Why wages and productivity look set to diverge further

Productivity growth has decoupled from wage growth across the US, Europe, and Japan since around 1970, with the gap widening into a chasm in recent years, according to economic data. The trend risks accelerating as AI and a falling labour share of GDP further drive a wedge between the two, challenging the long-held economic theory that they should grow in tandem.

Why wages and productivity look set to diverge further AI and a falling labour share of GDP risk accelerating decoupling trends across the rich world PRODUCTIVITY growth is pretty much all that matters in the long run. Without innovations and new technologies – many of which we now take for granted, such as clothes and flushable toilets – life would be nasty, brutish and short. Indeed, for most humans throughout history, their time on Earth was something resembling that. According to economic theory, productivity and real wages should grow in tandem, with the benefits of new technology being shared with the workers who produce the stuff. But in the US, Europe and Japan, pay growth has decoupled from productivity growth, with the latter having pulled ahead. In the US, wage and productivity growth were tightly linked at least since 1947, when official records began, until around 1970, when pay started to fall behind. In recent years, the gap has widened https://www.businesstimes.com.sg/international/us-productivity-slows-fourth-quarter into a chasm. TRENDING NOW /pulse?ref=trending-now UOB CEO’s youngest child Grant Wee turns burnout into a wellness business Wanted: 100 AI specialists, 100 wealth relationship managers at HSBC Singapore China chipmaker CXMT jumps 472% in debut after US$9.8 billion IPO Temasek should publicly state its position on the long-rumoured CapitaLand-Mapletree merger