The labor markets of the Organisation for Economic Co-operation and Development (OECD) remain resilient despite the impending challenges posed by an aging population, which will lead to significant labor shortages and fiscal pressures, the organization warned today.
“OECD labor markets remain resilient: employment rates rose further last year to 72.1% on average across OECD countries, the highest level since at least 2005,” said OECD Secretary-General Mathias Cormann in a statement regarding the OECD’s employment outlook report.
The report noted that employment across the OECD, which reached 668 million in May of this year—a nearly 26% increase since 2001—is projected to grow by about 1.1% in 2025 and 0.7% in 2026.
The unemployment rate across the OECD was 4.9% in May, and it is projected to remain near this level until 2026.
The unemployment rate was 0.5 percentage points higher for women than for men, but between the first quarter of 2024 and the first quarter of 2025, women’s employment rates increased on average by about 0.2 percentage points more than men’s.
This year’s edition also includes a new analysis of the significant impact that declining birth rates and increased life expectancy in the OECD will have on economic growth and employment.
“Population aging is expected to lead to significant labor shortages and fiscal pressures. We estimate that by 2060, the working-age population will decline by 8% in the OECD, and annual public spending on pensions and healthcare will rise by 3% of GDP,” noted the international organization promoting policies to improve economic and social well-being worldwide.
The report predicts that the working-age population will decrease by more than 30% in a quarter of OECD countries by 2060 and highlighted that the elderly dependency ratio increased from 19% in 1980 to 31% in 2023, with an estimate to rise to 52% by 2060.
The OECD emphasized the need for ambitious policy measures to improve employment opportunities for older workers, unlock the untapped potential of women’s and youth labor markets, and revive productivity growth, including ensuring that workers have the right skills to benefit from new Artificial Intelligence (AI) tools.
“Without decisive policy action, GDP per capita growth will fall by about 40% in the OECD area—from 1% per annum in 2006-19 to 0.6% per annum in 2024-60, on average,” it stated.
For now, the OECD noted, labor markets remain resilient, but there are signs of slowing, as geopolitical uncertainties and trade policy are impacting economic activity.
Real wages are rising in most OECD countries, yet they remain below levels observed in early 2021, just before the post-pandemic inflation surge, in about half of the countries.
The OECD is a global policy forum aiming to foster sustainable economic development, expand world trade, and improve quality of life in its 38 member countries, working with over 100 countries globally.
