ILO: Real global wage growth down sharply

Workers are seen in file photo on one of the many construction projects in Metro Manila. Most construction workers are minimum-wage earners.

RISING inflation and a slowdown in economic growth worldwide dragged down the real value of wages of “tens and millions of workers,” according to a new International  Labor Organization (ILO) study.

 In its “Global Wage Report 2022-2023: The Impact of Inflation and Covid-19 (novel coronavirus disease) on wages and purchasing power,” ILO said global monthly wages fell in real terms to minus 0.9 percent in the first half of the year.

It noted this was the first time this century that real global wage growth has been negative.

The labor arm of the United Nations attributed the trend to several factors including the war in Ukraine, pandemic, international economic slowdown and energy crisis.

ILO Director-General Gilbert F. Houngbo expressed concern over the trend, which he said could lead to the rise in income inequality, poverty and even trigger economic and civil unrest.

“In addition, a much-needed post-pandemic recovery could be put at risk. This could fuel further social unrest across the world and undermine the goal of achieving prosperity and peace for all,” Houngbo said.  

ILO is now urging the government to implement the necessary measures to address the impact of the declining real wage—the value of pay adjusted to inflation—since it is more detrimental to low-wage earners. 

The said response includes making “adequate adjustment” of minimum wage rates, giving vouchers to low-income households to help them buy essential goods, or cutting Value Added Tax.

Likewise, it said that providing sufficient revenue to workers could also help boost global economic growth. 

“Fighting against the deterioration of real wages can help maintain economic growth, which in turn can help to recover the employment levels observed before the pandemic. This can be an effective way to lessen the probability or depth of recessions in all countries and regions,” said Rosalia Vazquez-Alvarez, one of the report’s authors of the new report.

Image credits: Nonoy Lacza


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