[Global] ‘Striking’ drop in global wages leads UN to warn of social unrest

The United Nations labour agency has warned that soaring living costs that caused global wages to fall in 2022 for the first time since the global financial crisis, threaten to worsen inequality and drive social unrest, Al Jazeera reports.

In its latest global wage report - released on November 30 - The International Labour Organization (ILO) stated that monthly wages dropped 0.9 per cent in real terms in the first half of 2022. This is the first negative wage growth since 2008.

Lower-income groups have been hit particularly hard following significant wage losses during the pandemic, according to the ILO’s Global Wage Report 2022–23.

Despite rises to keep pace with inflation, the minimum wage reportedly fell in real terms from 2020-2022 in Bulgaria, Spain, Sri Lanka, South Korea, the United Kingdom and the United States.

While overall wages were lower in real terms in 2022 than in 2008 in Italy, Japan, Mexico and the UK.

The slump in wages comes despite rising productivity. 2022 shows the biggest gap between real labour productivity growth and real wage growth in high-income countries since 1999, according to the report.

Gilbert F Houngbo - ILO Director-General - said the deterioration in real wages is likely to continue without targeted policy responses by governments.

“This would increase the probability of a deeper recession, a risk that is already worsening due to the restrictive monetary policies adopted by central banks in their efforts to bring down inflation,” Mr Houngbo said.

“This in turn would endanger the economic and employment recovery, further increasing inequalities and fuelling social unrest. In this time of growing social and economic uncertainties and insecurity, it is vital to rebuild and strengthen people’s sense of social justice and social cohesion.”

According to the International Monetary Fund, global inflation is expected to hit 8.8 per cent by the end of 2022, before declining to 6.5 per cent in 2023 and 4.1 per cent in 2024.

By region, Eastern Europe and North America reportedly had the sharpest declines in purchasing power, with real wages falling 3.3 per cent and 3.2 per cent, respectively, in the first half of 2022.

The European Union saw real wages fall 2.4 per cent, while Latin America and the Caribbean recorded a 1.7 per cent decline. Africa saw real wages shrink by 0.5 per cent.

Asia and the Pacific, Central and Western Asia, and the Arab states reportedly saw wage growth rise by between 1.2 and 2.5 per cent.

Several regions recorded real wage growth on paper at the height of the pandemic in 2020 and 2021, although the rise was largely driven by job losses among lower-income workers.

The ILO has reportedly made a number of policy recommendations to tackle falling wages, including pay increases to match rising productivity, more generous adjustments to the minimum wage and greater international cooperation on global challenges such as climate change, essential healthcare and discrimination against women and girls.

“Shaping coherent policy responses within the multilateral system is indispensable to making progress toward more inclusive, resilient and equitable societies,” Mr Houngbo said.

“In a globalised economy, appropriate and timely wage policies that leave no one behind are an intrinsic part of such policy responses.”

Pandemic-related supply chain bottlenecks and the war in Ukraine pushed up food and energy costs, sending inflation in many countries to its highest level in 40 years.

Source: Al Jazeera

(Quotes via original reporting)

The United Nations labour agency has warned that soaring living costs that caused global wages to fall in 2022 for the first time since the global financial crisis, threaten to worsen inequality and drive social unrest, Al Jazeera reports.

In its latest global wage report - released on November 30 - The International Labour Organization (ILO) stated that monthly wages dropped 0.9 per cent in real terms in the first half of 2022. This is the first negative wage growth since 2008.

Lower-income groups have been hit particularly hard following significant wage losses during the pandemic, according to the ILO’s Global Wage Report 2022–23.

Despite rises to keep pace with inflation, the minimum wage reportedly fell in real terms from 2020-2022 in Bulgaria, Spain, Sri Lanka, South Korea, the United Kingdom and the United States.

While overall wages were lower in real terms in 2022 than in 2008 in Italy, Japan, Mexico and the UK.

The slump in wages comes despite rising productivity. 2022 shows the biggest gap between real labour productivity growth and real wage growth in high-income countries since 1999, according to the report.

Gilbert F Houngbo - ILO Director-General - said the deterioration in real wages is likely to continue without targeted policy responses by governments.

“This would increase the probability of a deeper recession, a risk that is already worsening due to the restrictive monetary policies adopted by central banks in their efforts to bring down inflation,” Mr Houngbo said.

“This in turn would endanger the economic and employment recovery, further increasing inequalities and fuelling social unrest. In this time of growing social and economic uncertainties and insecurity, it is vital to rebuild and strengthen people’s sense of social justice and social cohesion.”

According to the International Monetary Fund, global inflation is expected to hit 8.8 per cent by the end of 2022, before declining to 6.5 per cent in 2023 and 4.1 per cent in 2024.

By region, Eastern Europe and North America reportedly had the sharpest declines in purchasing power, with real wages falling 3.3 per cent and 3.2 per cent, respectively, in the first half of 2022.

The European Union saw real wages fall 2.4 per cent, while Latin America and the Caribbean recorded a 1.7 per cent decline. Africa saw real wages shrink by 0.5 per cent.

Asia and the Pacific, Central and Western Asia, and the Arab states reportedly saw wage growth rise by between 1.2 and 2.5 per cent.

Several regions recorded real wage growth on paper at the height of the pandemic in 2020 and 2021, although the rise was largely driven by job losses among lower-income workers.

The ILO has reportedly made a number of policy recommendations to tackle falling wages, including pay increases to match rising productivity, more generous adjustments to the minimum wage and greater international cooperation on global challenges such as climate change, essential healthcare and discrimination against women and girls.

“Shaping coherent policy responses within the multilateral system is indispensable to making progress toward more inclusive, resilient and equitable societies,” Mr Houngbo said.

“In a globalised economy, appropriate and timely wage policies that leave no one behind are an intrinsic part of such policy responses.”

Pandemic-related supply chain bottlenecks and the war in Ukraine pushed up food and energy costs, sending inflation in many countries to its highest level in 40 years.

Source: Al Jazeera

(Quotes via original reporting)