Inflation and slowing growth are leading to a “significant fall in real wages” in many countries, especially for low-income households, according to a report by the International Labor Organization (ILO) published on Wednesday.
According to this “Global Wage Report 2022-23”, monthly wages worldwide fell in real terms to “-0.9% in the first half of 2022”. “This is the first time in more than twenty years that we have recorded negative growth in real wages”, underlines the ILO.
“In the advanced G20 countries”, the ILO estimates that “real wages in the first half of the year fell to -2.2% while wages in the emerging G20 countries rose by 0.8%”, or 2 .6 points less than in 2019, before the pandemic.
“Disastrous situation”
In the EU, real wages increased by 1.3% in 2021 before falling to -2.4% in the first half. In North America, this growth was zero in 2021 before falling to -3.2%. In Latin America, it was already at -1.4% in 2021, then -1.7%. In Africa, the decline is -1.4% in 2021 and -0.5% thereafter.
In Asia-Pacific, after 3.5% in 2021, real wages increased by 1.3%. If China is excluded – in view of the significant weight represented by this country – this increase is only 0.3% in 2001 and 0.7% in the first half.
“The multiple crises (…) have placed tens of millions of workers in a dire situation,” ILO Director-General Gilbert F. Houngbo said in a statement.
Adjustment of minimum wage levels
According to the report, inflation has heavier consequences for low-income people who “spend a large part of their disposable income on essential goods and services, the prices of which generally rise more than those of non-essential goods”.
Adjusting minimum wage levels “could be a useful measure, given that 90% of ILO member states have minimum wage systems”, the authors suggest.
They also call for measures such as the distribution of vouchers for low-income households or the reduction of VAT on certain products to reduce the burden that inflation places on households, while helping to bring down this inflation.
ats/hkr