What are the findings of the Global Wage Report?

Published: December 3, 2018

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”.