Building a resilient recovery

Headline inflation has continued to come down in many countries, driven by the decline of food and energy prices in the first half of 2023. However, core inflation – inflation excluding the most volatile components, energy and food – hasn’t significantly slowed. It remains well above central banks’ targets. A key risk is that inflation could continue to prove more persistent than expected, which would mean interest rates need to tighten further or remain higher for longer. 

Inflation is projected to moderate gradually over 2023 and 2024, but to remain above central bank objectives in most economies. Headline inflation in the G20 economies is projected to ease to 6% in 2023 and 4.8% in 2024, with core inflation in the G20 advanced economies declining from 4.3% this year to 2.8% in 2024.

While firms’ adoption of AI is still relatively low, rapid progress including with generative AI (e.g. ChatGPT), falling costs and the increasing availability of workers with AI skills suggest that OECD countries may be on the brink of an AI revolution.

It is vital to gather new and better data on AI uptake and use in the workplace, including which jobs will change, be created or disappear, and how skills needs are shifting.

When considering all automation technologies including AI, 27% of jobs are in occupations at high-risk of automation. Initial findings from a new OECD survey of AI's impact in the manufacturing and finance sectors of seven countries highlight both the opportunities and risks that AI brings.

The COVID-19 pandemic battered the tourism sector. Despite its reopening, economic uncertainty continues to cast a shadow over the sector. How can tourism revive its fortunes in Emerging Asia?

Vocational training will be key to meeting increasing demands for skilled workers and adapting to a changing labour market. 

High work intensity coupled with limited control over one’s work, poor work-life balance and weak support from co-workers and management can all deteriorate workers’ health and well-being. At the same time, mental ill-health can have negative impacts on employees’ productivity and their participation in the labour market.

The pandemic was particularly detrimental to the mental health of many workers due to job insecurity and increased workloads in some sectors.

Changes in ways of working have also introduced new mental health challenges. While teleworking has increased flexibility and work-life balance for many, it can also worsen social isolation and impede healthy separation between work and home life.

Mental health conditions also affect how people engage with work: across OECD, almost half (47.6%) of people with such conditions were absent from work at least once over the previous year, compared with just under one-third (30.4%) of those without such conditions. In total, the labour-market costs of poor mental health exceed 1.5% of GDP across European countries.

By July 2022, Latin America and the Caribbean (LAC) had 13% of the world’s documented COVID-19 cases and 27% of the documented deaths – while accounting for only 8.5% of the world population. (At 873 per 100 000, Peru's excess death rate was more than double that of the LAC region, and roughly four times that of the OECD average.)

Such stark numbers bring to light long-standing weaknesses and challenges in the region's health systems. On closer examination, variables such as the comprehensiveness of a country's pandemic response and active measures to offset shortcomings correlated with lower excess death rates.

Chile and Costa Rica both centrally manage hospital capacity (including private providers). Despite a shortage of hospital beds similar to other countries in the region, an enhanced ability to allocate scarce resources made the difference: excess death rates in the two countries were lower than the OECD average.

The digital and green transformations have driven rapid changes in the world of work. Along with ageing populations, workers are facing ever greater job instability – which could impose costs on companies, workers and society.

By 2019, the average length of a job for a worker fell by nine months compared with just seven years before, a decline has been felt across all age groups. People have also been changing jobs at a faster pace, with one in five workers experiencing a change every year. This is a greater challenge for older workers.

With more people working for longer and against a backdrop of acute labour and skill shortages – a trend COVID-19 appears to have accelerated – there is a greater need to understand how to put the skills of a multigenerational workforce to better use, including through greater worker retention.