forthcoming>>

TRENDS IN PRODUCTIVITY AND WAGES

In addition to their regular forecasts for the major economic variables, twice a year (in February and August) we ask our Consensus Forecasts panellists' for their projections for total employment growth and wage or employment costs for the next twelve years, along with forecasts for real and nominal GDP growth over the same period. Using indices derived from these projections, we have calculated forecasts for changes to broad measures of productivity growth (real and nominal GDP per employee) and an indicator of unit wage costs (calculated by dividing the employment cost indices by the indices of real GDP per employee). Although some of the wage definitions used are imperfect measures for total compensation per employee, our calculated indices do provide an indication of future trends in unit wage costs.

Our surveys for Trends in Productivity and Wages cover each of the countries listed below. For illustrative purposes we have included forecast tables for the United States and Japan, along with a text commentary taken from our February 2014 survey below. To view a sample issue of Consensus Forecasts please click the "Download Sample Issues" button below


Consensus Forecasts
United States Euro zone
Japan Netherlands
Germany Norway
France Spain
United Kingdom Sweden
Italy Switzerland
Canada  

Download Sample Issues



UNITED STATES
  - Annual Averages -
% change over previous year 2013 2014 2015 2016 2017 2018-22 2023-27
Real GDP 2.2 2.4 3.2 2.9 2.7 2.7 2.4
Total Employment 1.0 1.6 1.8 1.5 1.2 0.9 0.9
Real Output (GDP) per Employee 1.2 0.8 1.3 1.3 1.5 1.5 1.5
Employment Costs 1.9 2.1 2.5 2.9 3.1 3.1 3.2
Unit Wage Costs 0.7 1.4 1.1

1.5

1.6 1.6 1.6
Nominal GDP 3.7 3.9 4.2 4.8 4.8 4.6 4.5
Nominal Output per Employee 2.7 2.2 2.4 3.3 3.5 3.6 3.6

JAPAN
  - Annual Averages -
% change over previous year 2013 2014 2015 2016 2017 2018-22 2023-27
Real GDP 1.6 0.2 1.3 1.6 0.8 1.3 1.0
Total Employment 0.7 0.7 0.6 0.4 0.2 0.1 -0.1
Real Output (GDP) per Employee 0.9 -0.5 0.7 1.2 0.7 1.1 1.1
Total Cash Earnings -0.1 0.8 1.1 1.2 1.5 1.8 2.0
Unit Wage Costs -1.0 1.3 0.4 0.0 0.8 0.6 0.9
Nominal GDP 1.0 1.7 2.8 2.2 2.0 2.3 2.2
Nominal Output per Employee 0.4 1.0 2.2 1.8 1.8 2.2 2.2

The 2008-9 financial crisis for the G-7 and Western Europe prompted severe falls in GDP. Not surprisingly, Real Output per Employee (our measure of productivity) in many countries also declined. In the United States, the immediate response to the crisis was to shed jobs quickly and preserve profit margins. The drop in employment outstripped that of GDP, but both falls were so sizeable that productivity growth was moderate. More recently, apart from a 3% surge in 2010, productivity has remained modest due to the tentative nature of the US recovery. Last year, our measure of output per employee advanced by 0.8%, mainly on the back of a strengthening labour market which also boosted unit wage costs. The US Bureau of Labor Statistics measure of nonfarm business sector labour productivity, Output per Hour, also grew at a modest 0.8% in 2014. Q4 2014 was especially muted, with flat productivity per hour in y-o-y terms and a 1.8% q-o-q annualized decline as unit labor costs soared. However, our assessment of Real Output per Employee going forward suggests that US productivity growth will average an upbeat 1.5% pace over the forecast horizon. UK productivity growth could be even faster, at around 1.7%, although rates of GDP and employment are projected to be lower than US ones. German output per employee will be close to that estimated for the US, as softer employment gains will boost it. But productivity growth in France, Italy and Spain is expected to be only half the German pace. Stagnation and acute structural unemployment continue to plague France and Italy, even though their governments have pledged reforms. After the crisis prompted mass layoffs and cutbacks, Spain saw notable gains on the productivity front. However, these gains should moderate going forward as the job market normalizes.

A portion of text from Consensus Forecasts, February 9, 2015.