PARIS (Reuters) – Companies in most countries are showing profits big enough to absorb wage increases needed in a high inflation environment, the Organization for Economic Co-operation and Development (OECD) said on Tuesday.
Despite tight labor markets, employers have failed to raise wages to keep pace with inflation in 31 of the 34 countries tracked in the latest Jobs Outlook report, released by the London-based body Paris.
After controlling for inflation, wages fell 3.8% year on year in the first quarter of 2023, with Hungarians posting the largest decline, down 15.6%, according to the report.
While inflation eroded the purchasing power of workers, corporate profits grew faster than wages after the pandemic in all countries tracked in the report.
“A cost of living crisis must be shared between governments, businesses and workers,” said Stefano Scarpetta, Director of the OECD’s Directorate for Employment, Labor and Social Affairs (ELS).
“There is some room for profits to adjust to higher wages without generating a price/wage spiral,” he added.
These wage increases vary by country and industry, he said.
(Report Leigh Thomas, Corentin Chapron, edited by Kate Entringer)
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