A new report from the Organization for Economic Cooperation and Development (OECD) on the job market for its 35 member nations found that employment rates have finally returned to pre–financial crisis levels. The recovery, however, has been uneven, with sporadic wage growth, and the share of middle-skilled jobs has declined, hollowing out the middle class. This has contributed to rising inequality and concerns that the highest earners are getting a disproportionate share of the gains from economic growth, according to the report.

The OECD report covers mostly developed nations in Europe, North America and Asia, but includes developing countries such as Mexico and Chile. The mission of the Paris-based group is to promote policies that will improve the economic and social well-being of people around the world.

Unemployment in the OECD area has dropped by 12 million people since peaking in the first quarter of 2010, the report said. The region’s average unemployment rate is projected to decline to 5.7%, or 36 million, at the end of 2018, from 6.1% at the end of the first quarter of 2017, or 38 million unemployed.

The report said not everyone has benefited from the labor market recovery. The jobless rate is likely to be only 1% above its pre-crisis level by the end of 2018, and significant jobs deficits will persist in areas such as southern Europe. Even in countries where employment has recovered, such as the United States, wage growth remains subdued. Average hourly and weekly wages in the United States in May rose about 2.5%, below the rate that was typical a decade ago.

“While the jobs gap is closing, many people do not feel the benefits as they are facing stagnant wages and no career prospects: we need an inclusive labor market that reconnects the benefits of our economic model with those who work in it,” said OECD Secretary-General Angel Gurría. “It is essential to ensure that the benefits of globalization and growth are widely shared and that our policies … help workers grasp the new opportunities but also respond to the challenges of a rapidly changing world of work.”

OECD said about one-third of overall polarization in the area’s labor market is because of shifts in jobs from manufacturing to services, with factory workers who have lost their jobs often forced to accept lower-paid work in the services sector.

The shifts in employment are mostly explained by the demand for labor concentrating in high-skilled jobs as well as low-skilled ones, with a hollowing of the middle class. In a chart surveying 23 OECD member countries, the percentage share of employment for middle-skill jobs declined in all 23 in the period from 1995 to 2015.

OECD says governments must help workers build the right skills and give them the opportunities to improve their skills throughout their working lives. Also, social protection and labor market policies must adapt to evolving forms of employment, the report advises.

On a more positive note, the OECD report found that the employed share of the population among member nations aged 15 to 74 years rose for the third straight year. It is expected to reach 61.5% by the end of 2018, above its peak of 60.9% in the fourth quarter of 2007.

The report predicts that the labor market will continue to improve until at least the end of 2018, with nearly 47 million more people employed than at the end of 2007.

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