This was the message from the OECD’s Secretary-General Angel Gurría
when he presented the 2014 OECD Employment Outlook.
“While wage cuts have helped contain job losses and restore
competitiveness to countries with large deficits before the crisis,
further reductions may be counter-productive and neither create jobs
nor boost demand,” Angel Gurría told a Paris press conference on 3
September.
According to the OECD, unemployment in member countries will fall
somewhat in the next 18 months, from 7.4 percent in mid-2014 to 7.1
percent at the end of 2015. Nearly 45 million people are unemployed
within the OECD. That is 12.1 million more than before the financial
crisis hit in 2008.
No real wage growth
According to the Employment Outlook real wage growth has been nearly
stagnant since 2009, and in many countries — including Greece,
Portugal, Ireland and Spain — it has fallen by two to five percent a
year.
“Governments around the world, including the major emerging
economies, must focus on strengthening economic growth and the most
effective way is through structural reforms to enhance competition in
product and services markets. This will boost investment, productivity,
jobs, earnings and well-being,” said Angel Gurría.
This is partly a new message from the organisation which represents
34 of the world’s most industrialised nations. Gurría underlined that
countries with the largest budget deficits before the crisis were not
doing anything wrong by cutting costs and slowing wage growth.
“It has helped them restore competitiveness. But this might not be
the right remedy in the future.”
Although the situation is of course more difficult for those who
have become unemployed, the economic crisis has also hit those who
managed to keep their jobs.
“There is a lot of opposition to cuts in nominal wages. Instead we
have seen cuts to bonuses and overtime pay. But money is money, and
families’ purchasing power has suffered,” said Angel Gurría.
Minimum wage in 26 countries
Since prices have not fallen in line with wages, most people are
worse off. Increasing the minimum wage, like the USA and Germany have
done, at least helps those at the bottom of the salary pyramid. This
year’s employment outlook also features statistics on work quality.
Increased flexibility is no panacea either.
“Less than half of those in temporary jobs got permanent jobs three
years later,” Angel Gurría pointed out.
26 of the 34 member countries have now introduced a minimum wage — a
solution opposed by Nordic trade unions because they want to retain the
opportunity to influence wage negotiations. But the OECD also wants
minimum wages to be implemented in a manner which gives them maximum
effect. Regional differences should be taken into account, as well as
differences in age and skills.
