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The rate of employment across developed economies will return to its 2007 level by the end of next year, although wages will take even longer to recover from the damage inflicted by the financial crisis, the Organization for Economic Cooperation and Development said Thursday.
In its annual report on the jobs outlook largely prepared before the U.K. voted to leave the European Union, the Paris-based research body urged governments to “make full use of all policy tools” to boost economic growth and support the creation of higher paying jobs.
The OECD calculates that in its 34 member nations, the proportion of people aged 15 to 74 years with jobs stood at 60.2% at the end of 2015, compared with 60.8% in 2007. That equates to a “jobs gap” of 5.6 million workers, which it projects will be closed by the end of 2017, almost a decade after the crisis hit.
The OECD said the repair of job markets had been “painfully slow,” reflecting much slower rates of economic growth than had been expected in the immediate aftermath of the crisis. But it said that even after the jobs gap has been closed, wages will remain well below the levels that would have been reached had pay continued to rise at the rates seen in the years before the crisis.
“Whether workers can ever recuperate the potential wage gains lost since 2007 is uncertain, especially if labor productivity growth remains weak,” said Stefano Scarpetta, the OECD’s director for employment.
A number of European countries that were hardest hit by the financial crisis and its aftermath are further away from closing the jobs gap than the OECD average, and will still have employment rates that are well below their 2007 levels a decade later. They include Greece, Spain, Ireland, Portugal and Finland. The U.S. is also projected to have employment rate lower than its precrisis level of 65.3% at the end of next year, at 63.4%.
But there are other countries that have already surpassed their precrisis employment levels, including Germany, Hungary, Poland and Chile.
Before its vote to leave the EU, the OECD had estimated that the U.K. would have had an employment rate higher than its precrisis level at the end of next year. But it estimates that the economic slowdown it expects to follow from the Brexit vote will lead to a fall in employment of 500,000 jobs over the coming four years.
“The U.K.’s short-term labor market prospects are likely to be negatively affected by the recent referendum decision to leave the EU,” said Mr. Scarpetta. “If the eventual outcome of negotiations to leave the EU makes the U.K. less attractive to companies that are most engaged in international trade and investment, then there will be long-term negative effects on wage growth. This is because such companies have higher productivity, and higher productivity growth, than companies that are not so heavily involved in the international economy.”
The U.K. had already seen one of the largest slowdowns in real wages since the crisis, and is one of a group of countries that also includes the Czech Republic, Estonia and Latvia in which pay is more than 25% lower than it would have been had precrisis trends continued.
Write to Paul Hannon at firstname.lastname@example.org
Read More At: http://www.wsj.com/articles/oecd-sees-post-crisis-jobs-gap-closing-by-end-of-2017-1467882001