This year’s OECD How’s Life publication comes at a time when economies and societies have yet to fully recover from the COVID-19 pandemic and cost-of-living crisis, and stresses that traditional economic indicators such as GDP or average income are only part of the whole story.
The report rightly claims that far-reaching policy intervention to address the recent crises made employment more resilient: and employment rates across the OECD, after falling during the pandemic, bounced back to reach historic highs by the beginning of 2024. Average real disposable household income reached a somewhat higher level in 2023 compared to its pre-pandemic level.
Delving deeper however, the OECD finds many warning signs when it comes to other dimensions of material conditions and broader well-being:
- Income inequalities remain high, with household disposable income of the 20% top earners in the income distribution 5.6 times as high as that of the poorest 20%.
- Progress in reducing the share of people across OECD countries who say they find it difficult to make ends meet has stalled since the outbreak of the pandemic, with one in five people experiencing financial difficulties (and with Greece, followed by Mexico, as significant outliers – respectively over 60% and close to 50%).
- The share of low-income households overburdened by housing costs has increased in a third of OECD – countries (with the share increasing substantially from already high levels in Chile and Hungary).
- 8% of 15-year-old students in OECD countries suffer from food insecurity (with the share of households with children unable to acquire enough food to meet their needs increasing by almost 5 percentage points in 2022 in the US to 17%).
- Average reading and mathematics scores of 15-year-old students dropped substantially between 2018 and 2022.
- The share of youth not in employment, education or training has risen markedly in one fifth of OECD countries (Estonia, Chile, Slovenia, Lithuania, Poland, US).
- Progress in reducing deaths of despair stalled during the COVID-19 pandemic, but rose further from already high levels in the US and Latvia .
- 95% (!) of the population across the OECD is exposed to outside air pollution, and 15% to extreme temperatures.
- More than half of people feel they do not have a say in what the government does and trust in government declined compared to the pre-pandemic level declined in one third of OECD- countries. More generally, inequality and well-being deprivations undermine the shared bonds of society and feed polarisation.
“With all the report’s warning signals on material deprivation, well- being and trust flashing red, economies and labour markets are not robust enough to withstand the turn to a competitiveness, austerity and deregulation agenda.''
“This OECD report raises the question whether economic policy is at risk of repeating the mistakes made after the financial crisis of 2008’’ added Veronica Nilsson.
“The OECD report is right in arguing that improving the state of inclusive and sustainable well-being requires action beyond government. But it misses the opportunity to point to the role of trade unions and collective bargaining as a reliable means to lower inequalities, improve job quality and well- being in the workplace”.
Background: OECD’s How’s life reports
In 2009, in the middle of the great financial crisis, the report by the Commission on the measurement of economic performance and social progress argued that there are limits to traditional economic indicators such as economic growth, inflation and unemployment. The gap between these statistics and people’s real-life experience was seen by its main authors – Joseph Stiglitz, Amartya Sen and Jean-Paul Fitoussi – as one of the reasons why the crisis took many by surprise. The typical economic measurement system focussed policy makers’ attention on the bright economic performance over 2004 -2007, while the underlying built-up of risks and dangers was ignored.
Following up on this report, the OECD started to launch from 2011 on regular reports “How’s life?”, providing a more complete picture of people’s lives and the state of well-being, with the aim of identifying areas warranting policy intervention.
