Global wage growth falls to its lowest level in four years, ILO

GENEVA, Wage growth around the world has decelerated since 2012, falling from 2.5 per cent to 1.7 per cent in 2015, its lowest level in four years. If China, where wage growth was faster than elsewhere, is not included, growth in global wages dropped from 1.6 per cent to 0.9 per cent, according to the ILO's Global Wage Report 2016/17 .

In much of the period following the 2008/09 financial crisis, wage growth was propelled by relatively strong wage growth in developing countries and regions. More recently, however, this trend has slowed or reversed.

Among emerging and developing G20 countries, real wage growth declined from 6.6 per cent in 2012 to 2.5 per cent in 2015. In contrast, wage growth among developed G20 countries rose from 0.2 per cent in 2012 to 1.7 per cent in 2015, the highest rate of the last 10 years. In 2015, wages grew to 2.2 per cent in the US, 1.5 per cent in Northern, Southern and Western Europe, and 1.9 per cent in the countries of the European Union.

"Faster wage growth in the US and Germany explain an important part of these trends. It is as yet unclear whether such an encouraging development will be sustained into the future , as developed countries are faced with growing economic, social and political uncertainty," said Deborah Greenfield, ILO Deputy Director-General for Policy. "In an economic context in which lower demand leads to lower prices (or deflation), falling wages could be the source of great concern, as it could add further pressure to deflation."

The report, Wage Inequality in the Workplace, notes vast differences between regions among developing economies. For example, in 2015, wage growth remained at a relatively robust 4.0 per cent in Asia and the Pacific, declined to 3.4 per cent in Central and Western Asia, and is tentatively estimated at 2.1 per cent in the Arab States and at 2.0 per cent in Africa. In 2015, real wages fell by 1.3 per cent in Latin America and the Caribbean and by 5.2 per cent in Eastern Europe.

The report highlights policies that can be used and adapted to country circumstances to reduce excessive wage inequality between and within enterprises. Minimum wages and collective bargaining play an important role in this context. Other possible measures include regulation or self-regulation of executive remuneration, promoting productivity among sustainable enterprises and addressing unequal wages between groups of workers, including women and men.

Source: Emirates News Agency