…Says Global Wages Growing Faster Than Inflation Recently
The International Labour Organisation (ILO) has reported that wage inequality has decreased in about two-thirds of all countries since 2000, noting, however, that despite this positive trend, significant wage differentials still persist worldwide.
The labour organization, in its latest report titled ‘Global Wage Report 2024-25: Is Wage Inequality Decreasing Globally?’ found that since the early 2000’s, on average, wage inequality, which compares the wages of high and low wage earners, decreased in many countries at an average rate that ranged from 0.5 to 1.7 per cent annually, depending on the measure used.
The report’s findings reflected that the most significant decreases occurred among low-income countries where the average annual decrease ranged from 3.2 to 9.6 per cent in the past two decades.
According to the ILO, wage inequality is declining at a slower pace in wealthier countries, shrinking annually between 0.3 and 1.3 per cent in upper-middle-income-countries, and between 0.3 to 0.7 per cent in high-income countries but that even though wage inequality narrowed overall, decreases were more significant among wage workers at the upper end of the pay scale.
The report also finds that global wages have been growing faster than inflation in recent times. For instance, the report’s data showed that in 2023, global real wages grew by 1.8 per cent with projections reaching 2.7 per cent growth for 2024, the highest increase in more than 15 years.
The labour organization pointed out that such positive outcomes marked a notable recovery when compared to the negative global wage growth, of -0.9 per cent, observed in 2022, a period when high inflation rates outpaced nominal wage growth.
However, it clarified that wage growth had been uneven across regions, with emerging economies experiencing stronger growth than advanced economies, the report finds.
The report showed that while advanced G20 economies registered a decline in real wages for two consecutive years (−2.8 per cent in 2022 and −0.5 per cent in 2023), real wage growth remained positive for both years in emerging G20 economies (1.8 per cent in 2022 and 6.0 per cent in 2023).
Also, the findings of the report revealed that regional wage growth patterns varied considerably as wage workers in Asia and the Pacific, Central and Western Asia, and Eastern Europe experienced their real wage increases at a faster rate than those in other parts of the world, according to the report.
Commenting on the latest report’s key findings, the ILO Director-General, Gilbert F. Houngbo, said: “The return to positive real wage growth is a welcome development. However, we must not forget that millions of workers and their families continue to suffer from the cost-of-living crisis that has eroded their living standards and that wage disparities between and within countries remain unacceptably high.”
Despite recent progress high levels of wage inequality remain a pressing issue, the report showed that globally, the lowest-paid 10 per cent of workers earn just 0.5 per cent of the global wage bill, while the highest-paid 10 per cent earn nearly 38 per cent of this wage bill. Wage inequality is the highest in low-income countries, with close to 22 per cent of wage workers there classified as low-paid.
The report also found that women and wage workers in the informal economy were more likely to be among the lowest paid, reinforcing the need for targeted actions to close wage and employment gaps and ensure fair wages for all wage workers.
While noting that wage inequality is relevant in all countries and regions, the report stated that globally, however, one in every three workers is a non-wage worker, and that in most low- and middle-income countries the majority were self-employed workers, who can only find opportunities to earn a living in the informal economy.
In his remarks, ILO Economist and one of the main authors of the report, Giulia De Lazzari, advocated that “national strategies to reduce inequalities require strengthening wage policies and institutions. But equally important is to design policies that promote productivity, decent work and the formalization of the informal economy.”
