OECD Employment Outlook 2025

1. Bouncing back, but on shaky ground: Wages continue to recover in uncertain labour markets

Alexandre Georgieff

Sébastien Martin

Abstract

OECD labour markets have continued to show resilience over the past year. Employment and labour force participation have reached record highs, while unemployment remains historically low. However, there are signs of weakening labour markets, with employment growth decelerating and labour market tightness in many countries and sectors falling back to pre‑COVID 19 levels, although labour shortages remain. Real wages are now growing in virtually all OECD countries, but in half of them their levels remain below the levels seen in early 2021 – just before the post-pandemic inflation surge. The wages of the lowest-paid workers have held up particularly well, as the real statutory minimum wage has increased since then in virtually all the 30 OECD countries with a national minimum wage. As real wages continue to recover, unit profits continue to lose the ground gained since 2021. Looking ahead, geopolitical uncertainties and hikes in tariff rates could significantly weaken labour markets and bring back high inflation, thereby hampering the wage recovery.

In Brief

OECD labour markets have continued to show resilience over the past year, but early signs of a slowdown are now visible, with more moderate employment growth and an easing of labour shortages. Nevertheless, real wages are rising year-on-year in virtually all OECD countries, although they remain below early 2021 levels in half of them. In the future, geopolitical uncertainties and tariff increases if confirmed are expected to dampen economic activity and may weigh on inflation and wages.

The latest labour market data available at the time of writing suggest that:

• OECD employment and labour force participation rates have reached record highs, while unemployment remains at historically low levels in many countries. The OECD unemployment rate remained at 4.9% in May 2025. The average employment rate in the OECD rose to 72.1% in Q1 2025, while the average participation rate reached 76.6%.

• However, there are signs of worsening labour market conditions, as employment growth continues to decelerate. Employment rates rose by 0.12 percentage points on average in the OECD between Q1 2024 and Q1 2025, compared with 0.20 between Q1 2023 and Q1 2024. In the near future, geopolitical uncertainties and hikes in tariff rates are expected to dampen economic activity, leading to further labour market slowdowns.

• Labour shortages continued to ease but labour markets remain tight. Labour market tightness has returned to pre‑COVID‑19 levels in many OECD countries, as has the efficiency of matching between employers and jobseekers. Nonetheless, tightness remains remarkably above pre‑crisis levels in several countries, and pre‑COVID‑19 labour markets were already tight for a number of structural reasons that are well at play.

• Gender gaps in employment and labour force participation are narrowing in many OECD countries. Between Q1 2024 and Q1 2025, on average across OECD countries, women’s employment rate rose by around 0.32 percentage points more than men’s, while the gender gap in the participation rate narrowed by 0.3 percentage points.

• The incidence of part-time employment has remained stable. However, this masks substantial offsetting changes in voluntary and involuntary part-time. Involuntary part-time declined as labour markets recovered from the COVID‑19 crisis and tightened. However, voluntary part-time increased simultaneously by about the same amounts, possibly because some workers switched from full-time to part-time as: (i) their preferences shifted from work to family commitments during the COVID‑19 crisis; and (ii) employers became more willing to accommodate requests for part-time work as labour markets tightened.

• Real wages are now growing in virtually all OECD countries but remain below the levels seen in early 2021 – just before the post-pandemic inflation surge – in half of them. According to the latest data for Q1 2025, annual real wage growth was positive in 33 of the 37 OECD countries for which data are available, with an average across countries of 2.5%. However, real wages remained below their Q1 2021 level in 18 of these 37 countries. Looking ahead, the wage recovery could be jeopardised, as geopolitical uncertainties and hikes in tariff rates may significantly weaken labour markets while exerting further upward pressure on inflation.

• The real statutory minimum wage was higher in April 2025 than in January 2021 in virtually all the 30 OECD countries with a statutory minimum wage. The increase in the average real minimum wage across these 30 countries was 7.9%, while that of the median real minimum wage, unaffected by particularly large increases in some countries, was 4.7%.

• The wages of the lowest-paid workers have proved more resilient than median wages to the post-pandemic inflation surge. Although empirical evidence remains scarce, a compression of the wage distribution at the bottom could be observed in some countries during the COVID‑19 crisis and subsequent recovery.

• As real wages continue to recover, unit profits continue to lose the ground gained during the post-pandemic inflation surge. Unit labour costs increased more than unit profits between Q1 2024 and Q1 2025 in most OECD countries, continuing a trend that began around Q1 2023. This reflects the catching-up of purchasing power by wages after the disproportionate contribution of unit profits to the inflation surge in 2021‑22; and should not be seen as a warning sign of price‑wage spirals.

Introduction

OECD labour markets suffered major shocks in the wake of the COVID‑19 crisis and Russia’s war of aggression against Ukraine. Fluctuations in labour demand and the efficiency of the matching process between labour demand and supply led to labour shortages in many sectors of the economy (OECD, 2024[1]; OECD, 2022[2]). A sharp rise in prices caused real wages to decline and living standards to fall, while most central banks tightened monetary policies. Nonetheless, OECD labour markets proved resilient to the negative consequences of these shocks (OECD, 2024[3]; Araki et al., 2023[4]). This chapter presents the latest labour market and wage developments across the OECD. In particular, it takes stock of labour shortages, with a particular focus on their potential lasting effects on part-time employment patterns. It also examines the latest impacts of the cost-of-living crisis on wages, as well as the risks associated with geopolitical uncertainties and rising tariff rates.

The chapter is organised as follows: Section 1.1 reviews recent labour market developments in OECD countries; Section 1.2 reports on labour shortages and their possible impact on part-time employment patterns; and Section 1.3 reports on recent wage developments, including an update on statutory minimum wages and negotiated wages. Section 1.4 concludes.

1.1. Labour markets have been supported by resilient economic growth but there are early signs of slowdown

GDP growth in OECD countries slowed down in Q1 2025 after several years of resilient pace (Figure 1.1). All along 2024 in most major economies, disinflation and the resulting easing of monetary policy helped to offset the uncertainty created by geopolitical tensions and persistent concerns over the cost of living, especially in the United States (OECD, 2024[1]). In early 2025, however, economic growth turned negative in a number of OECD countries including, Japan, Korea, the United States and a number of euro area countries (e.g. Denmark, Norway, Portugal and Slovenia) (OECD, 2025[5]). Still, growth remained solid in other euro area countries, including Germany, Ireland, Spain and the United Kingdom.

Figure 1.1. GDP growth slowed down in Q1 2025 after several years of resilient pace

Real GDP indexed to 100 in Q1 2021, seasonally adjusted, selected OECD countries

Note: Euro Area refers to the averages of 20 Eurozone countries.

Source: OECD calculations based on OECD Data Explorer, “Quarterly real GDP growth – OECD countries”, http://data-explorer.oecd.org/s/2ah (accessed on 06 June 2025).

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1.1.1. Labour markets have remained resilient

Unemployment remains historically low

Unemployment rates remain at historically low levels in many OECD countries but have stopped their declining trends (Figure 1.2). While the OECD unemployment rate was already at its pre‑COVID‑19 level in Q1 2022, it continued to decline, reaching a record low of 4.8% in Q2 2023 (OECD, 2024[3]). It has then remained stable over the past two years to stand at 4.9% in Q1 2025. That same quarter, the unemployment rate was 0.5 percentage points or more above its Q1 2024 level in only around a quarter of OECD countries: Austria, Canada, Denmark, Estonia, Finland, Latvia, Luxembourg, New Zealand, Slovenia and Sweden. On the other hand, Costa Rica stands out for the magnitude of its recent unemployment rate reduction: from 10.5% in Q1 2023 to 7.4% in Q1 2025. Monthly data suggests that the OECD unemployment rate was at 4.9% in May 2025.

Figure 1.2. Unemployment rates remain low

Unemployment rate (percentage of labour force), seasonally adjusted

Note: The labour force population includes all those aged 15 or more. Euro Area refers to the 20 Eurozone countries.

Source: OECD Data Explorer, “Monthly unemployment rates”, http://data-explorer.oecd.org/s/2ai (accessed on 16 June 2025).

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Employment continued to grow, albeit at a slower pace

Employment rates continued to grow in most OECD countries in 2024, reaching new records, even though in many countries growth was weaker than in 2023. Employment rates rose by 0.12 percentage points (to 72.1%) on average in the OECD between Q1 2024 and Q1 2025, compared with 0.20 between Q1 2023 and Q1 2024 (Figure 1.3, Panel A). Employment growth was also lower in 2024 than in 2023 in about half (20) of the 38 OECD countries, and even reached negative values in 16 countries. Nevertheless, employment rates accelerated remarkably in some of the countries where it was still well below or close to pre‑COVID‑19 levels in early 2024 (OECD, 2024[3]), and where there was therefore still some room for catching up: Colombia, Czechia, Lithuania and the United Kingdom. Costa Rica suffered significant and lasting employment losses after the pandemic but has recovered a significant portion of these over the past two years.

In most OECD countries, the gender gap in employment rates narrowed over the past year (Figure 1.3, Panel A), continuing an evolution observed throughout the recovery from the COVID‑19 crisis (OECD, 2024[3]). Between Q1 2024 and Q1 2025, on average across OECD countries, women’s employment rate increased by about 0.32 percentage points more than men’s. However, this represents 0.07 percentage points less than the gender gap reduction over the previous year. The even higher reduction in the gender employment gap between Q1 2023 and Q1 2024 might partly reflect the fact that some women returned to the labour market during the cost-of-living crisis to compensate for the loss of purchasing power linked to their husband’s earnings. Costa Rica and Lithuania recorded the biggest reduction in the gender gap in employment over the periods Q1 2023 – Q1 2024 and Q1 2024 – Q1 2025 respectively, showing that women benefited strongly from the employment catch-up in these countries over these periods.

On average across OECD countries, the increase in the employment rate between Q1 2023 and Q1 2025 is due for around a third to the increase in the employment rate of prime age workers (25‑54), and for two‑thirds to the increase in the employment rate of older workers (55‑64) (Annex Figure 1.A.1, Panel A). By contrast, the employment rate of younger workers (15‑24) fell slightly over the period. The increase in the employment rate of older workers is part of a trend that has been going on for two decades, analysed in detail in Chapter 3.

Figure 1.3. Employment rates continued to rise in many countries in 2024 but at a slower pace than in 2023

Percentage point change among the working age population, seasonally adjusted data

Note: The gender employment gap is defined as the male‑to-female difference in the employment rate. The working age population includes all those aged 15 to 64. OECD is the unweighted average of the 38 OECD countries shown in this Chart. Euro Area refers to the 20 Eurozone countries. Countries are ordered by descending order of the percentage point change in employment rates in Q1 2023‑Q1 2025 (Panel A). p.p: percentage point.

Source: OECD Data Explorer, “Employment rate”, http://data-explorer.oecd.org/s/2al (accessed on 17 June 2025).

