OECD Employment Outlook 2026

• July 31, 2026
• admin

This periodic OECD report finds that labour markets remain resilient, with employment rates at historically high levels, but signs of weakening are emerging. Unemployment is rising slightly, employment growth is flattening and labour market tightness is easing, while structural labour shortages persist. Young people face particularly difficult entry conditions, and real wage growth is slowing. Geopolitical uncertainty, high tariffs and elevated energy costs could further weaken the labour market and wage recovery.

The report highlights persistent regional inequalities in employment, income and social mobility. Employment rates can differ by more than 20 percentage points between regions within the same country, while people in lagging regions face lower incomes and fewer opportunities for upward mobility. Structural shocks such as globalisation and digitalisation can also impose significant costs on displaced workers, highlighting the need for place-based policies, investment in skills and infrastructure, and better support for workers transitioning between sectors and regions.

The report also examines how labour market institutions can support adaptation and productivity. Education, skills and flexible training improve employment and wages, while non-compete clauses can restrict job mobility, suppress wages and hinder productivity. The OECD therefore calls for better-designed employment protection legislation that balances worker security with firms’ need to adapt, while ensuring that workers have the skills and support needed to navigate economic and structural change.