The global economy is one massive riddle. For instance, in a world characterized by sluggish economic growth, why are companies around the world hiring so aggressively, and why hasn’t the demand for workers translated into faster wage growth? As pointed out by writer Tom Fairless, from Tokyo to London, unemployment rates have declined. In America and in the United Kingdom, the official unemployment rate has been below five percent recently. In the 19 nation Eurozone, the unemployment rate just hit a seven year low.
In Japan, the unemployment rate has been around three percent, its lowest level since the early 1990s. The most likely explanation for rapid hiring in the face of soft growth is that worker productivity is not climbing. As a result, even a little bit of economic growth can translate into significant demand for new workers. With respect to slow wage growth even with growing demand for workers, economists offer a number of explanations. One prominent one is that the types of jobs being created today often fail to pay as much as the production-oriented jobs lost over the course of time.