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Rising employment rates were also driven by an increase in the employment rate of migrants in a number of countries, albeit to a small extent – among OECD EU countries, only in Belgium, Ireland, Slovenia and Spain does it account for more than a quarter of employment rate growth over the Q1 2023 – Q1 2025 period (Annex Figure 1.A.2 Panel A) – see also Chapter 2. In addition, in these four countries, foreign-born individuals have been the main contributors to the growth in the absolute number of labour market participants over the recent period (Causa et al., 2025[6]). In terms of the employment gap, migrant employment was more affected by the COVID‑19 pandemic than that of natives, but rebounded more strongly, so that the employment rate gap between the two populations stabilised at a low level (0.6 percentage points) in 2022 on average across OECD countries (OECD, 2024[7]).

Labour force participation continued to rise

In most OECD countries, the labour force participation rate of the working-age population continued to rise in 2024 (Figure 1.4, Panel A), reaching new records. At 76.6% in Q1 2025, the average labour force participation rate in the OECD was 0.17 percentage points higher than in Q1 2024, a smaller increase than between Q1 2023 and Q1 2024. Nevertheless, in around a fifth of the countries, the Q1 2025 participation rate remains below its Q1 2023 level.

Similar to employment, labour force participation increased more for women than for men over the past year in most OECD countries, so that the gender gap in participation rates narrowed by 0.3 percentage points between Q1 2024 and Q1 2025 on average in the OECD (Figure 1.4, Panel B). The reduction in the gender participation gap has also slowed down: the gender gap reduction was 0.08 percentage points greater between Q1 2023 and Q1 2024.

Again similar to employment, the increase in the labour force participation rate between Q1 2023 and Q1 2025 is due solely to prime age and older workers (in approximately equal shares on average across OECD countries), and is significantly driven by a rising share of migrants participating in the labour market in only a few countries (Annex Figure 1.A.2 Panel B).

Figure 1.4. Labour force participation rates continued to rise

Percentage point change among the working age population, seasonally adjusted data

Note: The gender participation gap is defined as the male‑to-female difference in the labour force participation rates. The working age population includes all those aged 15 to 64. OECD is the unweighted average of the 38 OECD countries shown in this Chart. Euro Area refers to the 20 Eurozone countries. Countries are ordered by descending order of the percentage point change in labour force participation rates in Q1 2023‑Q1 2025 (Panel A). p.p.: percentage point.

Source: OECD Data Explorer, “Labour force participation rate”, http://data-explorer.oecd.org/s/2am (accessed on 17 June 2025).

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1.1.2. Labour markets are expected to slowdown in 2025 and 2026

Geopolitical uncertainty and new bilateral tariff rates are expected to weaken economic activity and, as a result, labour markets (OECD, 2025[5]). Business investment, trade and consumption, are likely to decline, while inflation may rise in many countries. Monetary policy could therefore remain restrictive for longer than previously anticipated, further weakening growth prospects.

Assuming that the bilateral tariff rates prevailing in mid‑May persist for the rest of 2025 and 2026, annual global GDP growth is expected to slow further from 3.3% in 2024 to 2.9% in 2025 and 2026 (OECD, 2025[5]). OECD employment is also expected to slow down (Figure 1.5 Panel A): for the median OECD country, annual employment growth is projected to decline from 1% in 2024 to 0.7% over 2025‑26. The median unemployment rate is projected to remain broadly stable, but there are notable differences between countries – in the United States, for example, the unemployment rate should rise from 4.1% in Q1 2025 (Section 1.1.1) to 4.3% in Q4 2026 (Figure 1.5 Panel B). However, these projections should be treated with caution, given the continuing uncertainty surrounding the new bilateral tariff rates.

Figure 1.5. OECD labour markets are expected to slow down

Note: (p) OECD projection. Euro Area refers to the 17 EU member states using the euro as their currency which are also OECD Member States. The 2000 19 trend refers to the average quarterly employment growth rate prevailing in Q1 2000 to Q4 2019.

Source: OECD Data Explorer, “Economic Outlook 117”, http://data-explorer.oecd.org/s/2an (accessed on 04 June 2025).

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1.1.3. Hours worked per capita continued their declining trend

Between 2019 and 2024, in most OECD countries, hours worked per capita continued their downward trend. On average across the countries for which data are available, around a quarter of the 5.5% reduction in total hours worked per year since 2005 occurred since 2019 (Figure 1.6, Panel A). The decline therefore pre‑dates the COVID‑19 crisis in most countries, although significant accelerations can be observed since the crisis in some countries, including Austria, Germany, Ireland, the Slovak Republic and Spain. Average usual weekly working hours followed a similar trend (Panel B), although the decline was smaller – 3.6% between 2005 and 2023 on average across the countries analysed – and followed the same trend before and after the COVID‑19 crisis in virtually all countries analysed.

The decline in working hours could be explained by a number of factors, including shifts in worker preferences towards less overtime or more part-time employment, changes in working time regulation or collective agreements (OECD, 2021[8]), but also compositional shifts towards jobs requiring fewer working hours. Evidence from Europe suggests that the downward trend in hours worked over the past 20 years reflects worker preferences for part-time employment rather than regulatory changes or compositional effects (Astinova et al., 2024[9]; ECB, 2021[10]). However, the recent reduction since the COVID‑19 crisis has not been associated with a widespread increase in part-time employment (see Section 1.2.3 below).

Figure 1.6. The post-pandemic decline in average hours worked per worker is generally consistent with long-term trends

Percentage change

Note: In Panel A, the figure reports total hours worked divided by total employment. OECD is an unweighted average of the 29 OECD countries shown in this Chart (not including Chile, Colombia, Costa Rica, the Euro area, Iceland, Japan, Korea, New Zealand, Switzerland and Türkiye). Euro Area refers to the averages of 20 Eurozone countries. In Panel B, OECD is the unweighted average of the 37 OECD countries shown (not including the Euro area and Japan). Figures for Costa Rica and the United States refers to employees. For Costa Rica, statistics refer to 2010‑19 and 2010‑23. Euro Area refers to the 20 Eurozone countries. Usual weekly working hours are the number of hours usually worked per week in the main job, thus excluding leave periods and non-usual overtime.

Source: Panel A: OECD Data Explorer, “Quarterly National Accounts (for ‘Developer API’)”, http://data-explorer.oecd.org/s/2ao, Labour Accounts (Australian Bureau of Statistics) for Australia, and Bureau of Labor Statistics, Office of Productivity and Technology for the United States. Panel B: OECD Data Explorer, “Average usual weekly hours worked on the main job”, http://data-explorer.oecd.org/s/2ap, and StatCan, “Average usual and actual hours worked in a reference week by type of work (full- and part-time)”, www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1410004301, Table: 14‑10‑0043‑01 for Canada.

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1.2. Labour shortages continued to ease but labour markets remain tight

Labour shortages were widespread following the COVID‑19 crisis. Labour demand rose considerably to catch up after the crisis (OECD, 2024[3]), while matching efficiency deteriorated significantly during the pandemic and early recovery period (OECD, 2024[1]). In theory, labour shortages should drive down involuntary part-time employment, as firms find it increasingly difficult to fill full-time vacancies and wish to attract more workers (OECD, 2023[11]; OECD, 2018[12]). Yet, the previous section shows that, between 2019 and 2023, weekly working hours generally did not deviate from the downward trend that had begun well before the COVID‑19 crisis. The objective of this section is to better understand the link between labour shortages, labour market tightness and part-time employment during the cost-of-living crisis and the recovery from the COVID‑19 crisis.

1.2.1. Labour market tightness is back to pre‑COVID‑19 levels in many countries and sectors but remains high

By Q1 2025, labour market tightness (measured by the number of vacancies per unemployed person) had returned to pre‑COVID‑19 levels in many of the countries analysed. It was well below the post-COVID‑19 peak in virtually all countries (Figure 1.7, Panel A) but remained remarkably above pre‑crisis levels in several. Labour market tightness was more than 10% above pre‑crisis levels in almost half (11) of the 25 countries analysed: Australia, France, Greece, Ireland, Lithuania, the Netherlands, Norway, Portugal, the Slovak Republic, Slovenia and Spain. In the Euro area, in April 2025, one in six firms in industry and one in four firms in services cited lack of labour as a one of the factors limiting production. While these figures are well below the post-pandemic peaks (about one in four in industry and one in three in services), they are above the pre‑pandemic records of 2019.1

Job postings data from the online platform Indeed2 completes the picture, showing declining trends in recent months: in May 2025, online job postings were below their December 2025 levels in the seven countries for which data are available (Figure 1.7, Panel B).3 However, the declining trend has slowed down (or even reversed) in most of these countries in April-May 2025.

Figure 1.7. Labour market tightness has returned to pre‑COVID‑19 levels in many countries

Note: OECD is the unweighted average of the 24 OECD countries shown in Panel A of this chart (not including Chile, Colombia, Costa Rica, Denmark, Estonia, Iceland, Israel, Italy, Japan, Korea, Mexico, New Zealand, Switzerland and Türkiye). The peak (Panel A) refers to the maximum value of the number of vacancies per unemployed reached in Q4 2019‑Q1 2025. For Latvia, the number of vacancies per unemployed remains always below its Q4 2019 level and consequently there is no peak during the period considered. In Panel A, statistics do not include vacancies in the public administration and compulsory social security.

In Panel A, statistics refer to the number of vacancies (see description below) divided by the number of unemployed (ILO definition). The definition of vacancies is not harmonised across countries, which limits international comparability. For European countries, a vacancy is defined as a paid post that is newly created, unoccupied, or about to become vacant for which the employer is taking active steps and is prepared to take further steps to find a suitable candidate from outside the enterprise concerned; and which the employer intends to fill either immediately or within a specific period. For Australia, a vacancy is defined as a job available for immediate filling and for which recruitment action has been taken by the employer. For Canada, a vacancy is defined as a job meeting the following conditions: it is vacant on the reference date (first day of the month) or will become vacant during the month; there are tasks to be carried out during the month for the job in question; and the employer is actively seeking a worker outside the organisation to fill the job. The jobs could be full-time, part-time, permanent, temporary, casual, or seasonal. Jobs reserved for subcontractors, external consultants, or other workers who are not considered employees, are excluded. For the United Kingdom, a vacancy is defined as a position for which employers are actively seeking recruits from outside their business or organisation (excluding agriculture, forestry, and fishing) based on the estimates from the Vacancy Survey. For the United States, a vacancy is defined as a job that is not filled on the last business day of the month and a job is considered open if a specific position exists and there is work available for it, the job can be started within 30 days, and there is active recruiting for the position.

In Panel B, online job postings on Indeed are indexed to 100 in December 2024.

Source: Job Vacancies (ABS) for Australia; Job vacancies, payroll employees, and job vacancy rate (Statistics Canada) for Canada; Eurostat, Job vacancy statistics by NACE Rev.2 activity (Table jvs_q_nace2) for the European countries; Vacancy Survey (ONS) for the United Kingdom; and Job Openings and Labor Turnover Survey (Bureau of Labor Statistics) for the United States; OECD Data Explorer, “Monthly unemployment rates”, http://data-explorer.oecd.org/s/2aq (accessed on 17 June 2025). Indeed, Online Job Posting Tracker, https://github.com/hiring-lab/job_postings_tracker (accessed on 17 June 2025).

