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The Progressive Economics Forum

Global Wage Crisis

The International Labour Organization has just released its second Global Wage Report, “Wage Policies in Times of Crisis.” The International Trade Union Confederation’s press release follows:

15 December 2010 – The ITUC has welcomed the second Global Wage Report from the International Labour Organization (ILO). “Today’s report reinforces what unions around the world have been saying about the economic crisis and the policy responses that governments need to put in place,” said ITUC General Secretary Sharan Burrow.

The ILO confirms that global wages have stagnated during the crisis. Excluding questionable figures for China and adjusting for inflation, global wage growth slowed from 2.2% in 2007 to only 0.8% in 2008 and 0.7% in 2009.

While these world averages remained slightly positive, wages actually decreased in many countries. “Even workers who remained employed during the crisis experienced flat or falling pay,” observed Burrow.

Over-reliance on exports and consumer borrowing for economic growth has proven to be unsustainable. To achieve a meaningful economic recovery, countries need to increase domestic demand based on rising wages and a more equal distribution of income. The ILO emphasizes three policy solutions in today’s report: inclusive collective bargaining, legislated minimum wages, and social protection programmes.

In addition to providing new data on wages during the crisis, the report also presents a longer-term analysis of low pay, defined as being below two-thirds of a country’s median wage. Since the late 1990s, the incidence of low pay has increased in two-thirds of the countries for which figures are available.

However, the ILO found that low pay is much less prevalent in countries with higher levels of union membership. “Unions are part of the solution, in terms of ensuring that wages rise along with productivity and that these gains are shared fairly,” said Burrow.

UPDATE (December 17): Quoted by The Guardian and La Repubblica

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