Job polarisation is being driven by lack of access to technological skills, warns OECD

productivityThe employment rate throughout OECD areas is finally returning to pre-crisis levels, but people on low and middle incomes have seen their wages stagnate and share of middle-skilled jobs fall. This is according to the latest OECD Employment Outlook 2017 which finds that the employed share of the population aged 15 to 74 years rose for the third consecutive year, and is expected to reach 61.5 percent by the end of 2018, above its peak of 60.9 percent in the fourth quarter of 2007. Its projections for the UK’s economy for 2017-18 anticipate that growth will ease as rising inflation weighs on real incomes and consumption, but business investment will weaken amidst uncertainty about the United Kingdom’s future trading relations with its partners.

Growing occupational polarisation has also contributed to rising discontent with globalisation, as those with lower or declining wages feel that the benefits from openness and interconnection are being reaped by a few. But the Outlook reveals that more than trade integration, job polarisation has been driven by pervasive and skill-biased technological changes. Between 1995 and 2015, the middle-skill share of employment fell by 9.5 percentage points in the OECD area, while the shares of high- and low-skill occupations rose by 7.6 and 1.9 percentage points, respectively.

“While the jobs gap is closing, many people do not feel the benefits as they are facing stagnant wages and no career prospects: we need an inclusive labour market that reconnects the benefits of our economic model with those who work in it,” said OECD Secretary-General Angel Gurría.

“It is essential to ensure that the benefits of globalisation and growth are widely shared and that our policies are future-proofed to help workers grasp the new opportunities but also respond to the challenges of a rapidly changing world of work.”

The report warns that governments must help workers build the right skills, and give them the opportunities to upskill and reskill throughout their working lives. Countries should also better assess changing skill needs, adapt curricula and guide students towards choices that open up labour market opportunities. In all OECD countries, high skilled workers have two to three times as many opportunities to participate in on-the-job training as their low-skilled counterparts.

The Outlook also includes a new scoreboard comparing the labour market performance of countries based on the quantity and quality of employment, as well as the inclusiveness of the job market, which shows that only a few OECD countries do well in all three areas, including Nordic countries, Germany, the Netherlands and Switzerland.

The report and country notes are available here.

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