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HomeInternational Observatory of Living WagesAnual Reports
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2019 Report: Living-wage assessment – PPP Wage rate gaps for selected "developed and emerging" economies for all employed in manufacturing workers (1996 up to 2017).

Overall, 2017 is the first year in the 22-year span in this report that US hourly wage rates dropped (0,9%). This enabled the vast majority of countries to reduce their comparative wage gaps or increase their surpluses in their manufacturing wage Eq-Index or at least keep their position.

Of the twelve economies in this report with data since 1996, Germany continues to have the best position with an actual equalisation advantage over the US in real PPP terms in its hourly wage rates, followed by France with a one point advantage over US wage rates. All other countries continue to record wage gaps vis-à-vis equivalent manufacturing wage rates in the US. Seven out of the twelve countries in this chart improved their position in 2017 vis-à-vis 2016 by increasing their advantage (Germany and France) or decreasing their wage gaps (Canada, UK, Spain, Japan and South Korea). Brazil and Mexico remained with their same gap in 2017 as in 2016. Only Italy, Singapore and Australia increased their gaps from the previous year. Mexico and Brazil continue reporting the worst wage gaps.

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2019 Report: Living-wage assessment – New assessment of Argentina's wage rate gap 1996-2017

With the staunchly neoliberal Macri government, Argentina reverted the impressive progress achieved in living-wage equalisation in the manufacturing sector of more than one decade. Repairing the damage will be a daunting task of the upcoming Fernández government, if it has the political and economic skill to materialize it.

Argentina is once again in the midst of an extreme economic crisis, as it was in 2002, as the direct result of the deep neoliberal economic policies that were reinstated by the Macri government to return to supply-side economics that depletes labour’s share of income. After the 2002 economic crisis, Argentina experienced a steady improvement of real wages. The Eq-Idx increased 93% between 2002 and 2012 to then drop gradually 19% to 2016. Macri’s government, claiming that their new economic plan would stop the unrelenting increase of inflation and stabilize the economy, did everything it could to reverse the demand-side policies of the preceding Kirchner and Fernández governments. These governments’ policies were instrumental in recovering Argentina’s economy, and, all the more important, much of the standard of living enjoyed prior to the 2002 “corralito crisis”, when Argentinians were unable to have free access to their private funds in their bank accounts for a full year, could not exchange their funds for other currencies, and could only withdraw a very limited amount on a weekly basis.

Prior to Macri’s government, manufacturing wages and their equalisation with US equivalent wages began to recover at a fast pace after 2002. The equalisation with equivalent wages in the US increased at an unprecedented pace, reaching a 58 Eq-Idx in 2012, almost twice the 30 index of 2002. This made Argentina’s manufacturing compensation cost the highest in Iberian America by a large margin. However, the steep increase of both the minimum wage and manufacturing wages, which, for the period 2003-2012, increased an average of 27,5% and 25,1%, respectively, in local currency, were faced with a corresponding inflation average of 16,3% for the same period, that Argentinian governments were unable to control and that subsequently exploded. The race to outperform inflation became unattainable and in 2014, inflation reached 38,6% whilst manufacturing wages increased only 30,3%. In 2015, the last year of the Fernández government, inflation dropped to 26,8%, but then, with Macri, jumped to 39,2% in 2016, dropped again to 24,8% in 2017, exploded to 47,6% in 2018, and it reached 53,5% in the last twelve months (September 2019) and it is expected to reach 57% in 2019.


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New 2019 Report!
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2019 Report: Living-wage assessment – New assessment of Mexico's wage rate gap 1996-2017

Mexico’s fraudulent government, fixated on the precarisation of Mexican society, deliberately contained real wages in manufacturing and across all economic sectors as a core matter of its economic policy for nearly 36 years. This appears to begin to change.

