OECD predicts British employment rate to fall as rest of the club finally pulls past pre-financial crisis levels

 
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Angel Gurria warned of a backlash against globalisation (Source: Getty)

The employment rate in developed nations has finally risen back to pre-financial crisis levels, but the UK is about to go into reverse, according to an influential economics group.

The Organisation for Economic Co-operation and Development (OECD) expects the rate of employed British citizens between 15 and 74 years old to fall in the next year, from 66 per cent at the end of 2016 to 65 per cent in 2018.

Slower economic growth over the next year caused by rising inflation will drag on employment, the Paris-headquartered club of mainly rich nations said.

Read more: UK employment rate reaches record high

In a note on the UK accompanying its 2017 forecasts for employment, the OECD said: “UK growth will ease as rising inflation weighs on real incomes and consumption, and business investment weakens amidst uncertainty about the United Kingdom’s future trading relations with its partners.”

The upcoming Brexit process may "require some major labour market adjustments", the group said, with a need to focus on improving productivity growth and ongoing skills training.

However, the forecasts would still leave the UK well above the OECD average, with unemployment at its lowest in more than four decades and the employment rate as measured by the Office for National Statistics at a record high.

Across the world OECD nations have finally recovered to pre-financial crisis levels. Employed people accounted for 61 per cent of 15 to 74-year-olds in OECD nations in 2016, above the 60.8 per cent rate in 2007, the group said.

The employment rate will continue to rise to 61.5 per cent by the end of 2018, the OECD said.

Read more: As Trump prepares to dump TPP, is globalisation going into reverse?

Angel Gurria, the OECD secretary-general, welcomed the rise in employment across developed economies as “good news” in a speech in Berlin. However, he added a stark warning uneven improvements in the labour market are part of the “ongoing backlash” against globalisation.

He said: “Getting back to pre crisis employment levels is simply not enough. Even in countries where employment has recovered, wage growth remains subdued and the occupational structure of labour markets is changing significantly, making it difficult for some workers to find rewarding employment opportunities.”

Job growth in the mainly rich nations has been sluggish since the global financial crisis struck at the end of 2007.

Since then some economies, particularly in the south of Europe, have struggled to kick-start their labour markets. Unemployment (the proportion of those actively seeking work) in Greece remains staggeringly high, at 22.5 per cent, while in Spain the rate remains at 18.75 per cent despite recent improvements.

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