29% in other sectors. To mitigate the impact of job losses in high-emission industries and support the net-zero transition, the report recommends policies that facilitate job transitions and provide income support.

Labor market strength in transition

Effective governance, development cooperation, and policy innovations are crucial to navigating the challenges and opportunities of the net-zero transition. The OECD expects the unemployment rate to remain around 4% in the United States through the next year. The report indicates that there are “no signs” of a price-wage spiral, suggesting that wages can continue rising without significantly increasing prices. Inflation-adjusted real wages in the U.S. are still about 0.8% below their 2019 levels. Still, the OECD notes that there is room for profits to absorb further wage increases, helping to prevent significant inflation. The U.S. labor market has shown stability over the past year, with the unemployment rate at 4.1% in June 2024, near historic lows. The Federal Trade Commission’s ban on non-compete clauses in employee contracts, affecting 18% of U.S. workers, is expected to enhance labor market competition and foster wage growth. The transition to net-zero emissions is expected to have a modest impact on overall employment in the U.S., with some jobs lost, new ones emerging, and many existing roles transforming. In the U.S., 20.6% of the workforce is employed in green-driven roles, while about 4.8% of employment is in emission-intensive occupations. Addressing climate change through net-zero transitions is crucial, considering the employment costs of inaction. The U.S. approach to climate mitigation emphasizes grants, loans, tax provisions, and other incentives to promote clean energy and technology, as embodied in the Inflation Reduction Act of 2022, which allocates $370 billion to enhance energy security and accelerate clean energy transitions.