The International Labour Organisation (ILO) reported on Thursday that available data suggested that Africa’s real wage growth of workers dipped to minus 1.4 percent in 2021 and to minus 0.5 percent in the first half of 2022.
The global labour organization made this disclosure in its latest ‘Global Wage Report 2022-2023: The Impact of Inflation and Covid-19 On Wages and Purchasing Power’ press statement on Thursday. Specifically, ILO linked the real wage decline to severe inflationary crisis and a global slowdown in economic growth – driven in part by the war in Ukraine and the global energy crisis.
According to the report, the crisis is reducing the purchasing power of the middle classes and hitting low-income households particularly hard.
A statement issued by the ILO indicated that the report estimated that global monthly wages fell in real terms to minus 0.9 per cent in the first half of 2022, the first time this century that real global wage growth has been negative.
The ILO further clarified that among advanced G20 countries, real wages in the first half of 2022 were estimated to have declined to minus 2.2 per cent, whereas real wages in emerging G20 countries grew by 0.8 per cent, 2.6 per cent less than in 2019, the year before the COVID-19 pandemic.
In his remarks on the report’s findings, ILO Director-General, Gilbert Houngbo said: “The multiple global crises we are facing have led to a decline in real wages. It has placed tens of millions of workers in a dire situation as they face increasing uncertainties.
“Income inequality and poverty will rise if the purchasing power of the lowest paid is not maintained. 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”, the Director-General added.
The report further reflected that inflation had a greater impact on low-wage earners as the cost-of-living crisis topped significant wage losses for workers and their families during the COVID-19 crisis, which in many countries had the greatest impact on low-income groups.
The organization indicated in the report that rising inflation had a greater cost-of-living impact on lower-income earners because they spend most of their disposable income on essential goods and services, which generally experience greater price increases than non-essential items.
The report’s findings also showed that inflation was also biting into the purchasing power of minimum wages as estimates showed that despite nominal adjustments taking place, accelerating price inflation was quickly eroding the real value of minimum wages in many countries for which data is available.