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To capture labour market tightness at industry level, Figure 1.8 provides an overview of the industry-specific vacancy rates (i.e. the fraction of all jobs available in the industry that are unfilled and for which employers report that they are actively trying to recruit) in Australia, the euro area and the United States.

In Q1 2025, in both the euro area and the United States, labour market tightness was close to or below pre‑COVID‑19 levels in many sectors, including some where the peak in tightness had been particularly high, such as accommodation and food service activities (Figure 1.8). Labour market tightness remained more than 10% above pre‑crisis levels (i) in the euro area: in arts and entertainment, manufacturing, finance, and trade; (ii) in the United States: in education, manufacturing, real estate, and other (unclassified) service sectors.

In Australia, however, labour market tightness remained substantially above pre‑COVID‑19 levels in most sectors, particularly those where peak tightness had been among the highest: accommodation and food service activities, manufacturing, and real estate – labour market tightness in these three sectors remained above pre‑COVID‑19 levels by 141%, 72% and 101%, respectively.

Figure 1.8. Labour market tightness is close to pre‑COVID‑19 levels in most sectors in the euro area and the United States but not in Australia

Job vacancy rates by industry as a percentage of occupied and unfilled jobs

Note: The definition of vacancies is not harmonised across countries. For Australia, a vacancy is defined as a job available for immediate filling and for which recruitment action has been taken by the employer. For the Euro Area, a vacancy is defined as a paid post that is newly created, unoccupied, or about to become vacant for which the employer is taking active steps and is prepared to take further steps to find a suitable candidate from outside the enterprise concerned; and which the employer intends to fill either immediately or within a specific period. For the United States, a vacancy is defined as a job that is not filled on the last business day of the month and a job is considered open if a specific position exists and there is work available for it, the job can be started within 30 days, and there is active recruiting for the position. The peak refers to the maximum value of the job vacancy rate reached in Q4 2019‑Q1 2025. Industries refer to the ANZSIC 2006 at 1‑digit level for Australia, the NACE Rev. 2 at 1‑digit level for the Euro Area and to the NAICS for the United States and are therefore not fully comparable between these three countries. For the United States, “Transports” includes warehousing and utilities, and “Health” and “Education” refer to the private sector only. Euro Area refers to 20 Eurozone countries.

Source: Job Vacancies (ABS) for Australia; Job vacancy statistics by NACE Rev.2 activity for the Euro Area; and Job Openings and Labor Turnover Survey (Bureau of Labor Statistics) for the United States.

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Despite these developments, labour market tightness remains high in the OECD. Indeed, pre‑COVID‑19 labour markets were already tight for a number of structural reasons that are still at play, including population ageing (Chapter 2), the digital and green transformations (Dorville, Filippucci and Marcolin, forthcoming[13]) and poor job quality in some sectors (Causa et al., 2025[6]).

1.2.2. Matching efficiency deteriorated between the onset of the pandemic and mid‑2022 but is now back to pre‑pandemic levels

Beyond labour market tightness, labour shortages are influenced by the efficiency of matching between employers and jobseekers. The Beveridge curve illustrates the relationship between the unemployment rate (x-axis) and the job vacancy rate (y-axis), plotting different points in time. During economic downturns, unemployment rises as job vacancies fall, while the opposite occurs during upturns, so that the Beveridge curve has a negative slope. An outward shift in the Beveridge curve implies that a given level of unemployment is associated with a higher number of vacancies, and that it is more difficult for firms to fill existing vacancies with qualified jobseekers. This may therefore be interpreted as a reduction in matching efficiency.

Matching efficiency deteriorated between the onset of the pandemic and mid‑2022 but is now back to pre‑pandemic levels in Australia, the euro area and the United States. Indeed, the corresponding Beveridge curves shifted outward between Q4 2019 and mid‑2022 but have now returned to pre‑pandemic patterns (Figure 1.9), although the level of tension is now higher (Q1 2025 is further to the left of the curve than Q4 2019) in Australia and in the euro area. Figure 1.9 Panel B and C also show that matching efficiency declined persistently in both the United States and the euro area after the 2008 global financial crisis (no data is available before Q4 2009 for Australia), notably due to growing skills mismatches and rising long-term unemployment (OECD, 2024[1]). It should be noted that movements of the Beveridge curve between two points in time cannot be interpreted as movements in matching efficiency (nor can they be compared between Europe and the United States) when the use of short-term work (in Europe) and/or temporary layoffs (in the United States) were high at those points in time – e.g. for periods starting/finishing in 2020‑21 (OECD, 2021[8]).4 However, this does not apply to differences between Q4 2019 and mid‑2022, as the exceptional measures taken in response to the pandemic had largely been rolled back by the end of 2021 (OECD, 2022[2]).

Figure 1.9. Beveridge curves shifted outward between the onset of the pandemic and mid‑2022 but have now returned to pre‑pandemic patterns

Job vacancy rate and unemployment rate, Q1 2006 to Q1 2025

Note: The job vacancy rate refers to the number of job vacancies expressed as a percentage of labour demand (occupied jobs and job vacancies). The definition of job vacancies is not harmonised across countries: Australia: a vacancy is defined as a job available for immediate filling and for which recruitment action has been taken by the employer. Euro Area: a vacancy is defined as a paid post that is newly created, unoccupied, or about to become vacant for which the employer is taking active steps and is prepared to take further steps to find a suitable candidate from outside the enterprise concerned; and which the employer intends to fill either immediately or within a specific period; United States: a vacancy is defined as a job that is not filled on the last business day of the month and a job is considered open if a specific position exists and there is work available for it, the job can be started within 30 days, and there is active recruiting for the position. Euro Area refers to 20 Eurozone countries. Q4 2009 to Q1 2025 for Australia.

Source: Job Vacancies (ABS) for Australia; Eurostat, Job vacancy statistics by NACE Rev.2 activity (Table jvs_q_nace2) for the Euro Area; Job Openings and Labor Turnover Survey (Bureau of Labor Statistics) for the United States; and “Monthly unemployment rates”, http://data-explorer.oecd.org/s/2aq (accessed on 16 June 2025).

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1.2.3. Tight labour markets may have contributed to changes in part-time employment patterns

Part-time employment can be voluntary or involuntary.5 On the one hand, individuals may choose to work part-time, for example to achieve a better work-life balance. On the other hand, part-time employment may reflect difficulties in finding full-time work,6 particularly in certain service sectors where part-time employment is often used to cope with daily variations in demand (OECD, 2019[14]; Euwals and Hogerbrugge, 2006[15]). Involuntary part-time workers tend to receive lower hourly wages and experience poorer working conditions than similar full-time or voluntary part-time workers (MacDonald, 2019[16]).

Part-time employment in OECD countries is largely female‑dominated (Figure 1.10 Panel A) and mainly voluntary (with the exception of Italy) (Panel B). On average across the countries analysed, part-time jobs accounted for 17.6% of total employment in 2023, and 71% of these were held by women. The average incidence of involuntary part-time employment was 2.8%, around five times lower than that of voluntary part-time employment (14.8%). The predominantly voluntary nature of part-time employment is particularly marked in the five European countries where part-time employment is most widespread (Austria, Denmark, Germany, the Netherlands and Switzerland7) (Figure 1.10 Panel B).

Figure 1.10. Part-time employment is largely female dominated and mostly voluntary

Incidence of part-time employment, in percentage of total employment (persons aged 15‑64), 2023

Note: Involuntary part-time employment refers to part-time workers who could not find full-time work. Part-time employment is based on national definitions. The OECD is the unweighted average of the 33 OECD countries shown (not including Costa Rica, Iceland, Korea, Mexico and Türkiye).

Source: OECD calculations based on OECD Data Explorer, “Incidence of full-time and part-time employment based on national definitions”, http://data-explorer.oecd.org/s/2ar, and “ Incidence of involuntary part time employment”, http://data-explorer.oecd.org/s/2as.

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The relative stability of part-time employment masks larger offsetting changes in voluntary and involuntary part-time

In most OECD countries, the incidence of part-time employment8 remained stable over the 2021‑23 period (Figure 1.11, Panel A), a period of post-COVID‑19 recovery and remarkable tightening of the labour market.9 The magnitude of the change in the incidence of part-time employment was greater than 10% in only four of the 33 countries analysed – Czechia (+21%), Greece (‑11%), Hungary (‑12%) and Latvia (‑12%). This may seem counter-intuitive since, in theory, tighter labour markets should encourage firms to make less use of involuntary part-time, to attract more workers and help fill full-time vacancies (OECD, 2018[12]).

However, the relative stability of part-time employment masks larger, offsetting changes in voluntary and involuntary part-time. Involuntary part-time employment declined. However, voluntary part-time increased at the same time. The changes in voluntary and involuntary part-time are of opposite sign but similar magnitude on average across the countries analysed (Figure 1.11, Panel A). On average across these countries, voluntary part-time accounts for around a quarter of employment growth over the 2021‑23 period (Panel B).

Figure 1.11. The incidence of part-time employment has not changed, but its nature has

Note: Involuntary part-time employment refers to part-time workers who could not find full-time job. Part-time employment is based on national definitions. The OECD is the unweighted average of the 33 OECD countries shown (not including Costa Rica, Iceland, Korea, Mexico, and Türkiye). Total employment refers to full-time and part-time workers aged 15‑64, excluding the unclassified. Therefore, the employment rates (Panel B) are not necessarily the same as the working age employment rates currently published by the OECD. Panel A: involuntary part-time and voluntary part-time refer to the contributions of each of these forms of employment to the percentage change in the incidence of part-time employment in working-age employment. Panel B: involuntary part-time, voluntary part-time and full-time refer to the contributions of each of these forms of employment to the percentage change in the working-age employment rate.

Source: OECD calculations based on OECD Data Explorer, “Incidence of full-time and part-time employment based on national definitions”, http://data-explorer.oecd.org/s/2au, and “Incidence of involuntary part time employment”, http://data-explorer.oecd.org/s/2av.

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Tight labour markets may have contributed to changes in part-time employment patterns

Both women and men benefited from the reduction in involuntary part-time. Although there are notable differences between countries, the percentage reduction in the incidence of involuntary part-time in total employment is similar (and around 17%) among women and men on average across the countries analysed in Figure 1.12. Furthermore, there is no major difference in the nature of the reduction in involuntary part-time by gender (Figure 1.13): for both women and men, part-time weekly working hours above 20 hours (referred to as long part-time working hours or LPT) play a more important role, probably because they are the easiest to convert into full-time working hours.

Figure 1.12. Women experienced a smaller increase in voluntary part-time employment during the COVID‑19 recovery than men

Percentage change in the incidence of involuntary (Panel A) and voluntary (Panel B) part-time employment in total employment (persons aged 15‑64), 2021‑23

Note: Involuntary part-time employment refers to part-time workers who could not find full-time work. Part-time employment is based on national definitions. The OECD is the unweighted average of the 33 OECD countries shown (not including Costa Rica, Iceland, Korea, Mexico and Türkiye).

