A new OECD report that looks at the effects of globalization on employment points out that while technological change is a major driver in the transformation to a competitive global economy, public perceptions about globalization’s impact on job insecurity and wage disparity need to be addressed through better social protection systems. To avoid a “backlash,” governments should do more to improve the skills of workers and help them adjust to increased job mobility.
The annual Employment Outlook (available to media and for purchase on the OECD website) provides some interesting statistics about “earnings inequality” in OECD countries. It graphs the earnings increases of the 10 percent best-paid workers vs. those of the 10 percent least-paid workers and shows that in 18 of the 20 OECD countries graphed, the gap increased between the highest-earning workers and the lowest. In only two countries, Ireland and Spain, did the gap decrease.
While the report extols some of the social protection systems in place in some of the European countries, those programs didn’t seem to help decrease those countries’ “earnings inequality” gap. Since I just had the summary of the Report, I don’t know if the researchers looked closely at what explains Ireland’s and Spain’s stellar performances. Could it be that pro-market policies have a greater effect than social programs?