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Labour/Economic analysis relevant to TLWNSI...

GLOBAL WAGE REPORT 2016/2017

The 2016/17 edition examines inequality at the workplace level, providing empirical evidence on the extent to which wage inequality is the result of wage inequality between enterprises as well as within enterprises. The report also includes a review of key policy issues regarding wages.

Over the past few years there has been a growing recognition of the need to monitor wage trends and implement sustainable wage policies that prevent wage stagnation, raise levels of pay for the millions of working poor around the world, ensure fair distribution, reduce excessive wage and income inequalities, and buttress consumption as a key pillar of sustainable economies. Wages matter for several different reasons. First, they represent a vital source of household income and consequently have a huge influence on people’s living standards. The previous Global Wage Report (ILO, 2015a) calculated that in devel-Where incomes have grown and income inequality has been reduced, this has frequently come about as the result of a combination of more jobs in paid employment for low-income households and a more equitable wage distribution. The role of labour markets and wages in reducing poverty and inequality has also been highlighted in the first edition of the World Bank’s annual flagship report, Poverty and shared prosperity (World Bank, 2016).

Second, wages matter for economic and political reasons. At the level of enterprises, the wages of paid employees represent a cost. But at the macroeconomic level, sustainable wage growth is central to maximizing aggregate demand. While excessive wage growth may lead to price inflation and declining exports or investment, weak wage growth can represent a drag on household consumption and domestic demand – a prospect that is particularly relevant in the current global economic context characterized by slow growth. Excessive inequality tends to contribute to lower economic growth and less social cohesion (Ostry, Berg and Tsangarides, 2014; d’Hombres, Weber and Elia, 2012). It can also lead to political polarization: a recent IMF report pointed out that in some countries the nature of political discussions had shifted as a result of “growing income inequality as well as structural shifts, some connected with globalization, that are seen as having favoured economic elites while leaving others behind” (IMF, 2016a, p. xiii).

Last but not least, wages are about more than money; they matter from the point of view of fairness and human dignity. The ILO has long emphasized that “labour is not a commodity” and that, this being so, the price of labour cannot be determined purely and simply through the application of the rule of supply and demand (see ILO, 1944 and 2014a). As pointed out by Piketty, “the price system knows neither limits nor morality” (2014, p. 6). Minimum wages play an important role in ensuring that workers are treated in a way that is fair and compatible with notions of human dignity and respect. Over and above minimum wage levels, policies in the areas of wages, hours and other conditions of work can contribute substantially to fostering social dialogue and collective bargaining, and ensuring a just share of the fruits of progress to all (ILO, 2008a). Fairness includes equal remuneration for work of equal value, and the elimination of pay discrimination between men and women, or between other groups.

 

Download the full 2016/2017 report
 

Click here or on the picture to download the full pdf file.

 
Click here to download the French version of the ILO's 2016-2017 update on wages in a pdf file.


 


GLOBAL WAGE REPORT 2014/2015

The Global Wage Report 2014/15 presents both the latest trends in average wages and an analysis of the role of wages in income inequality. The first part of the report shows that global wage growth in recent years was driven by emerging and developing economies, where real wages have been rising since 2007 although wage growth slowed in 2013 compared to 2012. In developed economies, wages generally remained stagnant in 2012 and 2013, and in a number of countries wages remained below their 2007 level. These trends are a matter of concern.

At the level of the individual worker or firm, the immediate impacts of higher or lower wages are self-evident. At the national level, the effects of higher or lower wages on aggregate demand and employment are context-specific and cannot be predicted or evaluated without taking into account the level of wages relative to productivity, the degree of openness of the country under consideration and the relative size of the different components of aggregate demand. At the international level, if too many countries pursue wage moderation policies, the outcome is likely to be negative. In the current environment, in which the global economy risks sliding back into a low-growth trap, higher wage growth would be desirable in those countries where wages in the past have lagged behind productivity growth. As the report demonstrates, in some countries policies have already started to shift in that direction.

The second part of the report turns to the role of wages in income in- equality. Inequality has become the subject of growing interest in recent years across the world, and there has been a realization that growing inequality not only undermines social justice objectives, but can also have adverse economic conse- quences. Through the adoption of the 2008 Declaration on Social Justice for a Fair Globalization, ILO Members renewed their commitment to pursue policies with regard to wages and earnings designed to ensure a just share of the fruits of pro- gress to all and recognized that for a fair outcome for all, it has become even more necessary to achieve social cohesion and to combat poverty and rising inequalities.

In many countries, the distribution of wages and paid employment has been a key factor in recent inequality trends. This highlights the importance of labour market institutions and policies – including minimum wages and collective bar- gaining – that have an effect on income distribution.
 

Download the full 2014/2015 report
 

Click here or on the picture to download the full pdf file.

 
Click here to download the French version of the ILO's 2014-2015 update on wages in a pdf file.
 


GLOBAL WAGE REPORT 2012/2013

The global crisis has had significant negative repercussions for labour markets in many parts of the world, and recovery is proving uncertain and elusive. At the global level, average wages have grown but at lower rates than before the crisis. However this Global Wage Report 2012/13 shows that the impact of the crisis on wages was far from uniform.

