Financial crisis halves world wage growth: ILO
The International Labour Organisation on Wednesday warned that a persistant stagnation of salaries across the world was weakening recovery in many economies.
“Wage stagnation was an important trigger of the crisis and continues to weaken recovery in many economies,” said Juan Somavia, director general of the ILO.
In its Global Wage Report, which compiles data from 115 countries and territories, the UN’s labour agency said growth in wages was halved in 2008 and 2009 due to the financial crisis, with some regions such as Europe even posting a net drop in salaries.
“The growth in real average monthly wages declined from 2.8 percent before the crisis in 2007 to 1.5 percent in 2008 and 1.6 percent in 2009,” said the report.
An “unusually high inflation,” mainly due to high fuel prices in 2008 had cut purchasing power during the year.
Meanwhile “sharp declines in inflation” in 2009 helped prevent a more precipitous drop in wages during the year, said the ILO.
In industrialised economies, wages dropped 0.5 percent in 2008 before growing at 0.6 percent in 2009.
In Eastern Europe and Central Asia, where wage growth reached 17 percent in 2007, it fell to 10.6 percent in 2008 and turned negative in 2009 when salaries declined by 2.2 percent.
“The recession has not only been dramatic for the millions who lost their jobs, but has also affected those who remained in employment by severely reducing their purchasing power and their general well-being,” said Juan Somavia, ILO director-general.
Overall data was propped up by wage growth in Asia, where real wages were 7.2 percent higher in 2008 and 8.0 percent more in 2009.
The report also warned that the proportion of people earning less than two-thirds of median wage had grown over the last 15 years in more than two-thirds of the countries surveyed, including Argentina, China, Germany, Ireland, South Korea and Spain.
“In these and other countries with a high or growing share of low pay, there is a risk that a large number of people will be left behind,” it warned.
Collective bargaining and minimum wages would help to bring about a more balanced recovery by ensuring that low-wage households get a fair share of economic growth, it said.