Workers’ wages in half of OECD countries have yet to recover the ground lost since 2021, at the start of the post-pandemic inflation surge, according to the latest OECD Wage Bulletin published today. In 19 out of 37 countries analysed, real wages remain below their 2021 levels – despite OECD-wide unemployment averaging below 5%.
The OECD also highlights that real negotiated wages remain below 2021 levels in all but two OECD economies and have slowed further, reflecting both infrequent adjustment and what recent OECD research identifies as an erosion of workers’ bargaining power. For the many workers already facing a surge in the cost of living, TUAC argues, the risk is that the loss in purchasing power becomes permanent.
The only bright spot is statutory minimum wages, which have risen above their 2021 levels and outpaced median wage growth. This has helped protect the living standards of low-skilled and vulnerable workers, while further compressing the wage distribution. But TUAC insists that such progress for the lowest-paid, while welcome, cannot on its own restore what workers across the income spectrum have lost.
Without wider recovery, TUAC cautions, the consequences will be felt not only by workers and their families, through a reduction in living standards, but by the broader economy through weaker consumption and slower growth.
In response, TUAC urges all OECD governments to act without delay with a comprehensive set of measures to ensure the full recovery of workers’ purchasing and bargaining power. Policies must actively support real wage recovery across the board, strengthen collective bargaining frameworks, and rebuild social protection.
Even the tight labour markets of recent years failed to deliver meaningful wage growth for most workers facing a surge in the cost of living. Governments must go further than focusing on minimum wages only, with an encompassing and coherent strategy to improve working conditions – strengthening social dialogue, employment protection and social insurance is essential to rebalance bargaining power and ensure that workers across the wage distribution finally see real improvements in their incomes.
