[Reader-list] Wage-workers of the world..think ahead.

[Jeebesh]

dear all,

Just saw this report from ILO. It says that the situation is going to  
be grim in the coming years for the 1.5 billion wage earners in the  
world. This global downturn of falling wages, loss of employment,  
bankruptcies, will create it's own political fallout. How do you all  
see the coming years.?

(to Lawrence, Amit and Danish - i am trying to workout which text to  
start the discussion. Maybe given this volatile times, a good text on  
food maybe a good idea. Looking around for it.)

warmly

jeebesh

Global Wage Report

ILO, 25th November, 2008

http://www.ilo.org/global/About_the_ILO/Media_and_public_information/Press_releases/lang--en/WCMS_100783/index.htm

GENEVA (ILO News) ─ The global economic crisis is expected to lead to  
painful cuts in the wages of millions of workers worldwide in the  
coming year, according to a new report published today by the  
International Labour Office (ILO).

“For the world’s 1.5 billion wage-earners, difficult times lie  
ahead”, says ILO Director-General Juan Somavia. “Slow or negative  
economic growth, combined with highly volatile food and energy prices,  
will erode the real wages of many workers, particularly the low-wage  
and poorer households. The middle classes will also be seriously  
affected”.

The report, entitled Global Wage Report 2008/09 (Note 1), warns that  
tensions are likely to intensify over wages.

Based on latest IMF growth figures, the ILO forecasts that the global  
growth in real wages will at best reach 1.1 per cent in 2009, compared  
to 1.7 per cent in 2008, but wages are expected to decline in a large  
number of countries, including major economies. Overall, wage growth  
in industrialized countries is expected to fall, from 0.8 per cent in  
2008 to -0.5 per cent in 2009.

The ILO report shows that this bleak outlook follows a decade in which  
wages failed to advance in lockstep with economic growth.

According to the report, between 1995 and 2007, each additional 1 per  
cent in the annual growth of GDP per capita led to on average only a  
0.75 per cent increase in annual growth of wages. As a result, in  
almost three-quarters of countries worldwide the labour share in GDP  
has declined.

While inflation was low and the global economy grew at a 4.0 per cent  
annual rate between 2001 and 2007, growth in wages lagged behind,  
increasing by less than 2 percent per year in half of the world’s  
countries, the report says.

There were wide regional differences. The growth in real wages was  
about 1 per cent per year or less in most developed and Latin America  
countries, but reached 10 per cent or more in China, Russia and a  
number of other transition countries.

Unsustainable growth in wage inequality
The report also shows that since 1995, inequality between the highest  
and lowest wages has increased in more than two-thirds of the  
countries surveyed, often reaching socially unsustainable levels.  
Among developed countries, Germany, Poland and the United States are  
amongst the countries where the gap between top and bottom wages has  
increased most rapidly. In other regions, inequality has also  
increased sharply, particularly in Argentina, China and Thailand.

Some of the countries which have succeeded in reducing wage inequality  
include France and Spain, as well as Brazil and Indonesia, though in  
these latter two countries inequality remains at a high level.

The pay gap between genders is still high and closing only very  
slowly. Although about 80 per cent of the countries for which data are  
available have seen an increase in the ratio of female to male average  
wages, the size of change is small and in some cases negligible. In  
the majority of countries, women’s wages represent on average between  
70 per cent and 90 per cent of men’s wages, but it is not uncommon to  
find much lower ratios in other parts of the world, particularly in  
Asia.

Wages to support the real economy
Based on an analysis of major trends in the level and the distribution  
of wages around the world in recent years, the ILO report shows that  
while wage growth has lagged behind overall economic growth during  
upswings, it slowed down more rapidly during economic downswings.  
According to the report, between 1995 and 2007, for each 1 per cent  
decline in GDP per capita, average wages fell even further by 1.55  
percentage point – a result that points to the possible effects on  
wages of the current crisis.

“If this pattern were to be followed in the rapidly spreading global  
downturn it would deepen the recession and delay the recovery”, Mr.  
Somavia said.

As the reports says, “In this context, governments are encouraged to  
display a strong commitment towards protecting the purchasing power of  
wage earners and hence stimulating internal consumption. Firstly,  
social partners should be encouraged to negotiate ways to prevent a  
further deterioration in the share of wages relative to the share of  
profits in GDP. Secondly, minimum wages should effectively protect the  
most vulnerable workers. Thirdly, minimum wages and wage bargaining  
should be complemented by public intervention through, for instance,  
income support measures”.

The report shows that minimum wage and collective bargaining can be  
efficiently combined. Higher coverage of collective bargaining ensures  
that wages are more aligned with economic growth, and also contributes  
to lower wage inequality. At the same time, effective minimum wages –  
by providing a wage floor – can reduce wage inequality in the bottom  
half of the wage distribution, limit low pay, and reduce the gender  
pay gap.

The ILO study already reports a reactivation of minimum wages around  
the world in recent years, to reduce social tensions resulting from  
growing inequalities. Globally, over the period 2001–2007, minimum  
wages were allowed to rise by an average of 5.7 per cent per year in  
real terms – contrasting with some previous periods when the real  
value of the minimum wage had declined – and to increase in  
proportion to the average wage.

“The legitimacy of globalization and of open economies and societies  
hinges critically on greater fairness in outcomes. Central to this  
fairness is the ability of working women and men to obtain a fair  
share of the wealth they create”, Mr. Somavia said.


Note 1 – Global Wage Report 2008/09: Minimum wages and collective  
bargaining: Towards policy coherence. ISBN 978-92-2-121499-1 (print).  
ISBN 978-92-2-121501-1 (CD-ROM). International Labour Office, Geneva,  
2008.

For further information, please contact the Department of  
Communication and Public Information (DCOMM) at Tel: +4122/799-7912,  
or communication at ilo.org.