Decoupling of wages from productivity

In a number of countries with above-average productivity growth, such as Korea, Poland or the Slovak Republic, real median wages have grown well above the OECD average despite significant wage-productivity decoupling.

However, where productivity growth has been around or below the OECD average, such as in Canada, Japan and the United States, decoupling has been associated with near-stagnation of real median wages.

[9] This could indicate the presence of "winner-takes-most" dynamics, as frontier firms take advantage of technology or globalisation-related increases in economies of scale and scope to reduce the share of fixed labour costs in value-added (e.g. related to research and development, product design or marketing) and/or again a dominant position that allows them to raise their mark-ups.

With the caveat that global value chain expansion is unlikely to be independent of technological change,[16] quantitatively its effect appears to be only around a third of that from declines in relative investment prices.

[18] However, it raises the question of how public policies can contribute to the broader sharing of the productivity gains from technological change and increased trade integration.

Public policies play a key role in ensuring that productivity gains from technological change and global value chain expansion are broadly shared with workers.