OECD Employment Outlook 2025

Executive summary

Labour markets remain resilient but there are early signs of slowdown

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. Looking ahead, geopolitical uncertainties and hikes in tariff rates are expected to dampen economic activity, leading to further labour market slowdowns.

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

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 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. In the near future, however, the wage recovery could be jeopardised by the potential comeback of high inflation and labour market slowdown.

Without decisive policy action, the demographic transition will dampen GDP per capita growth in the medium term

Declining fertility and increasing life expectancy imply that the OECD population is becoming older. With the progressive exit of baby boomers from the labour force, OECD countries’ working-age population (aged 20 to 64 years) is declining while their old-age dependency ratio – defined as the ratio of individuals aged 65 years and above to the working-age population – has increased dramatically from 19% in 1980 to 31% in 2023 and is projected to rise further to 52% by 2060. In turn, without further policy action or changes in behaviours, this will weigh significantly on economic growth and the capacity of OECD countries to continue improving their living standards. Without a significant acceleration of productivity growth, GDP per capita growth would slow down by about 40% in the OECD area (from 1% per year in 2006‑19 to 0.6% per year in 2024‑60 on average). All but two OECD countries would see their per-capita growth declining.

Mobilising untapped labour resources will be key to offset this downfall

The downfall in GDP per capita growth, however, could be largely counterbalanced by the mobilisation of significantly untapped labour resources, especially among women, older people in good health and regular migrants. Additionally, the dynamic of intergenerational disparities – that is, the shift of income and wealth toward older cohorts and poverty concentrating more among young ones – suggests that mobilising old-age people in good health would be necessary not only for efficiency reasons but also for fairness reasons.

Labour market policies and employer practices must evolve to support an ageing workforce

Despite progress in past decades, employment rates start to decline from age 50 and drop sharply after 60. Continued reforms of pension systems remain important to delay labour market exit, including carefully designed flexible retirement options that allow for the combination of pension and labour income. However, greater focus should be placed on the employability of older workers in a rapidly changing world of work. Policies should support the demand for older workers among employers. Indeed, rising employment rates of older workers create opportunities for employers to retain valuable knowledge and skills and boost productivity. However, employers often hesitate to hire or retain older workers due to age stereotypes around adaptability, productivity, or the need for workplace accommodations. Policies should also help older workers maintain and adapt their skills and capabilities and facilitate job mobility. Enhancing employability and career progression throughout a person’s working life is crucial for improving job prospects later in life. Some older workers also face skill challenges or poor health that prevent them from participating fully in the labour market. Supportive measures – such as lifelong learning, flexible work, and healthy work environments – are vital.

Lifelong investments in skills are necessary to allow older workers to thrive…

As economies evolve, the nature of work changes too. There are fewer physically demanding jobs and more roles that reward experience offering workers greater opportunities to remain productive for longer. However, there is a risk that benefits from these developments are offset by a decline in skills as the workforce ages. For instance, adults aged 60‑65 years have significantly lower literacy and adaptive problem-solving skills than those aged 25‑29. While part of this gap reflects cohort differences in educational attainment, skill levels have also declined with age within each cohort over the past decade. To address this, supporting older workers in maintaining and adapting their skills is crucial. Yet, in 2023, only a third of adults aged 60‑65 years participated in training, compared to over half of those aged 25‑44. In this context, there is an urgent need to avoid skill declines and foster a culture of continuous learning, shifting to a career model where learning at work takes place throughout life. Stronger action to expand access to career guidance and lifelong learning should be considered, especially for mid-career and older workers.

…and so are policies addressing barriers to job-to-job mobility

Demographic change has resulted in declining job-to-job mobility, negatively affecting wage and productivity growth. In fact, unlike involuntary employment transitions, voluntary job-to-job mobility significantly contributes to wage and productivity growth by reallocating workers to better jobs in better firms. However, this process declines sharply with age as workers become less mobile and less likely to transition to higher-quality firms. As a result, demographic ageing has reduced wage and productivity annual growth rates by respectively 0.10 and 0.13 percentage points between 2000 and 2019. Policies must provide sufficient flexibility for firms while offering opportunities for job mobility to workers. For mid-career and older workers in particular, targeted interventions including early support, wage insurance, job-search assistance, and continuous skill development can help maintain job-to-job mobility.