Inflation hits real wages even as OECD jobs market remains tight

Unemployment in OECD countries, at 4.8% for the third consecutive month in May 2023, is at its lowest level since the early 1970s, with OECD-wide employment projected to continue to expand in 2023 and 2024.

However, nominal wage growth, which rose 5.8% between Q1 2022 and Q1 2023, has been outpaced by inflation in 30 of 34 countries with available data, which means real wages have fallen 3.8% in the corresponding period. All G7 countries registered a fall in real wages.

Analysis in the OECD’s latest report indicates that there is room for company profits, which have outpaced labour compensation, to absorb further wage adjustments. This would recover some of the losses in purchasing power gradually without generating significant price pressures or affecting labour demand.

> Explore: Employment Outlook 2023

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