📈 Strong Labour Markets, But Growth Is Slowing
OECD Employment Outlook 2025: How Ageing Populations Are Changing the Future of Work.According to the latest OECD Employment Outlook 2025, labour markets in many OECD countries are performing well. In fact, both employment and labour force participation are at their highest levels ever recorded.
As of May 2025, the OECD unemployment rate remains at just 4.9%—a historically low figure. The employment rate climbed to 72.1% in the first quarter of 2025, while the labour force participation rate reached 76.6%. These numbers show that more people are working or looking for work than ever before.
However, there are early warnings that this strong growth may not last. The pace at which jobs are being created is slowing down. In many countries, labour market pressure—like the number of job openings compared to job seekers—is returning to pre-COVID-19 levels. This suggests that we may be entering a more stable, slower-growing phase.
💵 Real Wages Recovering, But Not Everywhere
Wages across the OECD are now increasing again after years of inflation. But in about half of the member countries, real wages (adjusted for inflation) are still lower than they were in early 2021, before inflation spiked following the COVID-19 pandemic.
This slow recovery in wages is making it harder for people to keep up with the cost of living, especially in countries where food, energy, and housing costs have risen the most.
👵 Ageing Population: A Growing Challenge for the Economy
A major theme in the 2025 Outlook is the growing impact of population ageing. Thanks to longer life expectancy and declining birth rates, populations in OECD countries are becoming older. This has serious implications for economic growth and social stability.
The working-age population—people between the ages of 20 and 64—is now shrinking in many countries. At the same time, the number of retirees is going up fast.
Here’s what the numbers look like:
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In 1980, there were 19 people aged 65+ for every 100 working-age adults.
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By 2023, that number increased to 31.
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By 2060, it is expected to rise to 52, on average across OECD countries.
This trend is known as the old-age dependency ratio, and it is rising steadily. The higher this ratio, the greater the burden on younger workers to support older generations through taxes, pensions, and healthcare systems.
📉 What Happens If We Don’t Act?
If governments and businesses don’t change course, economic growth will slow down sharply. The report warns that GDP per capita growth (which shows how much economic value each person produces) could fall by around 40% in the coming decades.
Here’s the comparison:
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Between 2006 and 2019, GDP per capita in OECD countries grew by 1% per year on average.
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From 2024 to 2060, this could drop to just 0.6% per year.
Only two countries in the entire OECD are expected to avoid this slowdown if nothing changes.
👩⚕️ The Solution: Bring More People Into the Workforce
To reduce the economic impact of ageing, countries must make better use of groups that are currently underrepresented in the labour market. This includes:
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Healthy older adults
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Women who work part-time or are not working
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Regular and legal migrants
For example, if countries help more older workers stay in the workforce—especially those aged 55–65—it could add 0.2 percentage points to annual GDP per capita growth in nearly half of OECD countries. That’s a big gain.
Similarly, closing the gender employment gap (the difference in employment rates between men and women) could create another strong boost to economic output.
🎓 Skills Development: Training Older Workers Is Key
Older workers have valuable experience, but many of them lack up-to-date skills in literacy and problem-solving. This makes it harder for them to adapt to modern workplaces, especially those relying on technology.
In 2023:
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Only 1 in 3 adults aged 60–65 took part in job-related training.
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More than half of younger adults (aged 25–44) did.
To keep older workers employed and productive, governments and employers need to invest in lifelong learning and targeted training programs. This will help them stay competitive and contribute meaningfully to the economy.
✅ Final Thoughts: Turning a Challenge Into Opportunity
The ageing population is a reality that cannot be avoided. But the OECD report makes it clear: with the right policies and social changes, it doesn’t have to mean economic decline.
By:
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Keeping healthy older adults in work longer
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Supporting women to participate more fully in the workforce
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Making it easier for migrants to work legally
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Investing in lifelong education and skills
…OECD countries can protect their economic future, support living standards, and maintain social stability in the face of demographic change.
