Chart LG1: 2016 Gaps of
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Wage rate gap comparisons for selected economies

Nominal wage rates in dollars continued to decrease in 2016 at the same rate as in 2014, averaging a drop of 12,5%, vis-à-vis 12,6% in 2014. This is due to a great extent to the devaluation of these currencies against the dollar. Furthermore, most wage rates in local currencies increased at a lower rate than the 5,4% increase of the U.S. hourly wage rate. As a result, most equalisation indices continued dropping. Only Italy and South Korea sustained their 2014 indices and Singapore was the only one of the twelve economies selected that was able to increase its index in 2016. Since 2012 only three economies did not increase their equalisation gaps. Germany kept the same index and Italy and Singapore improved their equalisation. Of the twelve selected economies, four are worse off than in 1996, Brazil did not change and seven are better off than in 1996. Overall, East Asia economies have fared far better than the rest.

Among East Asian countries, Singapore has been improving steadily since 2010, increasing its living wage equalisation with the U.S. from 66 to 81 in 2016. South Korea has not been able to recover its highest index (71) in 2014, but at least remained at the same level as in 2014 (68). Japan has not been able to sustain the closing of its wage gap, since its equalisation index dropped two points to 69, from its highest index ever achieved in 2014.

Outside of East Asia, only Italy, Spain, France and Australia recorded a higher equalisation index in 2016 than twenty years earlier. However, among these countries, only Italy managed to increase its index since 2012, albeit its index remained the same between 2014 and 2016. Canada, Brazil, Mexico, France, United Kingdom, Spain and Australia recorded lower equalisation indices both in 2014 and 2016 than in 2012. Australia is just one point above its equalisation index in 2016 versus 1996 ((82 vs. 81). However, Australia dropped the most points in equalisation since 2014, from 90 to 82.

Brazil has increased its wage gap since 2014 due to the devaluation of its currency since 2010 under a sustained recession. Brazil’s government under Dilma Rousseff continued complying with its minimum wage appreciation law, which increased its nominal value 72,5% between 2010 and 2016 vis-à-vis a 49,7%% increase of its consumer price index. However, after she was impeached, the new neoliberal government of Michele Temer passed a law that puts a freeze on public spending effectively ending compliance with the minimum wage appreciation law. Consequently, in 2017 and 2018 the minimum wage was increased at a slightly lower rate than the NCPI.

Mexico’s track record since 1996 (and since 1985 if we look back at production-line hourly wages) exposes a deliberate State policy of maintaining real wages at the level of modern-slave-work wages. The government’s survey data was improved in 2016 to include all manufacturing units. This has caused indices to drop 25% on average. Consequently the wage gap is actually much greater than what was being reported and it is now as low as in China, with the difference that China has been increasing real wages steadily. With Mexico there has been virtually no change in equalisation terms for the entire twenty-year period. This makes Mexico, barring the Philippines, the country with the worst living-wage equalisation position of the 34 countries in the three regions of our living-wage gap assessments.

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