PARIS: Fast-growing “superstar” tech firms are taking a growing share of national income in many countries, leaving workers’ overall wage growth subdued, the Organization for Economic Cooperation and Development said on Wednesday.
Though unemployment in most OECD countries has returned to pre-crisis levels, wage growth has not, even though many labour markets have become the tightest they have ever been, the Paris-based policy forum said in its annual Employment Outlook.
One legacy of the 2008-2009 global economic crisis is that many workers were forced to accept low-pay jobs afterwards, weighing on overall wage growth.
The OECD said another factor was at play with overall productivity gains in most economies no longer translating into higher wages for all workers as they did in the past.
The reasons for slow post-crisis wage growth has been one of the great economic debates in recent years as stronger labour markets have in the past fuelled higher overall wages, and thus, higher inflation.
Weighing into the debate, the OECD suggested what it called “superstar” firms could be partly to blame for weak wage growth, which slowed on average in OECD countries to 1.2% after accounting for inflation, down from 2.2% before the crisis.
It said much of the productivity growth has been generated by a small of number of innovative firms that invest massively in technology but employ few workers compared to other more traditional companies.
As a result, the overall share of national income going to workers, rather than investors, has declined on average in the OECD, led by the United States, Ireland, South Korea, and Japan.
It said for now there was no evidence that emergence of superstar firms was creating anti-competitive forces, but it also did not rule that out as a future danger.
“A key challenge for product market regulation and competition policy going forward will be to prevent emerging dominant players from engaging in anti-competitive practices,” the OECD said.
Instead of recommending an anti-trust clamp-down as some politicians in the United States have proposed, the OECD said the way to help workers would be to give them better skills an education.
It also said collective bargaining between workers’ representatives and employers could help reduce wage inequality.