This report analyzes the OECD Employment Outlook 2025, examining the current state of robust labor markets and the impact of aging populations on economic growth.
Despite slowing GDP growth, OECD labor markets remain resilient. The unemployment rate in Q1 2025 stands at a historically low 4.9%, with 18 countries recording all-time high employment rates. Real wages increased by an average of 2.5 percentage points, and employment rates rose by 0.12 percentage points. Japan's unemployment rate was 4.9% as of May 2025.
The impact of aging is severe, with the elderly dependency ratio rising from 19% in 1980 to 31% in 2023, projected to reach 52% by 2060. This will likely reduce potential GDP growth per capita from 1% to 0.6% annually. Japan faces particularly acute challenges, with the working-age population declining 16% since 1995 and the elderly dependency ratio expected to rise from 49% in 2024 to 74% by 2060.
The OECD recommends increasing labor participation among healthy elderly workers, women, and regulated migrants. It also advocates investment in lifelong learning, promotion of inclusive employment practices, and careful implementation of AI technologies. For Japan specifically, addressing gender employment gaps and immigration could boost potential GDP growth by 0.33%.
The report concludes that while OECD countries maintain strong labor markets, they face constraints on economic growth from rapid aging, making improved labor participation and productivity gains key to future sustainable growth.