What are the findings of the Global Wage Report?

The Global Wage Report is released by the International Labour Organisation (ILO). The report examines the evolution of real wages around the world. The report gives a unique picture of wage trends globally and by region.

Findings of the Global Wage Report:   

• The report has put into sharp relief one of the biggest drags on global economic momentum: slowing wage growth.
• Global wage growth when adjusted for inflation has slowed to 1.8% in 2017, from 2.4% in 2016. It is the lowest rate since 2008.
• If China was excluded, the average wage growth rate was even lower at 1.1%.
• Wage expansions were noticeably tepid last year across a majority of geographies and economic groupings.
• Among G20 countries, the wage growth rate was at 0.4%, and the U.S. posted an unchanged 0.7% growth. Europe (excluding Eastern Europe) was stalling at about zero.
• Even the emerging and developing economies in the G20 were not spared from deceleration trends. The growth in wages slowed down to 4.3%, from 4.9% in 2016.
• The wage rates across Asia and Pacific nations, where workers had enjoyed the biggest real wage growth worldwide between 2006 and 2017, reduced down to 3.5% from the previous year’s 4.8%.

Analysis of the Findings:

• The obvious impact of the low pace in wage rise has been on global economic growth with consumption demand hurt by restrained spending by wage-earners.
• The acceleration of economic growth in high-income countries in 2017 was mainly led by higher investment spending rather than by private consumption.
• Real wages have almost tripled in the developing and emerging countries of the G20 between 1999 and 2017. In the advanced economies the increase over the same period aggregated to a far lower 9%.
• In many low- and middle-income economies the average wage, in absolute terms was so low that it was inadequate to cover the bare needs of workers.
• There was a decoupling between wages and labour productivity due to the intensification of competition in the wake of globalisation, accompanied by a worldwide decline in the bargaining power of workers.
• The share of labour compensation in GDP across many countries has remained substantially below those of the early 1990s,

The ILO report has sent a clear message to Indian policymakers “to reap the demographic dividend we need not only jobs but wage expansion that is robust and equitable”.