Productivity growth has continued to slow in the post-crisis period, limiting the scope for improvements in material well-being, and the impact of the slowdown has been exacerbated by a decoupling in wage and productivity growth in many countries, which may also be driving inequalities in income and wealth.
OECD Compendium of Productivity Indicators 2018
OECD Compendium of Productivity Indicators
Growth in labour income
Key findings
Recent years have seen a slowdown in real average and median compensation growth compared with the pre-crisis period. In some countries, such as Greece, Italy, Portugal, Spain and the United Kingdom, real average compensation fell over the period 2010-2016. In Canada, Korea, Luxembourg, Poland and the United States, growth in median compensation has lagged that of average compensation over the last 15 years, partly explaining increases in income inequalities.
Definition
Compensation of employees is made up of two components: wages and salaries, and social contributions payable by employers. Wages and salaries are payable in cash or in kind and include the values of any social contributions, income taxes, etc., payable by the employee even if they are actually withheld by the employer and paid on behalf of the employee. The value of social contributions payable by employers include actual social contributions payable by employers to social security schemes or to private funded social insurance schemes and imputed social contributions to unfunded schemes.
Compensation of employees is not payable in respect of unpaid work undertaken voluntarily, including work done by members of a household within an unincorporated enterprise owned by the same household. Any income generated through these activities is recorded as mixed income in the national accounts, which also includes income earned by the self-employed.
Median compensation is estimated using the ratios of minimum to median and minimum to mean wages of full-time employees available in the OECD Employment and Labour Market Statistics (database).
Information on data for Israel: http://dx.doi.org/10.1787/888932315602.
Comparability
Compensation of employees does not represent the entire value of the contribution of labour to production. Mixed income also reflects a labour income component. In some countries, and notably in some sectors, the shares of self-employed in the labour force may be significant and, so, differences in the shares of compensation of employees across countries may reflect institutional differences, for example tax incentives, to be self-employed or otherwise. This can also have implications in a temporal context. For example increases in average compensation per employee at the total economy level may merely reflect compositional effects, for example if employees in lower paid activities shift to self-employed status.
Sources and further reading
OECD Employment and Labour Market Statistics (database), http://dx.doi.org/10.1787/data-00313-en
OECD National Accounts Statistics (database), http://dx.doi.org/10.1787/na-data-en.
OECD Productivity Statistics (database), http://dx.doi.org/10.1787/pdtvy-data-en.
OECD (2017), OECD Compendium of Productivity Indicators 2017, OECD Publishing, Paris, http://dx.doi.org/10.1787/pdtvy-2017-en.
Figure 5.1. Growth in real average compensation per hour (employees)
Figure 5.2. Growth in real average and median compensation per hour (employees)
