The Organisation for Economic Co-operation and Development (OECD) labor markets remain resilient, with total employment across member countries reaching an all-time high and projected to keep growing this year and next, according to a press release issued on 7 July 2026 by the OECD. However, real wages remain below their levels five years ago in around one-third of OECD countries. This year’s energy shock is expected to put further pressure on wages. The findings appear in the newly released OECD Employment Outlook 2026. The report highlights a widening gap between employment strength and workers’ purchasing power.
OECD-wide employment reached 670 million in May 2026, up by about 26% since 2001. Employment is expected to grow by 0.3% in 2026 and 0.6% in 2027. The OECD-wide unemployment rate stood at 4.9% in May 2026, having remained at or below 5.0% for more than four years. It is projected to remain near this low level through 2027. Real wage growth, meanwhile, has lost momentum and is expected to slow further amid renewed inflationary pressures linked to higher energy costs.
The wages of the lowest paid workers have held up better against inflation than those of most workers, due to increases in minimum wages. Unemployment rates have risen for younger people, including graduates and, in some countries, young people without college degrees. Evidence of the impact of artificial intelligence on younger workers is so far limited, the report notes. Cyclical factors and longer-term shifts in skills demand are more significant drivers. Regional disparities also shape both employment prospects and opportunities for upward income mobility.
Unemployment rates in the 20% worst-performing regions are on average more than twice as high as in the 20% best-performing ones, with the ratio exceeding four in Belgium, Canada, Italy, and the Slovak Republic.
“OECD labour markets have been strong and resilient – employment is at record highs and unemployment rates are near historic lows,” OECD Secretary-General Mathias Cormann said. “But workers’ purchasing power is not keeping up. The answer is boosting labour productivity with better education policies, adult learning options, job mobility and technology adoption.”
People in lower-income regions face weaker prospects for upward mobility. Trade and technological change affect local labor markets differently depending on their industrial structure.
To help regions adapt, the OECD urges governments to combine investment in local public goods with targeted employment, skills, and industrial policies. Recommended measures include:
- Partnerships among employers, public employment services, universities, training providers, and local authorities
- Early intervention, retraining, and job-search and income support for workers at risk of displacement
- Diversification so local economies are less dependent on a single industry
- Addressing housing, childcare, family constraints, portability of rights, and access to local services
As mobility is not feasible for many people, these efforts should be paired with expanding good job opportunities where people already live.
