GDP growth across the OECD has slowed almost to a standstill, and in some countries is negative. Yet there is little sign of labour-market weakness. We explain what is happening and why
. At airports people are employed to straighten suitcases after they tumble onto the baggage carousel. Men in uniform with fluorescent batons stand outside construction sites, and politely remind you that walking on to the site is probably not a good idea. In department stores smartly dressed women help you use the lifts. And in one of Tokyo’s best bars, a team of four people was involved in the preparation of your correspondent’s gin martini .
Unemployment is rising in a few countries, including Austria and Israel. One of the worst performers is Finland, where the unemployment rate has risen by more than a percentage point from its post-lockdown lowfell by 0.6% in the fourth quarter of 2022. But “worst” is relative. At 7.2% in December, Finland’s jobless rate is still well below its long-run average.
A more Japanese labour market would have disadvantages. If workers do not leave poorly performing firms, they cannot join more innovative ones which drive growth. Indeed, the data suggest that rich-world productivity growth is exceptionally weak at present. On the other hand, spells of unemployment can exert a terrible human toll, especially on the young, who may earn lower salaries for the rest of their working lives.
A more intriguing possibility concerns the labour force. According to our estimates the rich world is “missing” 10m workers, or roughly 1.5% of the total workforce, relative to pre-pandemic trends . In Britain and Italy the workforce has actually shrunk. Early retirements and an increasingly elderly population explain some of the deficit. Covid may have pushed people to reassess their priorities, prompting them to drop out.
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