Source: OECD calculations based on OECD Data Explorer, “Incidence of full-time and part-time employment based on national definitions”, http://data-explorer.oecd.org/s/2au, and “Incidence of involuntary part time employment”, http://data-explorer.oecd.org/s/2av.

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The increase in voluntary part-time also concerns both women and men, although the percentage increase for women is less than half that for men (4% for women vs. 9% for men on average across the countries analysed) (Figure 1.12). The nature of the increase also differs by gender: while LPT again plays a more important role among women, the situation is more balanced among men, with only half of the increase due to LPT on average across the countries analysed in Figure 1.13 – the other half is therefore due to weekly working hours below 20 hours, referred to as short part-time working hours or SPT.

Figure 1.13. The nature of the post-COVID‑19 rise in voluntary part-time differs by gender

Percentage change in the incidence of part-time employment in total employment (persons aged 15‑64), 2021‑23

Note: Involuntary part-time employment refers to part-time workers who could not find full-time work. Part-time employment is based on national definitions. “Average” is the unweighted average of the 16 OECD countries shown in this chart (not including Australia, Canada, Chile, Colombia, Costa Rica, the Euro area, Estonia, Hungary, Iceland, Israel, Japan, Korea, Latvia, Lithuania, Luxembourg, Mexico, New Zealand, Poland, the Slovak Republic, Slovenia, Spain, Türkiye and the United Kingdom). Some European countries are missing due to EU-LFS data limitations. EA17 refers to the weighted average of the 17 OECD countries of the Eurozone. In Panel A (respectively Panel B), each category refers to the contribution of the category to the percentage change in women’s (respectively men’s) incidence of part-time employment in working-age employment.

Source: OECD calculations based on the European Union Labour Force Survey (EU-LFS) for the European countries and the Current Population Survey (CPS) for the United States.

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These developments are consistent with the notion that some workers switched from full-time to part-time work because: (i) their preferences shifted from work to family commitments during the COVID‑19 crisis; and (ii) employers became more willing to meet part-time work requests as labour markets tightened and workers’ bargaining power became stronger. Increases in voluntary part-time via this mechanism would have been strongest for men, as women were much more committed to the family than men before the COVID‑19 crisis (Andrew et al., 2022[17]; Hupkau and Petrongolo, 2020[18]; Sevilla and Smith, 2020[19]). In other words, fathers may have enjoyed or got used to working less and spending more time with their families when the COVID‑19 restrictions were in force (Alon et al., 2020[20]) and decided to modify their working arrangements accordingly when the restrictions were lifted and their bargaining position became more favourable.

Another mechanism at play could be that non-working household members have decided to (re‑)enter the labour market on a part-time basis to compensate for the loss of purchasing power of their main source of income (e.g. social benefits or partner’s wage) when hit by the cost-of-living crisis. This mechanism would affect more women than men, as women are less likely to be the household’s main breadwinner.

As expected, the negative contribution of involuntary part-time to the change in total part-time employment is particularly strong between 2021 and 2022 (Annex Figure 1.A.3, Panels A and B), when labour market tightness increased the most (Annex Figure 1.A.4). In contrast, the positive contribution of voluntary part-time is balanced over the periods 2021‑22 and 2022‑23, which is consistent with the above mechanisms: although most of the changes in real wages and labour market tightness occurred between 2021 and 2022, real wages remained low – so economic hardship remained high – and labour markets (particularly) tight – so workers’ bargaining power remained high – until 2023. Again in line with the above mechanism, the positive contribution of voluntary part-time to the change in total part-time employment does not hold over the period 2019‑21 (Annex Figure 1.A.3, Panel C).

These results may have implications in terms of wage inequality. On the one hand, the reduction in involuntary part-time could have reduced labour market slack for some – generally lower-wage – groups and sectors for which it was high, exerting upward wage pressure for these groups and thus reinforcing wage compression. On the other hand, SPT is likely to be associated with low monthly and annual wages, so the greater increase in voluntary SPT among men may have contributed to reducing the gender wage gap.

Whether these trends reflect a temporary adjustment phase or persistent changes remains an open question. Involuntary part-time may stabilise, as labour market tightness has returned to pre‑pandemic level in many countries (Section 1.2.1). In addition, it is unclear to what extent the changes in preferences induced by the pandemic will persist over time.

1.3. Real wages are growing in virtually all OECD countries but there is still room for catching up in many of them

In all countries analysed, headline inflation is now a long way from its 2022 peak (Figure 1.14). In Q1 2025, inflation in the OECD area (as measured by the Consumer Price Index) was 4.5%, less than half of its Q3 2022 level (10.4%), but still above 2%, which is the central bank target for many OECD countries (e.g. the euro area, the United Kingdom and the United States). Inflation remains above this target in 28 OECD countries – 40% in Türkiye and above 4% in six other OECD countries.

Figure 1.14. Inflation has fallen significantly since its 2022 peak

Inflation defined as annual percentage change in the consumer price index (CPI), Q1 2025

Note: Values on top refer to peaks of inflation above 16%. “OECD (average)” and “OECD (median)” are the unweighted average and the median across the 38 OECD countries, respectively.

Source: OECD Data Explorer, “Consumer price indices (CPIs, HICPs), COICOP 1999”, http://data-explorer.oecd.org/s/2aw, and “Consumer price indices (CPIs), COICOP 2018”, http://data-explorer.oecd.org/s/2ax (accessed on 07 May 2025).

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1.3.1. Real wages are growing year-on-year in virtually all OECD countries but remain below early 2021 levels in half of them

According to the latest data for Q1 2025,10 annual real wage growth was positive in virtually all OECD countries, with an average of 2.5% across the 37 countries for which data are available (Figure 1.15 Panel A).11 Only in Belgium, Iceland, Israel and Japan, was annual real wage growth negative in Q1 2025, but the reduction in real wages was generally modest (1% or less).12 Recent data on wages posted in online vacancies for nine countries point to a slowdown in the growth of real posted wages over recent months (Box 1.1).

In Q1 2025, despite their persistent annual growth, real wages remained below their Q1 202113 level (which pre‑dates the post-pandemic inflation surge) in half of the 37 countries for which data are available (Figure 1.15, Panel B). Real wages remained more than 3% below Q1 2021 levels in a quarter of the countries analysed: Australia, New Zealand, three Nordic countries (Denmark,14 Finland, Sweden) and four southern and central and eastern European countries (Czechia, Italy, the Slovak Republic and Spain). Nonetheless, real wages regained some (at least 17% – in New Zealand) of the lost ground in all OECD countries.

Several factors may have influenced wage growth over the last year. While the easing of labour market tightness described in the previous section may have been a moderating factor for new hires, the increase in statutory minimum wages (see next section) and further adjustments in wages negotiated in collective agreements (Box 1.2) – negotiated wages are renewed on average every 12 to 24 months (OECD, 2023[21]) – continued to exert upward pressures. In the future, however, the wage recovery could be jeopardised, as geopolitical uncertainties and hikes in tariff rates may significantly weaken labour markets while exerting further upward pressure on inflation (OECD, 2025[5]).

Figure 1.15. Real wages continued to grow in 2024 but remain below Q1 2021 levels in half of OECD countries

Note: nominal hourly wages refer to a constant-industry-structure “wages and salaries” component of the labour cost index, except if otherwise indicated. For Costa Rica and Mexico, the adjustment for constant-industry-structure of the average hourly earnings has been estimated by the OECD. Statistics refer to the private sector only for Costa Rica, Japan, Korea, Mexico and the United States. For Türkiye, statistics exclude public administration and defence; compulsory social security; education; human health and social work activities; arts, entertainment and recreation; and other service activities. Nominal wage series are seasonally adjusted for all countries except for Canada, Costa Rica, Israel, Mexico, New Zealand and Switzerland. Statistics for Chile refer to regular hourly wages, excluding overtime and bonuses. Nominal hourly wage data in Mexico are affected by a significant share of employees with unreported income.

†: Nominal hourly wage refers to the actual wage i.e. without any adjustment for sources of compositional shifts for Israel, Japan, Korea and the United Kingdom, and thus comparing these results with the other countries requires caution. Moreover, nominal hourly wage refers to the average monthly wages per employee job for Israel, and to the average weekly earnings for the United Kingdom.

‡: Nominal hourly wage controls for additional sources of compositional shifts, such as regions for Australia, Canada, Chile, and New Zealand, job characteristics and workers’ characteristics for Australia, Chile, and New Zealand, gender for Chile and Switzerland, and occupations for Chile and the United States. Real hourly wage is estimated by deflating the nominal hourly wage by the consumer price index (CPI-all items).

Countries are ordered by descending order of the year-on-year changes in real hourly wages (Panel A). The trough (Panel B) refers to the quarter where real hourly wages were at their lowest value for the indicated country since Q1 2021. For Switzerland, the trough (Panel B) refers to the lowest fourth quarter since Q4 2020. “OECD (average)” and “OECD (median)” are the unweighted average and the median, respectively, of the 37 OECD countries shown in this chart (not including Colombia). Statistics for Mexico and Switzerland refer to Q4 2024.

Source: OECD calculations based on the Wage Price Index (Australian Bureau of Statistics) for Australia; the Fixed weighted index of average hourly earnings for all employees (Statistics Canada) for Canada; the Índice de Remuneraciones y de Costos Laborales (Instiuto Nacional de Estadística) for Chile; the Encuesta Continua de Empleo (Instituto Nacional de Estadística y Censos) for Costa Rica; the Labour cost index by NACE Rev. 2 activity (Eurostat) for the European countries except the United Kingdom; the Wages and Employment Monthly Statistics (Central Bureau of Statistics) for Israel; the Monthly Labour Survey (Ministry of Health, Labour and Welfare) for Japan; the Labour Force Survey at Establishments (Ministry of Employment and Labour) for Korea; the Encuesta Nacional de Ocupación y Empleo y Encuesta Nacional de Ocupación y Empleo Nueva Edición (Instituto Nacional de Estadística y Geografía) for Mexico; the Labour Cost Index (Stats NZ) for New Zealand; the Swiss Wage Index (Federal Statistical Office) for Switzerland; the Labour Cost Index (TUIK) for the Republic of Türkiye; the Monthly Wages and Salaries Survey (Office for National Statistics) for the United Kingdom; and Employment Cost Index (Bureau of Labor Statistics) for the United States. OECD Data Explorer, “Consumer price indices (CPIs, HICPs), COICOP 1999”, http://data-explorer.oecd.org/s/2aw, and “Consumer price indices (CPIs), COICOP 2018”, http://data-explorer.oecd.org/s/2ax (accessed on 07 May 2025).

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Box 1.1.  Wages advertised in online vacancies point to a recent slowdown in the growth of real posted wages

Data from wages advertised in job postings on the online platform Indeed show decreasing or stable growth of real posted wages between November 2024 and April 2025 in the euro area and eight of the nine countries for which data are available. Real wage growth declined in six countries (Canada, Ireland, Italy, the Netherlands, Spain and the United-Kingdom), remained stable in two (Germany and the United States), and rose in France only (Figure 1.16). In most areas where real wage growth decreased (Canada, Ireland, Italy, Spain and the euro area as a whole), this is due to both rising inflation and a deceleration in nominal wages. In fact, these data show no increase in the growth of nominal posted wages between November 2024 and April 2025. Nonetheless, in about half of the countries analysed, nominal and real wage growth picked up slightly towards the end of the period.