Mexico’s track record since 1996 exposed a deliberate state policy of maintaining modern-slave-work real wages between 1996 and 2015. However, wage policy appears to have changed in 2017 after the execution of consistent supply-side policies over more than three decades. For the first time the federal minimum wage was increased above inflation in 2017 and 2018. Through a so-called “Independent Recovery Amount”, the minimum wage for 2017 was increased arbitrarily by 9,6%, including 3,9% to offset the estimated CPI inflation rate. The same criterion was applied for 2018, for a total minimum wage increase of 10,4%, including a 3,9% increase to offset CPI inflation. In 2019, Mexico’s new government, touting to implement a strong minimum wage recovery policy, increased the minimum wage by 16,2%, including a 5% increase to offset inflation.

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2019 Report: Living-wage assessment – New assessment of Spain's wage rate gap 1996-2017

Spain experienced a very meaningful increase of its Eq-Idx in 2017, gaining 4 points equivalent to a 4,5% increase; the result of the combination of the increase of its hourly rate in euros, the euro revaluation against the US dollar and the drop of 0,9% of the US hourly rate. Although this is a reversal of its previous drop between 2014 and 2016, the change is in line with the vast majority of European economies for the same reasons.

Spain had made great economic strides in its convergence with the major European economies in the last part of the twentieth century, but began to stall after 1996, during the rule of its conservative government. Spain’s Eq-Idx for production-line workers in manufacturing rose powerfully from 51 in 1975 to 84 in 1990, but then it began to hover in the mid 70s indices. In this way, the Eq-Idx —in purchasing power parity terms— of total hourly compensation costs for all employed in manufacturing has not reached an 80 index and has continued to linger since joining the euro between 70 in 1999 and 77 in 2017, averaging nearly a 73 index for the period. This is the result of supply-side economic policies applied by both right and left of centre governments that no longer sought to put at par Spain’s labour compensations in manufacturing with the compensation rates of equivalent workers in the major economies of the euro area (Germany, France and Italy) under the principle of equal pay for equal work of equal value. The end result appears to be the deliberate decision to keep wages —in terms of living wage equalisation— at the same level they have recorded vis-à-vis the US, Germany, France and Italy.

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Living-wage assessment – the four largest economies in the Americas (Canada, Brazil, Mexico and Argentina).

2017 is the first year in the 22-year span in this report that US hourly wage rates dropped (0,9%). This enabled the vast majority of countries to reduce their comparative wage gaps or increase their surpluses in their manufacturing wage Eq-Index. In the Americas, all four major economies reduced their equalisation gaps or remained at the same level.

In the case of Canada, the combination of its hourly rate increase in Canadian dollars of 9,4%, its currency revaluation of 2,2% and the 0,9% US rate decrease, produced an 11,8% increase of its hourly rate in US dollars between 2016 and 2017. This enabled its living wage equalisation index (Eq-Idx) to grow 10,2%, from 75 to 83, its highest since 2010.

In Argentina, In 2017, in local currency, the minimum wage managed to increase by 17,2% in nominal terms but inflation grew by 24,8%. In 2018 the minimum wage increased 12,9% but inflation reached 47,8%. In 2017, manufacturing hourly rates increased 29,1% in pesos and 15% in US dollars, whilst the US hourly rate dropped almost 1%, This allowed Argentina’s manufacturing hourly wage rates to increase its equalisation index by three points to a 50 Index. However, with inflation close to 48% and a devaluation of 41% in 2018, Argentina’s hourly rates and their equalisation index with comparative US rates are certain to drop dramatically in 2018, with CPI and exchange rate indicators looking even worse for 2019.

In Brazil the hourly rates and the Eq-Idx are bound to drop in 2018 and 2019, given that Bolsonaro’s new government is deepening the anti-labour policies initiated by the Temer government.

In Mexico wage policy appears to have changed in 2017 after the execution of consistent supply-side policies over more than three decades. This allowed the Eq-Idx to gain four points, to 23, both in 2016 and 2017, the highest recorded index in the 22 year span of time, but still the country continues having the widest living-wage gap in the Americas by far.



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¡2019!
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Living-wage assessment – eight Asia and Oceania economies. 