This Global Wage Report presents data on trends in wages around the world and compares them with trends in labour productivity, analysing their complex effects on the global economy with a view to shedding some light on the current debates over distribution, competitiveness and labour costs. When wages rise in line with productivity increases they are both sustainable and create a stimulus for further economic growth by increasing households’ purchasing power. However for a decade or more before the crisis, the link between wages and labour productivity was broken in many countries and this contributed to the creation of global economic imbalances. The report shows that since the 1980s a majority of countries have experienced a downward trend in the “labour income share”, which means that a lower share of national income has gone into labour compensation and a higher share into capital incomes. This has happened most frequently where wages have stagnated but also in some countries where real wages have grown strongly. On a social and political level this trend risks creating perceptions that workers and their families are not receiving their fair share of the wealth they create. On an economic level, it could endanger the pace and sustainability of future economic growth by constraining wage-based household consumption. This is particularly true where the era of debt-based consumption has now led to an extended period in which households must pay off earlier debts.

At the global level, while some countries can run a trade surplus or export their way out of recession, this must come at the expense of deficits in importing countries and relocation of jobs. To avoid beggar-thy-neighbour competition, the path to sustained and balanced economic growth must come through increased domestic consumption in surplus countries, based on wages that grow in line with productivity. International coordination can contribute to achieving equitable outcomes that benefit all countries. Many countries in the world are trying to address these challenges, often by implementing innovative policies. I hope this Global Wage Report will help them and will stimulate fresh thinking on issues which today stand at the centre of international
decision-making.


Download the full 2012/2013 report
 

Click here or on the picture to download the full pdf file.

 Click here to download the French version of the ILO's 2012-2013 update on wages in a pdf file.

 


GLOBAL WAGE REPORT 2010/2011

The ILO"s 2010 Global Wage Report provides clear evidence on the impact of the global capitalist crisis and urgently calls on governments, employers and trade unions to materialise their, otherwise, rhetoric support of the internationally agreed ILO Declaration on Social Justice for a Fair Globalisation and the Global Jobs Pact, which requires a jobs- and income-based growth strategy.

T
he I
LO's 2010 global wage report asserts that the global economic crisis has had devastating consequences on labour markets. Unemployment has increased to 210 million, the highest level ever recorded, and many millions more have simply dropped out of the labour force because they are too discouraged to continue looking for work. Paychecks have been affected too. The report shows in particular that the global growth in real average wages was reduced by half in 2008 and 2009, compared to earlier years. This highlights how while the crisis has been dramatic for those who lost their jobs, smaller than expected paychecks have also severely affected the purchasing power and well-being of those who managed to stay in work.

In this way, the ILO argues that a jobs- and income-based growth strategy is urgently needed to bring the global economy back on track, to redress past imbalances and to place economic growth on more solid foundations. As could be expected, the most pressing challenges to be dealt with are rising wage inequality, the growing disconnect between wages and productivity, and the 330 million or so employees who are now amongst the low paid in their country. A figure that the Jus Semper can only deem as rather conservative given the fact that the vast majority of workers in emerging and other developing countries do not earn a living wage by any standard. Rather optimistically, the report hopes that policy makers and their social partners will use its findings to advance their decent work objectives.


Download the full 2010/2011 report
 

Click here or on the picture to download the full pdf file.

 Click here to download the French version of the ILO's 2010-2011 update on wages in a pdf file.

 
 


GLOBAL WAGE REPORT 2008/09 and 2009 update


Wages lost GDP share in favour of profits; whilst loss of share was deeper in countries with a higher openness to international trade

T
he first edition of this study, to be published every two years clearly asserts that in the 2001 – 2007 period real wages lost ground in their share of GDP in favour employers profits despite the economic expansion climate experienced. During the 2001 – 2007 period, inflation was low and the global economy grew 4% in real terms. Nonetheless, wage growth lagged behind economic performance as a whole. According to ILO's estimates, real wages only grew 1,9% during 2001-2007, despite the strong recovery of some economies that continue to be or were in transition (Eastern Europe). Therefore, the slow wage growth was accompanied by a decline in GDP share in favour of shareholder value. Moreover, the ILO identified share of GDP has declined faster in countries with a higher openness to international trade, possibly, the ILO reckons, because openness places a lid on wage demands based on a fear of losing jobs to imports. In this way, a "virtuous circle" is deliberately created in favour of domestic companies as well as for transnationals that open operations in these countries of that outsource labour at misery prices. Another –rather obvious– consequence that the ILO pinpoints is the increase in inequality. A s a whole, more than two thirds of the countries included in the ILO's sample suffered wage inequality increases due both top wages took off in some countries and because bottom wages fell relative to median wages. Also, gender wage inequality recorded meagre improvement if at all.

The report's asserted that, given that the economic context is now much less favourable, the outlook for 2009 is much less optimistic. Indeed, in its the 2009 update, the ILO confirmed that the economic crisis has been dramatic due to the strong recession that began in the U.S. for a variety or causes –which evolve around financial markets' speculation. Thus, as a whole, in the sample of 53 countries, with consistent data, more than one fourth recorded no growth or a fall in real wages. In this way, the ILO's outlook for the remainder of the year is that wage conditions will get worse despite the "beginning" of a "possible" economic recovery.


Download the full 2008/2009 report
 

Click here or on the picture to download the full pdf file.

 Click here to download the French version of the ILO's 2009 update on wages in a pdf file.

 

 

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