Figure 1.16. Posted wages point to a recent slowdown in real wage growth

Year-on-year percentage change, three‑month moving averages, from November 2024 to April 2025

Note: The posted wages are the average year-on-year percentage changes in wages and salaries advertised by job postings on Indeed.

Source: Indeed Wage Tracker, https://github.com/hiring-lab/indeed-wage-tracker; and OECD Data Explorer, “Consumer price indices (CPIs, HICPs), COICOP 1999”, http://data-explorer.oecd.org/s/2aw, and “Consumer price indices (CPIs), COICOP 2018”, http://data-explorer.oecd.org/s/2ax (accessed on 11 June 2025).

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Box 1.2.  Real negotiated wages in selected OECD countries have accentuated their upward trend but remain below the levels reached before the inflation surge

Negotiated wages (i.e. wages defined in collective agreements, as opposed to the average wages received by workers) are now increasing in real terms in virtually all countries analysed but remain below the levels seen just before the post-COVID‑19 inflation surge in all countries except Denmark, where they have fully recovered, and Mexico, where they did not fall with the inflation surge (Figure 1.17).

Figure 1.17. Real negotiated wages in selected OECD countries

Percentage change in real negotiated wages (i.e. resulting from collective agreements) since Q1 2021

Note: International comparability of data on negotiated wages is affected by differences in definitions and measurement. Statistics are representative of all employees covered by a collective wage agreement for Austria, Belgium, the Euro Area (20), France, Germany, Italy, the Netherlands, Sweden and the United States. In Canada, statistics refer to collective bargaining settlements of all bargaining units covering 500 or more employees (units of 100 or more employees for the Federal Jurisdiction). In Denmark, statistics refer to collective agreements negotiated by the main union and employer confederations, FH and DA, and do not cover public sector employees and the academic unions (AC). For Australia, Canada and Mexico statistics refer only to employees affected by an increase of the negotiated wage at date. For Denmark, wage increases cover basic wages, employer pension contributions, “fritvalg” (flexible benefit) accounts, and other collectively agreed elements (e.g. wages in the event of sickness absence or maternity/paternity leave) from the five major sectoral collective agreements (the “breakthrough agreements”) that set the financial framework for the subsequent minimum wage agreements or standard wage agreements to be negotiated in the private sector. Calculations are based on the assumption of full relative pass-through of centrally negotiated wage rates to actual wage adjustments (i.e. a 1% increase in the minimum wage or standard wage rate leads to a 1% increase in locally negotiated wages higher up the wage distribution). Wage increases in Austria, Belgium, the Euro Area (20), Germany, Italy, the Netherlands, Sweden and the United States refers to the average increase in negotiated wages weighted by the employment composition for a reference year (Laspeyres index). The reference year of the employment composition used is 2009 for Sweden, 2010 for Belgium, 2015 for Germany and Italy, 2016 for Austria, 2020 for the Netherlands, 2021 for the United States, and January 2023 for the Euro Area (20). For Australia, Canada, France and Mexico wage increases refer to the average increase in negotiated wages weighted by the number of employees affected of the period considered. Private sector in Germany refers to all industries excluding agriculture, public administration, education, health, and other personal services (Sections B to N of the NACE rev. 2). Percentage changes for Australia, Canada, Denmark, the Euro Area, France, Mexico and Sweden are OECD estimates based on published year-on-year percentage changes and can therefore only be calculated between two similar quarters (Q1 in this chart). Statistics for Australia and Canada refer to the percentage change in Q4 2024 (Q4 2023 and Q4 2022) since Q4 2020. LS: wages including lump sums and/or special payments.

Source: OECD calculations based on national data on negotiated wages and OECD Data Explorer, “Consumer price indices (CPIs, HICPs), COICOP 1999”, http://data-explorer.oecd.org/s/2aw, and “Consumer price indices (CPIs), COICOP 2018”, http://data-explorer.oecd.org/s/2ax (accessed on 11 June 2025).

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Real negotiated wages were higher in Q1 2025 than a year earlier in all the countries analysed, except for Belgium, where they had already stabilised around the levels seen in Q1 2021 by Q1 2023. Besides Belgium, real negotiated wages in Q1 2025 were close to (i.e. less than 2% below) Q1 2021 levels in Austria, France, the Netherlands and the United States. Real negotiated wages were already rising on an annual basis in Q1 2024 in Austria, Canada, Denmark, France, Germany, Italy, Mexico, the Netherlands and the United States, and their growth slowed down over 2024 in about half of these countries (Austria, Denmark, France, the Netherlands and the United States). By contrast, real negotiated wage growth turned positive only in 2024 in Australia and Sweden (Annex Figure 1.A.6). Considering the euro area as a whole, real negotiated wages have stopped rising over the past year, although they remain 4.3% below their early 2021 levels.

The dynamics of real negotiated wages reflect a combination of factors, including the staggered and infrequent nature of collective bargaining, the time lag between the completion of negotiations and actual wage revisions, the infrequent use of automatic inflation indexation, and workers’ bargaining power (Araki et al., 2023[4]). Since the start of the cost-of-living crisis, as bargaining rounds have multiplied and affected a growing number of workers, negotiated wages have regained more and more of the ground lost during the inflation surge.

Looking ahead, the European Central Bank’s (ECB) indicator of future growth in negotiated wages points to a gradual reduction in nominal negotiated wage growth in Europe from 5.3% in Q4 2024 to 1.6% in Q4 2025.1

 

1. https://www.ecb.europa.eu/press/pr/date/2025/html/ecb.pr250423_1~1efe6e210c.en.html.

1.3.2. The wages of the lowest-paid workers have proved more resilient than median wages to the inflation surge

Statutory minimum wages in real terms are above their January 2021 level

The real statutory minimum wage was higher in April 2025 than in January 2021 in virtually all of the 30 OECD countries that have a national statutory minimum wage in place (Figure 1.18, Panel A). The real minimum wage was 7.9% higher in April 2025 than in January 2021 on average across these 30 countries, and the median increase, unaffected by outliers (e.g. Mexico), was 4.7%. The real minimum wage was lower in April 2025 than in January 2021 in only four countries – Korea, the Slovak Republic, Slovenia and the United States. In the United States the nominal federal minimum wage has remained unchanged since 2009, but state‑level minimum wages have risen frequently in recent times, so that the reduction in the employment-weighted average of state‑level real minimum wages between January 2021 and April 2025 (‑2.2%) is much smaller than that of the federal real minimum wage (‑18.5%).

Minimum wages have been able to keep pace with inflation thanks to automatic or discretionary increases in the nominal minimum wage, introduced by countries to support the lowest earners during the cost-of-living crisis (Araki et al., 2023[4]). During 2022, the real gains resulting from these adjustments rapidly faded away on average across countries, as inflation continued to rise (Figure 1.18, Panel B). In 2023 and 2024, however, larger minimum wage adjustments and moderating inflation enabled the real minimum wage to catch up (in 2023) and exceed (in 2024) its January 2021 level on average across countries.

There are indications of a compression of the wage distribution at the bottom

In most OECD countries, statutory minimum wages have increased by more than median wages in recent years, favouring a compression of the wage distribution at the bottom. Figure 1.19 shows changes in the ratios of minimum wage to median wage (or Kaitz index) between 2021 and 2024. It shows an increase in 22 of the 30 countries analysed. On average across the countries analysed, the Kaitz index rose from 55% in 2021 to 56.6% in 2024. This trend can be explained in part by the fact that wages negotiated in collective agreements generally need more time than the minimum wage to keep pace with inflation (Araki et al., 2023[4]), particularly in a context of weak productivity growth (OECD, 2024[22]) and a long-term trend of declining scope of collective agreements (OECD, 2019[23]).

Figure 1.18. Real minimum wages are above January 2021 levels in virtually all countries

Note: Change in real minimum wage in April 2025 compared to January 2021 for New Zealand (Panel A) is estimated by assuming that the CPI in April 2025 is the same as in Q1 2025. “OECD (average)” is the unweighted average of the 30 OECD countries shown except the United States (weighted) and “OECD (median) is the median values across the same countries. Canada (weighted) is a Laspeyres index based on minimum wage of provinces and territories (excluding the Federal Jurisdiction) weighted by the share of employees of provinces and territories in 2019. United States (weighted) is a Laspeyres index based on minimum wage of states (not including territories like Puerto Rico or Guam) weighted by the share of nonfarm private employees by state in 2019. For the Netherlands, the minimum wage is now defined in hourly terms, while it was defined on a daily, weekly and monthly basis before 1 January 2024. The hourly minimum wage before 2024 is therefore estimated based on the weekly (or daily) minimum wage of an employee usually working 40 hours per week (or 8 hours per day). See Appendix Table 1.C.1 of the 2024 employment outlook (OECD, 2024[24]) for more details on the calculations.

Source: OECD calculations based on national data and OECD Data Explorer, “Consumer price indices (CPIs, HICPs), COICOP 1999”, http://data-explorer.oecd.org/s/2aw, and “Consumer price indices (CPIs), COICOP 2018”, http://data-explorer.oecd.org/s/2ax (accessed on 11 June 2025), and Monthly CPI Indicator (Australian Bureau of Statistics).

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Figure 1.19. Statutory minimum wages have increased more than median wages in most countries

Gross minimum wage as a percentage of gross median wage of full-time workers

Note: The minimum wage for the United States is estimated by the sum of state‑level minimum wages weighted by the number of nonfarm private sector employees in the state in 2019 from the State and Metro Area Employment, Hours, & Earnings published by the BLS. For the five states without a minimum wage (Alabama, Louisiana, Mississippi, South Carolina, and Tennessee), the federal minimum wage is used. This estimate does not take into account any exemptions or derogations in force in the states. OECD is the unweighted average of the 30 OECD countries shown. 2024 data are preliminary. Latest data available are from 2023 for Chile, Estonia, Greece, Hungary, Ireland, Israel, Latvia, Lithuania, Luxembourg, the Netherlands, Poland, Portugal, the Slovak Republic, Slovenia, Spain and Türkiye.

Source: OECD Data Explorer, “Minimum relative to average wages of full-time workers”, http://data-explorer.oecd.org/s/2ay.

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In addition to the minimum wage, other factors may have influenced wage compression at the bottom of the distribution. Although empirical evidence is scarce for most countries, there are further indications of a compression of the wage distribution at the bottom in recent years in some countries (OECD, 2024[3]). Box 1.3 provides an insight into wage compression in two of these countries: France and the United States. While in France, minimum wage hikes and their spillovers to higher levels of the wage distribution were key in driving wage compression, in the United States the process was more generally driven by the tightening of the labour market.

