ILO: "Global Wage Growth Has Halved"

In a press release, the ILO (International Labour Organization) has outlined the key findings of its report: having analysed data from 115 countries, representing 94% of the world's nearly 1.4 billion wage earners, it found that the economic and financial crisis halved wage growth in 2008 and 2009.

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Globally, average wage growth fell from 2.8% in 2007 (before the crisis erupted) to 1.5% in 2008 and 1.6% in 2009. Excluding China, wage growth dropped to just 0.8% in 2008 and 0.7% in 2009.

According to Juan Somavia, ILO Director-General, the report reveals another dimension of the ongoing employment crisis: "The recession has not only been devastating for the millions who lost their jobs, it has also hit those who kept them, by drastically eroding their purchasing power and overall wellbeing."

He added that "we are facing a world of weak aggregate claim, large unmet needs, and persistently high unemployment. Macroeconomic policymakers must focus their attention on employment and wages in order to shore up the fragile economic recovery and address longer-term social and economic imbalances."

Another notable finding is the significant variation in wage growth rates across different regions. While Asia and Latin America maintained positive wage growth (albeit at a reduced rate), Eastern Europe and Central Asia experienced sharp declines: 12 out of 28 advanced economies saw a fall in real wage levels in 2008, and 7 showed the same trend in 2009.

The Report notes that the overall short-term impact of the crisis on wages should be viewed in the broader context of a long-term decline in the share of wages in total income, a growing gap between productivity growth and wages, and widespread and increasing wage inequality.

Specifically, the Report highlights that, since the mid-1990s, the proportion of people earning a low salary, defined as less than two-thirds of the median salary, has risen in more than two-thirds of countries for which data is available. Looking ahead, the Report concludes that the pace of economic recovery will depend, at least in part, on the extent to which households are able to use their wages to boost consumption.