2017 is the first year in the 22-year span in this report that US hourly wage rates dropped (0,9%). This enabled the vast majority of countries 9except for Australia and Singapore) to reduce their comparative wage gaps or increase their surpluses in their manufacturing wage Eq-Index or at least keep their position. This allowed most countries in the region to improve their living wage equalisation position to improve.

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¡2019 !
¡2019!
¡2019!
Annual Reports
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2019 Report: Living-wage assessment – New assessment of Brazil's wage rate gap 1996-2017

With the Temer and Bolsonaro governments against demand-side economic policies, Brazil’s labour remunerations are bound to lose in real terms. Temer’s government passed a new law (PEC 55) that freezes all public spending for 20 years, which implies that constitutionally-protected government expenditures in the areas of health, education and other social sectors would remain stunted until 2036. This has in practice ended Brazil’s commitment to sustain its minimum wage appreciation policy, after the minimum wage had more than doubled in real terms since 1996. Manufacturing wages actually lost ground since 1996, until the minimum wage appreciation policy began to have a positive influence from 2009 onwards. But with a renewed recession during the 2014-2016 period that is only beginning to subside and the staunchly neoliberal supply-side approach followed by Bolsonaro’s new government, Brazil will no longer sustain the closing of its Eq-Idx and it is likely to actually increase its equalization gap with comparative wages in the US.

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Living-wage assessment – Table T5: 1996-2017 Real wage-gap rates for fourteen selected economies, in purchasing power parity (PPP) terms, for all employed in manufacturing. *(The base table used for all PPP real-wage gap analysis)

2017 is the first year in the 22-year span in this report that US hourly wage rates dropped (0,9%). This enabled the vast majority of countries to reduce their comparative wage gaps or increase their surpluses in their manufacturing wage Eq-Index or at least keep their position.

Japan has reversed the downward trend in living-wage equalisation (Eq-Idx) that began in 2013. South Korea sustained the growing trend of its Eq-Idx that resumed in 2014 after a brief downturn in 2013. A strong drop of Singapore’s hourly rate in local currency produced a 1 point loss in its Eq-Idx.

•In the euro zone, Spain, Germany and France stopped their downturn that began in 2012, after steady and stronger growth of the US hourly rate vis-à-vis the growth of their comparative hourly rates in euros. In contrast, Italy’s drop of its hourly rate of almost 4% in local currency and 2% in US dollars, produced further erosion of its Eq-Idx that began in 2014.

The United Kingdom, reversed the sustained erosion of its Eq-Idx that began in 2008 and gained four points from its 2016 position. In contrast, Australia continued to decrease its Eq-Idx that began in 2014, with 4,4% drop of its hourly rate in local currency and a 1,9% increase in the PPP cost of living. In the case of Canada, the combination of its hourly rate increase in Canadian dollars of 9,4%, its currency revaluation of 2,2% and the 0,9% US rate decrease, produced an 11,8% increase of its hourly rate in US dollars between 2016 and 2017.

South Africa is a new economy incorporated into this report, showing a steady increase of its Eq-Idx since 2004, the earliest year with available data. Extremely strong growth of hourly rate in local currency (41%) at a much higher rate than strong currency devaluation (17%) produced a strong 31% increase of Turkey’s Eq-Idx, the highest of all economies included in our reports.

In Brazil the hourly rates and the Eq-Idx are bound to drop in 2018 and 2019, given that Bolsonaro’s new government is deepening the anti-labour policies initiated by the Temer government. In Mexico wage policy appears to have changed in 2017 after the execution of consistent supply-side policies over more than three decades. Yet, Mexico continues to have one of the widest living-wage gaps among the 41 countries included in all our reports, just ahead of China, India and the Philippines.

 

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Living-wage assessment – twenty-eight European economies. 

2017 is the first year in the 22-year span in this report that US hourly wage rates dropped (0,9%). This enabled the vast majority of countries to reduce their comparative wage gaps or increase their surpluses in their manufacturing wage Eq-Index. Most European economies improved their living-wage equalisation position very meaningfully.

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New 2019 Report!
New 2019 Report!
New 2019 Report!
New 2019 Report!