In particular, a factor behind these trends may be that low-pay service sectors saw a particularly marked increase in labour demand and labour market tightness in the early recovery from the COVID‑19 crisis (OECD, 2023[11]; Causa et al., 2022[25]), leading to significant labour shortages (although these tensions are now easing).

Yet, while there is a clear trend towards wage compression between sectors in the United States over the Q1 2021 - Q1 2025 period, this is not the case in Australia or in the euro area. In the United States, accommodation and food service activities is by far the sector with the strongest real wage growth (+3%) (Figure 1.20) – possibly due, at least in part, to the remarkable peak in sectoral labour market tightness for this sector over the period15 (Section 1.2.1). This is also a sector where wages are relatively low. On the other hand, the five sectors with the biggest real wage declines are finance (‑9.4% wage growth), followed by information and communication (‑5.3%), education (‑3.9%), construction (‑3.3%), and business services (‑3.1%), all sectors where wages tend to be relatively high. This wage compression had already begun during the post-pandemic inflation surge, when real wages fell more in higher-wage sectors; but it was reinforced by the fact that the subsequent wage recovery was weaker in some of these sectors. The picture is more mixed in the euro area, where two high-wage sectors (finance and business services) are among the sectors with the smallest wage reductions (or highest increases), while arts and entertainment, where wages tend to be low, records the biggest wage decline. Similarly, in Australia, where wage growth is much more homogeneous across sectors, no pattern of wage compression emerges.

The situation is less clear-cut in some other OECD countries (Annex Figure 1.A.8). Some patterns of wage compression between sectors can be observed in Chile, Denmark, Iceland, Korea, Norway, Mexico and Poland, but they are significantly less marked than in the United States.

Figure 1.20. There is a clear trend towards wage compression between sectors in the United States but not in Australia and the euro area

Percentage change in real hourly wages since Q1 2021

Note: Nominal hourly wages refer to a constant-industry-structure “wages and salaries” component of the labour cost index for the Euro Area, and controls for additional occupational shifts for Australia and the United States. Real hourly wage is estimated by deflating the nominal hourly wage with the consumer price index (CPI-all items). The trough refers to the minimum value of the percentage change in real hourly wage since Q1 2021. Industries refer to the ANZSIC 2006 at the 1‑digit level for Australia, the NACE Rev. 2 at the 1‑digit level for the Euro Area and the NAICS for the United States and are therefore not fully comparable between these three countries. Changes in real wages in the Wholesale and retail trade industry in the United States refer to the employment-weighted averages of the wholesale and retail trade industries based on non-farm payroll employment in these industries in Q4 2005. Similarly, changes in real wages in the Arts and entertainment industry in the United States is derived from statistics for the Leisure and Hospitality industry and Accommodations and Food Service industry using non-farm payroll employment in these industries in Q4 2005. Industries are ranked by the median wage in 2018 in the European Structure of Earnings Survey (SES). The ranking of industries is broadly consistent when 2019 data on median wages from the Current Population Survey of the United States are used.

Source: OECD calculations based on the Wage Price Index (Australian Bureau of Statistics) for Australia; wages and salaries component of labour cost index by NACE Rev. 2 activity (Eurostat) for the Euro Area, the Employment Cost Index (U.S. Bureau of Labor Statistics) for the United States; and OECD Data Explorer, “Consumer price indices (CPIs, HICPs), COICOP 1999”, http://data-explorer.oecd.org/s/2aw (accessed on 16 June 2025).

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Box 1.3. The compression of the wage distribution in France and the United States may reflect different phenomena

The compression of the wage distribution in France since the COVID‑19 crisis can be linked to the significant minimum wage increases over the period and their spillovers to higher levels of the wage distribution (Bozio and Wasmer, 2024[26]; Groupe d’experts sur le salaire minimum interprofessionnel de croissance, 2024[27]). Looking at the period 2006‑22, there is a remarkable compression of the wage distribution between 2018 and 2022 (Figure 1.21), when the French minimum wage – Salaire Minimum Interprofessionnel de Croissance (SMIC) – increased dramatically to keep pace with high inflation – the SMIC is indexed to inflation, unlike other wages.

Figure 1.21. Distribution of gross hourly earnings expressed as a share of the minimum wage in France

Percentage of private sector employees aged 18‑64 (main job)

Reading: In 2022, 1.5% of private sector employees aged 18‑64 earn a gross hourly wage equivalent to 1.22 times the minimum wage.

Note: Statistics refer to private sector employees (excluding salaried self-employed) aged 18‑64 in their main job (i.e. highest paid in terms of gross wage) in metropolitan France who earn less than 4 times the gross hourly minimum wage.

Source: Bozio and Wasmer (2024[26]), “Les politiques d’exonérations de cotisations sociales: une inflexion nécessaire [Social security contribution of social security contributions: A necessary change of direction]”, www.strategie.gouv.fr/publications/mission-bozio-wasmer-politiques-dexonerations-de-cotisations-sociales-une-inflexion.

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In the United States, on the other hand, it was the tightening of the labour market rather than minimum wage increases that enabled some low-wage workers to benefit from substantial wage increases (Autor, Dube and McGrew, 2023[28]). Although likely amplified by the surge in tightness after the pandemic, these developments predate the COVID‑19 crisis (Aeppli and Wilmers, 2022[29])1 and might therefore still be at work despite the recent easing of tensions to pre‑COVID‑19 levels (Figure 1.7), leaving scope for further wage compression. For example, the latest compensation plan for employees of warehouse store company Sam’s club (owned and operated by Walmart), implemented in November 2024, suggests that tensions might still be high for low-wage occupations in the retail sector. The new plan raised the hourly wages from USD 15 to USD 16 for entry-level workers, and increased wage growth by up to 6% depending on years of service.2

1. Aeppli and Wilmers (2022[29]) document a link at the local labour market level between pay increases for low-wage workers and the tightening of the labour market since the recovery from the global financial crisis.

2. www.reuters.com/business/retail-consumer/walmarts-sams-club-raise-hourly-pay-100000-workers-november-2024-09-17/.

1.3.3. As real wages keep on recovering, unit profits continue to lose the ground gained during the inflation surge

Unit labour costs16 grew more than unit profits between Q1 2024 and Q1 2025 in most OECD countries (Figure 1.22), continuing a trend that began around Q1 2023 (OECD, 2024[3]). In fact, unit profits even fell over the period in around a third of the countries analysed. In Australia and in the euro area, the contribution of unit profits to domestic price pressures dropped over 2023 to early 2024 (mostly in Q2 2023 for Australia), then remaining at historically low levels (Figure 1.23).

Figure 1.22. Profits continue to buffer the increase in labour costs

Percentage change between Q1 2023 and Q1 2025, seasonally adjusted data

Note: OECD is the unweighted average of the 29 OECD countries shown in this Chart (not including Chile, Colombia, Costa Rica, Iceland, Israel, Korea, Mexico, New Zealand and Türkiye). Euro Area represents the 20 Eurozone countries. For Norway, the data are based on mainland Norway. Unit labour costs and unit profits are calculated by dividing compensation of employees and gross operating surplus respectively, by real GDP. For Japan and Norway, gross operating surplus is approximated by deducting compensation of employees from nominal GDP – and hence also include unit net taxes.

Source: OECD calculations based on OECD Data Explorer, “Quarterly GDP and components – income approach”, http://data-explorer.oecd.org/s/2az (accessed on 10 June 2025), Cabinet Office, Government of Japan, Economic and Social Research Institute (ESRI) Quarterly Estimates of GDP for Japan, and Statistics Norway, Quarterly National Accounts for Norway.

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Figure 1.23. Unit profits continue to lose the ground gained during the inflation surge in Australia and the euro area

Contribution to the GDP deflator, year-on-year percentage changes, seasonally adjusted data

Note: Euro Area refers to 20 Eurozone countries. Unit labour costs, unit profits and unit taxes less subsidies are calculated by dividing compensation of employees, gross operating surplus and taxes less subsidies on productions and imports, respectively, by real GDP. Compensation of employees, gross operating surplus, taxes less subsidies on productions and imports, gross domestic products and deflators are denominated in local currencies. For the United States, changes in the GDP deflator are reported net of statistical discrepancies.

Source: OECD calculations based on OECD Data Explorer, “Quarterly GDP and components – income approach”, http://data-explorer.oecd.org/s/2az (accessed on 10 June 2025).

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These developments reflect the catching-up of purchasing power by wages, rather than a warning sign of price‑wage spirals. On the one hand, unit profits continue to lose the ground gained during the inflation surge of 2021‑22, when they were making an unusually large contribution to domestic price pressures (Araki et al., 2023[4]). On the other hand, wage pressures are expected to ease over the second half of 202517 (Bates, Bodnár and Schlieker, 2024[30]).

The United States stands out from the above trends, with unit profits growing slightly more than unit labour costs (albeit at a modest pace) between Q1 2024 and Q1 2025 (Figure 1.22). Looking further back, the relative contribution of unit profits to domestic price pressures in the United States has stabilised in late 2023 around pre‑pandemic levels, following a sharp fall in early 2023 (Figure 1.23).

1.4. Concluding remarks

OECD labour markets have continued to show resilience over the past year despite a significant slowdown in economic activity in most OECD countries. Employment and labour force participation have reached record highs, while unemployment remains historically low. However, there are signs of weakening labour markets, with employment growth decelerating and labour market tightness in many countries and sectors falling back to pre‑COVID‑19 levels, although labour shortages remain.

There is some evidence that the exceptionally tight labour markets during the recovery period may have affected part-time employment patterns: involuntary part-time work has declined, while voluntary part-time – by men in particular – has increased. Whether these trends reflect a temporary adjustment phase, or persistent changes will depend on the evolution of unemployment and labour market tightness, as well as the lasting effects of the pandemic on gender norms.

Despite the easing of labour market tightness, real wages are now growing virtually everywhere in the OECD, but their levels remain below the levels seen in early 2021 – just before the post-pandemic inflation surge – in half of OECD countries. The wages of the lowest-paid workers have held up particularly well, as real statutory minimum wages were increased since then in virtually all the 30 OECD countries with a national minimum wage. As real wages continue to recover, unit profits continue to lose the ground gained since 2021.

Looking ahead, geopolitical uncertainties and hikes in tariff rates are expected to affect economic activity, and bring back the risk of high inflation. Employment and social policies (e.g. unemployment insurance, social assistance, active labour market policies, collective bargaining) will be essential to address the potential negative consequences of these shocks on employment. In addition, in the context of limited risks of a price‑wage spiral – with wage pressure expected to ease in 2025 –, well-designed and implemented collective bargaining and social dialogue have a role to play in ensuring that the cost of inflation is fairly distributed between workers and employers (and between workers at different wage levels).

References

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[32] Adrjan, P. and R. Lydon (2023), “What Do Wages in Online Job Postings Tell Us about Wage Growth?”, SSRN Electronic Journal, https://doi.org/10.2139/ssrn.4451751.

[29] Aeppli, C. and N. Wilmers (2022), “Rapid wage growth at the bottom has offset rising US inequality”, Proceedings of the National Academy of Sciences, Vol. 119/42, https://doi.org/10.1073/pnas.2204305119.

