Painful Separation

Published on Incomes and Inequality

Workers are gaining less of the proceeds from economic growth right across the OECD. Painful Separation examines the relationship between economic growth and wages for workers on middle (median) wages over the last 30 years in 10 major OECD countries.

Countries are grouped to describe the severity of the situation in each, with the UK in the middle of the pack:

• Chronic – the US, Australia and Canada, where median pay consistently grew at less than half the rate of economic output

• Acute – the UK, France and Germany, where median pay tracked growth in economic output for long periods, but increased at less than half the rate of GDP per capita in the last decade.

• Mild – Finland, Japan, Denmark and Sweden – where median pay outpaced or tracked GDP in the 1990s, but grew at only around three-quarters of the rate of GDP per capita in the most recent decade

The report concludes that greater inequality in pay appears to be the most significant factor distinguishing the chronic and acute countries from the mild, with wages for the top 10% moving further away from wages for those at the bottom and in the middle of the earnings scale.