In addition to their regular one and two year macro forecasts on pages 4-26, this month we asked for our panellists’ projections for total employment growth and wage or employment costs between now and 2038, along with real and nominal GDP growth forecasts over the same period. Using indices derived from these projections, we have calculated forecasts for changes in broad measures of productivity growth (real and nominal GDP per employee) and an indicator of unit wage costs (calculated by dividing the employment cost indices by the indices of real GDP per employee). Although some of the wage definitions used are imperfect measures for total compensation per employee, our calculated indices do provide a general indication of future trends in unit wage costs. Figures in normal type are official data, with Consensus Forecasts – based on the averages of our panels’ forecasts – shown in blue italics.
Our surveys for Trends in Productivity and Wages cover each of the countries listed below. For illustrative purposes we have included forecast tables for the United Kingdom, along with a text commentary taken from our August 2025 survey below.
| Consensus Forecasts – Trends in Productivity and Wages | |
|---|---|
| United States | Italy |
| Japan | Canada |
| Germany | Euro zone |
| France | Spain |
| United Kingdom | Switzerland |
Our twice-yearly Trends in Productivity & Wages survey generates productivity estimates using forecasts for Real GDP growth and Total Employment to arrive at Real Output per Employee. This is different from other measures of labor productivity per hour. The consensus also weights forecasts for different (i.e.: not directly comparable) wage variables against productivity in order to derive Unit Wage Costs. When we last conducted this survey in August 2025, United States’ real productivity estimates averaged around 1.2% over the forecast horizon, but these have now risen noticeably, to around 1.7%. This modest improvement is due to upgrades in the consensus forecast for GDP growth, especially projections for 2028-38. Strong spending and rapid advances in AI have raised bets of a productivity boom. While there is concern that AI will render many jobs obsolete, US employment costs also look unexpectedly upbeat, at 3.3%. AI advancement will require further large investments in capital and R&D, not to mention enormous energy usage, so that is an important cost component. Meanwhile, our German forecasters expect GDP growth to jump by 1.5% in 2027, driven by fiscal expenditure in defence and infrastructure. Many European economies must boost defence spending in the face of fragmented alliances and greater military threats. Productivity forecasts for Japan, Germany, France, UK, Canada and the Euro zone remain noticeably below those of the US, though Japanese investment is also being directed at automating swathes of industry amid declining birth rates. Other G7 nations are ageing, too, and they may also move towards greater automation. Labor shortages could also push up salary costs in order to attract a smaller pool of workers.
A portion of text from Consensus Forecasts – G7 and Western Europe, August 11, 2025.