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[17] Andrew, A. et al. (2022), “The gendered division of paid and domestic work under lockdown”, Fiscal Studies, Vol. 43/4, pp. 325-340, https://doi.org/10.1111/1475-5890.12312.

[4] Araki, S. et al. (2023), “Under pressure: Labour market and wage developments in OECD countries”, in OECD Employment Outlook 2023: Artificial Intelligence and the Labour Market, OECD Publishing, Paris, https://doi.org/10.1787/b3013c36-en.

[9] Astinova, D. et al. (2024), “Dissecting the Decline in Average Hours Worked in Europe”, IMF Working Papers, No. 24/2, IMF.

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[30] Bates, C., K. Bodnár and K. Schlieker (2024), Recent developments in wages and the role of wage drift, European Central Bank, Frankfurt, https://www.ecb.europa.eu/press/economic-bulletin/focus/2024/html/ecb.ebbox202406_05~57bf8fd14c.en.html.

[33] Bellatin, A. and G. Galassi (2022), “What COVID-19 May Leave Behind: Technology-Related Job Postings in Canada”, SSRN Electronic Journal, https://doi.org/10.2139/ssrn.4114783.

[26] Bozio, A. and E. Wasmer (2024), “Les politiques d’exonérations de cotisations sociales : une inflexion nécessaire [Social security contribution of social security contributions: A necessary change of direction]”, https://www.strategie.gouv.fr/publications/mission-bozio-wasmer-politiques-dexonerations-de-cotisations-sociales-une-inflexion.

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[13] Dorville, Y., F. Filippucci and L. Marcolin (forthcoming), All Hands on Deck! Do structural megatrends affect labour shortages and mismatch?, OECD Publishing, Paris.

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[27] Groupe d’experts sur le salaire minimum interprofessionnel de croissance (2024), “Salaire minimum interprofessionnel de croissance [Interprofessional minimum wage]”, https://www.strategie.gouv.fr/files/2025-02/smic-rapport-2024-11decembre15h45_vdef_complet.pdf.

[18] Hupkau, C. and B. Petrongolo (2020), “Work, Care and Gender during the COVID‐19 Crisis*”, Fiscal Studies, Vol. 41/3, pp. 623-651, https://doi.org/10.1111/1475-5890.12245.

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[16] MacDonald, D. (2019), “Under-employment: A crisis hangover, or something more?”, OECD Social, Employment and Migration Working Papers, No. 234, OECD Publishing, Paris, https://doi.org/10.1787/47123848-en.

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[24] OECD (2024), OECD Employment Outlook 2024: The Net-Zero Transition and the Labour Market, OECD Publishing, Paris, https://doi.org/10.1787/ac8b3538-en.

[31] OECD (2024), “Real wages regaining some of the lost ground: The OECD wage bulletin”, OECD Publishing, Paris, https://www.oecd.org/en/publications/real-wages-regaining-some-of-the-lost-ground_2f798dfe-en.html.

[3] OECD (2024), “Steady as we go: Treading the tightrope of wage recovery as labour markets remain resilient”, in OECD Employment Outlook 2024: The Net-Zero Transition and the Labour Market, OECD Publishing, Paris, https://doi.org/10.1787/0ea4644c-en.

[11] OECD (2023), Beyond Applause? Improving Working Conditions in Long-Term Care, OECD Publishing, Paris, https://doi.org/10.1787/27d33ab3-en.

[21] OECD (2023), OECD Employment Outlook 2023: Artificial Intelligence and the Labour Market, OECD Publishing, Paris, https://doi.org/10.1787/08785bba-en.

[2] OECD (2022), OECD Employment Outlook 2022: Building Back More Inclusive Labour Markets, OECD Publishing, Paris, https://doi.org/10.1787/1bb305a6-en.

[8] OECD (2021), OECD Employment Outlook 2021: Navigating the COVID-19 Crisis and Recovery, OECD Publishing, Paris, https://doi.org/10.1787/5a700c4b-en.

[23] OECD (2019), Negotiating Our Way Up: Collective Bargaining in a Changing World of Work, OECD Publishing, Paris, https://doi.org/10.1787/1fd2da34-en.

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[19] Sevilla, A. and S. Smith (2020), “Baby steps: the gender division of childcare during the COVID-19 pandemic”, Oxford Review of Economic Policy, Vol. 36/Supplement_1, pp. S169-S186, https://doi.org/10.1093/oxrep/graa027.

Annex 1.A. Additional results

Annex Figure 1.A.1. Employment rates have increased for prime aged and older individuals but not for the young

Decomposition of the overall change in the employment rate and labour force participation rate (persons aged 15‑64) by age group between Q1 2023 and Q1 2025

Note: OECD is the unweighted average of the 38 OECD countries shown in this chart. Euro Area refers to the 20 Eurozone countries. p.p.: percentage point.

Source: OECD Data Explorer, “Employment rate”, http://data-explorer.oecd.org/s/2b0 and “Labour force participation rate”, http://data-explorer.oecd.org/s/2b1 (accessed on 17 June 2025).

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Annex Figure 1.A.2. The share of working-age migrants in employment has increased

Decomposition of the overall change in the employment rate and labour force participation rate (persons aged 15‑64) by country of birth between Q1 2023 and Q1 2025

Note: Euro Area refers to the 20 Eurozone and European Union to the 27 EU member countries. Statistics for Türkiye refer to Q4 2022 and Q4 2024. p.p.: percentage point.

Source: OECD calculations based on Eurostat, Population by sex, age, country of birth and labour status (Table lfsq_pgacws), https://doi.org/10.2908/LFSQ_PGACWS (accessed on 13 June 2025).

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Annex Figure 1.A.3. Change in the incidence of part-time employment, alternative periods

Percentage change in the incidence of part-time employment in total employment (persons aged 15‑64)

Note: Involuntary part-time employment refers to part-time workers who could not find full-time job. Part-time employment is based on national definitions. OECD is the unweighted average of the 33 OECD countries shown (not including Costa Rica, Iceland, Korea, Mexico and Türkiye).

Source: OECD calculations based on OECD Data Explorer, “Incidence of full-time and part-time employment based on national definitions”, http://data-explorer.oecd.org/s/2au, and “Incidence of involuntary part time employment”, http://data-explorer.oecd.org/s/2av.

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Annex Figure 1.A.4. Labour market tightness increased sharply between 2021 and 2022

Vacancies per unemployed person, national definitions

Note: OECD is the unweighted average of the 23 OECD countries shown (not including Chile, Colombia, Costa Rica, Czechia, Denmark, Estonia, Iceland, Israel, Italy, Japan, Korea, Mexico, New Zealand, Switzerland and Türkiye). Statistics do not include vacancies in the public administration, defense and compulsory social security. For further details on the national definitions of job vacancies, see Figure 1.7.

Source: Job Vacancies (ABS) for Australia; Job vacancies, payroll employees, and job vacancy rate (Statistics Canada) for Canada; Eurostat, Job vacancy statistics by NACE Rev.2 activity (Table jvs_q_nace2) for the European countries; Vacancy Survey (ONS) for the United Kingdom; and Job Openings and Labor Turnover Survey (Bureau of Labor Statistics, retrieved from FRED) for the United States.

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Annex Figure 1.A.5. Nominal and real wage index by country since Q4 2019

Index base 100 in Q4 2019

 

 

 

Note: Otherwise indicated, nominal hourly wages refer to a constant-industry-structure “wages and salaries” component of the labour cost index. For Costa Rica and Mexico, the adjustment for constant-industry-structure of the average hourly earnings has been estimated by the OECD. Statistics refer to the private sector only for Costa Rica, Japan, Korea, Mexico and the United States. For Türkiye, statistics exclude public administration and defence; compulsory social security; education; human health and social work activities; arts, entertainment and recreation; and other service activities. Nominal wage series are seasonally adjusted for all countries except for Canada, Costa Rica, Israel, Mexico, New Zealand and Switzerland. Statistics for Chile refer to regular hourly wages, excluding overtime and bonuses. Nominal hourly wage presents a significant amount of unreported income for Mexico, with a notable increase in Q1 2025.

Nominal hourly wage refers to the actual wage i.e. without any adjustment for sources of compositional shifts for Israel, Japan, Korea and the United Kingdom, and thus comparing these results with the other countries requires caution. Moreover, nominal hourly wage refers to the average monthly wages per employee job for Israel, and to the average weekly earnings for the United Kingdom.

Nominal hourly wage controls for additional sources of compositional shifts, such as regions for Australia, Canada, Chile and New Zealand, job characteristics and workers’ characteristics for Australia, Chile and New Zealand, gender for Chile and Switzerland, and occupations for Chile and the United States. Real hourly wage is estimated by deflating the nominal hourly wage by the consumer price index (CPI-all items).

“OECD (average)” and “OECD (median)” are the unweighted average and the median, respectively, of 37 OECD countries (not including Colombia).

Source: OECD calculations based on the Wage Price Index (Australian Bureau of Statistics) for Australia; the Fixed weighted index of average hourly earnings for all employees (Statistics Canada) for Canada; the Índice de Remuneraciones y de Costos Laborales (Instiuto Nacional de Estadística) for Chile; the Encuesta Continua de Empleo (Instituto Nacional de Estadística y Censos) for Costa Rica; the Labour cost index by NACE Rev. 2 activity (Eurostat) for the European countries except the United Kingdom; the Wages and Employment Monthly Statistics (Central Bureau of Statistics) for Israel; the Labour Force Survey at Establishments (Ministry of Employment and Labour) for Korea; the Monthly Labour Survey (Ministry of Health, Labour and Welfare) for Japan; the Encuesta Nacional de Ocupación y Empleo y Encuesta Nacional de Ocupación y Empleo Nueva Edición (Instituto Nacional de Estadística y Geografía) for Mexico; the Labour Cost Index (Stats NZ) for New Zealand; the Swiss Wage Index (Federal Statistical Office) for Switzerland; the Labour Cost Index (TUIK) for the Republic of Türkiye; the Monthly Wages and Salaries Survey (Office for National Statistics) for the United Kingdom; and Employment Cost Index (Bureau of Labor Statistics) for the United States. OECD Data Explorer, “Consumer price indices (CPIs, HICPs), COICOP 1999”, http://data-explorer.oecd.org/s/2aw and “Consumer price indices (CPIs), COICOP 2018”, http://data-explorer.oecd.org/s/2ax (accessed on 16 June 2025).

