OECD Observer
Not all jobs are created equal

New business creation is thriving, and is back to pre-crisis levels in many OECD countries, generating millions of new jobs along the way.  However, most new firm and job creation has taken place in sectors with below average productivity, for example, in accommodation and food services in Greece, Ireland and the United Kingdom, and in construction in Italy and Norway. In almost every major OECD economy, the top three sectors generating the largest net employment gains over the period 2010 to 2016 were– restaurants, health and residential care activities, and these had below average labour productivity. In contrast, the level of jobs created in SMEs with above median productivity has been dropping since 2006. This has contributed to lower productivity growth rates in developed economies in recent decades.

The trouble is that more jobs in lower-productivity activities means more lower-paid jobs. This also weighs down average salaries in the economy as a whole. Between 2010 and 2016, for example, close to 90% of all new jobs in France were created in activities with below-average wages as were close to 65% in Germany and the UK and over 75% in the US.  

©OECD Observer Q3 No 319 Sep 2019