In addition to their regular forecasts for the major economic variables, twice a year (in February and August) we ask our Consensus Forecasts panellists’ for their projections for total employment growth and wage or employment costs for the next twelve years, along with forecasts for real and nominal GDP growth over the same period. Using indices derived from these projections, we have calculated forecasts for changes to 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 an indication of future trends in unit wage costs.
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 States and Japan, along with a text commentary taken from our August 2017 survey below. To view a sample issue of Consensus Forecasts please click the “Download Sample Issues” button below.
|United States||Euro zone|
It is 10 years since the start of the global financial crisis in August 2007, and the impact is still felt in the labour markets of the G-7 and Western Europe. Some economies still struggle with high joblessness among younger workers, and low wages. It is worth noting, however, that productivity growth began slowing years before the Great Recession, as the buoyant effects of the IT revolution faded. The economic meltdown from 2008 onwards put that productivity picture into sharp relief. Household, corporate and government debt burdens meant that neither governments nor private enterprise were able to invest as much in education, technology, or R&D. The Great Recession prompted regulations to rein in the financial sector, which in turn muffled entrepreneurial risk-taking. 2016 was an especially weak year for productivity growth (measured as Real Output per Employee) in the United States, due to soft growth and faster employment gains. The latter represents good news: after close to a decade of high unemployment, labour markets are now in recovery mode. On the other hand, with the exceptions of the Netherlands, Spain and Sweden, no country in the G-7 and Western Europe saw GDP growth top 2% last year. And no country will see productivity growth top 1.5% over the 12-year forecast horizon. Sweden leads the pack with its productivity growth estimates, thanks to an upbeat GDP outlook and moderation in hiring. Among the G-7, US productivity forecasts continues to outpace those for the Euro zone, with rates close to those seen in 2007-11. Japanese productivity growth should outstrip those seen in 2007-11, as should Germany’s, although as the chart on the front page illustrates, productivity in both will remain below the US (as well as the UK and Canada). With unit wage costs comparatively stronger than real output per employee, this also raises another problem for long-term worker productivity in the region.
A portion of text from Consensus Forecasts – G7 and Western Europe, August 7, 2017.