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Annex Figure 1.A.6. Growth in real wages in selected OECD countries resulting from collective agreements

Year-on-year percentage change, Q1 2018 to Q1 2025

Note: International comparability of data on negotiated wages is affected by differences in definitions and measurement. Statistics are representative of all employees covered by a collective wage agreement for Austria, Belgium, the Euro Area (20), France, Germany, Italy, the Netherlands, Sweden and the United States. In Canada, statistics refer to collective bargaining settlements of all bargaining units covering 500 or more employees (units of 100 or more employees for the Federal Jurisdiction). In Denmark, statistics refer to collective agreements negotiated by the main union and employer confederations, FH and DA, and do not cover public sector employees and the academic unions (AC). For Australia, Canada and Mexico statistics refer only to employees affected by an increase of the negotiated wage at date. For Denmark, wage increases cover basic wages, employer pension contributions, “fritvalg” (flexible benefit) accounts, and other collectively agreed elements (e.g. wages in the event of sickness absence or maternity/paternity leave) from the five major sectoral collective agreements (the “breakthrough agreements”) that set the financial framework for the subsequent minimum wage agreements or standard wage agreements to be negotiated in the private sector. Calculations are based on the assumption of full relative pass-through of centrally negotiated wage rates to actual wage adjustments (i.e. a 1% increase in the minimum wage or standard wage rate leads to a 1% increase in locally negotiated wages higher up the wage distribution). Wage increases in Austria, Belgium, the Euro Area (20), Germany, Italy, the Netherlands, Sweden and the United States refers to the average increase in negotiated wages weighted by the employment composition for a reference year (Laspeyres index). The reference year of the employment composition used is 2009 for Sweden, 2010 for Belgium, 2015 for Germany and Italy, 2016 for Austria, 2020 for the Netherlands, 2021 for the United States, and January 2023 for the Euro Area (20). For Australia, Canada, France and Mexico wage increases refer to the average increase in negotiated wages weighted by the number of employees affected of the period considered. Private sector in Germany refers to all industries excluding agriculture, public administration, education, health, and other personal services (Sections B to N of the NACE rev. 2).

Source: OECD calculations based on national data on negotiated wages and OECD Data Explorer, “Consumer price indices (CPIs, HICPs), COICOP 1999”, http://data-explorer.oecd.org/s/2aw, and “Consumer price indices (CPIs), COICOP 2018”, http://data-explorer.oecd.org/s/2ax (accessed on 11 June 2025).

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Annex Figure 1.A.7. Minimum wage evolution, January 2021 to April 2025

Nominal and real minimum wage, percentage change since January 2021

 

 

Note: Canada (weighted) is a Laspeyres index based on minimum wage of provinces and territories (excluding the Federal Jurisdiction) weighted by the share of employees of provinces and territories in 2019. United States (weighted) is a Laspeyres index based on minimum wage of states (not including territories like Puerto Rico or Guam) weighted by the share of nonfarm private employees by state in 2019. Changes in nominal minimum wage in Belgium in April and May 2022 relate to the transition to a single rate for workers aged 18 and over. “OECD (median)” is the median across the 30 OECD countries with statutory minimum wage (not including the Canada Federal Jurisdiction and the weighted average for the United States). Change in real minimum wage in April 2025 for New Zealand is estimated by assuming that the CPI is the same as in Q1 2025. For the Netherlands, the minimum wage is now defined in hourly terms, while it was defined on a daily, weekly and monthly basis before 1 January 2024. The hourly minimum wage before 2024 is therefore estimated based on the weekly (or daily) minimum wage of an employee usually working 40 hours per week (or 8 hours per day). See Appendix Table 1.C.1 of the 2024 employment outlook (OECD, 2024[24]) for more details on the calculations.

Source: OECD calculations based on national data and OECD Data Explorer, “Consumer price indices (CPIs, HICPs), COICOP 1999”, http://data-explorer.oecd.org/s/2aw, “Consumer price indices (CPIs), COICOP 2018”, http://data-explorer.oecd.org/s/2ax (accessed on 11 June 2025), and Monthly CPI Indicator (Australian Bureau of Statistics).

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Annex Figure 1.A.8. Change in real wage by industry in some non-euro area OECD countries

Percentage change in real hourly wages since Q1 2021

 

Note: Real wages are obtained by deflating nominal wages by consumer price inflation (all items). Industries are ranked by the median wage in 2018 in the European Structure of Earnings Survey (SES). The ranking of industries is broadly consistent when 2019 data on median wages from the Current Population Survey of the United States are used.

Industries are ordered from low- to high-pay industries as follows: 1. Accommodation and food service, 2. Administrative and support service, 3. Arts, entertainment and recreation, 4. Wholesale and retail trade; 5. Transportation and storage, 6. Manufacturing, 7. Other service, 8. Real estate activities, 9. Construction; 10. Human health and social work, 11. Education, 12. Professional activities, 13. Information and communication, and 14. Finance and insurance.

Series are not seasonally adjusted for Canada, Chile, Japan, Korea, Mexico and the United Kingdom. Statistics for the accommodation and food service sector are not available for Denmark. For Türkiye, statistics exclude public administration and defence; compulsory social security; education; human health and social work activities; arts, entertainment and recreation; and other service activities. Nominal hourly wage presents a significant amount of unreported income for Mexico, with a notable increase in Q1 2025, and hence statistics refer to the period Q1 2021 to Q4 2024. The trough refers to the quarter where real hourly wages were at their lowest value for the indicated industry since Q1 2021.

Source: OECD calculations based on the Wage Price Index (Australian Bureau of Statistics) for Australia; Fixed weighted index of average hourly earnings for all employees (Statistics Canada) for Canada; the Labour cost index by NACE Rev. 2 activity (Eurostat) for Czechia, Denmark, Hungary, Iceland, Norway, Poland and Sweden; Monthly Labour Survey (Japanese Ministry of Health, Labour and Welfare) for Japan; Labour Force Survey at Establishments (Korean Ministry of Employment and Labour) for Korea; Nacional de Ocupación y Empleo, Encuesta Telefónica de Ocupación y Empleo, Encuesta Nacional de Ocupación y Empleo Nueva Edición (Instituto Nacional de Estadística y Geografía, Mexico) for Mexico; Labour Cost Index (Statistics New Zealand) for New Zealand; and Monthly Wages and Salaries Survey (UK Office for National Statistics) for the United Kingdom; OECD Data Explorer, “Consumer price indices (CPIs, HICPs), COICOP 1999”, http://data-explorer.oecd.org/s/2aw and “Consumer price indices (CPIs), COICOP 2018”, http://data-explorer.oecd.org/s/2ax (accessed on 16 June 2025).

Statlink

Notes

← 1.  https://ec.europa.eu/eurostat/databrowser/view/ei_bsse_q_r2__custom_16762528/default/table and https://ec.europa.eu/eurostat/databrowser/view/ei_bsin_q_r2__custom_16762125/default/table.

← 2.  Indeed data are subject to a number of limitations, including the over-representation of high-skilled jobs and the under-representation of low skilled jobs, jobs posted by small firms and the agricultural sector. Nevertheless, there is evidence that job postings at the aggregate level tend to track well with job vacancies from government sources (Adrjan and Lydon, 2023[32]; Adrjan et al., 2021[34]; Bellatin and Galassi, 2022[33]; Ciminelli et al., 2024[35]).

← 3.  In Canada, there is evidence that the decline in the number of job vacancies observed since the summer of 2022 stopped towards the end of the summer of 2024, and has remained relatively stable since then, although certain sectors, such as healthcare and education, have continued to post higher number of job offers (see https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1410040001&cubeTimeFrame.startMonth=01&cubeTimeFrame.startYear=2015&cubeTimeFrame.endMonth=10&cubeTimeFrame.endYear=2024&referencePeriods=20150101%2C20241001).

← 4.  In Europe, due to short-time work, unemployment was artificially depressed at the start of the pandemic, without any real change of matching efficiency. The opposite occurred in the United States, where temporary laid off workers where initially not searching for jobs.

← 5.  Full-time employment can also be involuntary, with some full-time workers wishing to work fewer hours (ILO, 2022[37]).

← 6.  Throughout this section, involuntary part-time workers are defined as workers working part-time (according to national definition) in their main job because they could not find a full-time job.

← 7.  In Switzerland, partner income might be one of the reasons why many women start working limited hours at childbearing age, contributing to Switzerland’s place among the European OECD countries with the highest share of workers working less than 20 hours a week (Georgieff, 2024[36]).

← 8.  Throughout this section, the population of interest is the working-age population (15‑64). However, the analyses have been replicated for the 25‑54 age group, and the results remain qualitatively unchanged.

← 9.  The post-COVID19 surge in labour market tightness took place between 2021‑22 in virtually all OECD countries for which data are available (Annex Figure 1.A.4).

← 10.  Nominal hourly wage data are affected by a significant share of employees with unreported income for Mexico, with a notable increase in Q1 2025. Data for Mexico are therefore reported only up to Q4 2024.

← 11.  Most of the data used in this section refer to the “wages and salaries” component of the Labour Cost Index (i.e. excluding employer’s social security contributions) produced by Eurostat – or similar measure for non-European countries (see notes to the figures for the details on the countries for which different wage measures have been used). In addition to separating wages from other labour cost components, these indicators have two main advantages relative to measures of compensation per hour worked derived from National Accounts. First, they are generally constructed to follow the evolution of hourly nominal wages for a constant industry structure, therefore minimising the potential impact of compositional changes on aggregate wage dynamics. Second, they are available at a more detailed sectoral breakdown than measures of compensation of employees from National Accounts, allowing the analysis on wage dynamics by industry of different pay levels of the next section.

← 12.  In Belgium, real wages had already returned to their pre‑COVID‑19 levels by Q3 2023 (OECD, 2024[31]).

← 13.  Examining wage growth since Q4 2019 instead of Q1 2021 reveals positive wage changes in a greater number of countries. However, using Q1 2021 as the reference quarter is more relevant than pre‑COVID data (Q4 2019) for analysing the wage recovery from the inflation surge. Nominal wage index series since Q4 2019 show that the artificial increase in wages induced by composition effects during the pandemic had subsided by Q1 2021 in virtually all OECD countries (Annex Figure 1.A.5).

← 14.  Figure 1.15 shows a 3.7% reduction in real wages between Q1 2021 and Q1 2025 in Denmark, while the Danish standardised index of average earnings has returned to pre‑inflation levels. This is because the labour cost index used in Figure 1.15 refers to a constant industry structure, while the standardised index of average earnings is adjusted for both the industrial and occupational structure.

← 15.  Accommodation and food service activities is the only sector where the average real wage did not decrease during the post-COVID‑19 inflation surge.

← 16.  To enable a comparison of the dynamics between labour costs and profits, this section uses indicators from the National Accounts (see note to Figure 1.22). Using the income approach, nominal GDP can be decomposed as $PY=NCE+GOS+TAXN$ where $P$ is the GDP deflator, $Y$ is real GDP, $NCE$ is nominal compensation of employees, $GOS$ is gross operating surplus, and $TAXN$ is nominal taxes. Unit labour costs and profits are derived by dividing the two relevant GDP components by real GDP. Unit labour costs increase when growth in compensation exceeds growth in real GDP or, dividing these two components by hours worked, when growth in compensation per hour worked exceeds growth in labour productivity. This measure of unit labour costs differs in some important respects from the measure of hourly wages based on the “wages and salaries” component of the labour cost index used in the previous sections (see note 13). Most notably, unit labour costs include employer’s social security contributions and do not control for changes in the sectoral composition of the economy.

← 17.  https://www.ecb.europa.eu/press/pr/date/2025/html/ecb.pr250423_1~1efe6e210c.en.html.