Stubborn wage stagnation worldwide undermines recovery in many economies, warned the International Labour Organization (ILO) in its latest report.
"Wage stagnation has been a significant setback for the crisis and continues to weaken recovery in many economies," said Juan Somavia, ILO’s Director-General, on Wednesday. In the global wage report, which covered data from 115 countries and regions, the UN’s labor agency highlighted that wage growth was halved in 2008 and 2009 due to the financial crisis, with some regions like Europe even recording a net decline in wages."The growth of the average real monthly wage decreased from 2.8 percent in the pre-crisis period in 2007 to 1.5 percent in 2008 and 1.6 percent in 2009," the report states. Unusually high inflation, largely stemming from high fuel prices in 2008, reduced purchasing power during that year.
Meanwhile, a sharp decrease in the inflation rate in 2009 helped prevent a more pronounced decline in wages that year, ILO further explains. In industrialized economies, wages decreased by 0.5 percent in 2008, followed by a growth of 0.6 percent in the subsequent year. In Eastern Europe and Central Asia, where wage growth reached as high as 17 percent in 2007, wages increased by 10.6 percent in 2008, only to decrease by 2.2 percent in 2009."The recession has not only dramatically affected millions of people who lost their jobs but also those who retained their jobs by significantly reducing their purchasing power and overall well-being," said Juan Somavia, ILO’s Director-General. Overall data were bolstered by figures from Asia, where real wages increased by 7.2 percent in 2008 and eight percent in 2009, the report further emphasizes. The ILO also warned that the share of people earning less than two-thirds of the average wage has increased in more than two-thirds of the surveyed countries over the past 15 years, including Argentina, China, Germany, Ireland, South Korea, and Spain."In these and other countries with high or rising shares of low-income earners, there is a risk that a large number of people will be brought into a difficult situation," the ILO warns. Collective bargaining and minimum wages would help establish a more equitable recovery as they would guarantee low-income families a fair share of the ‘pie’ from economic growth, the report’s authors conclude. (H)
