Despite indications that the economy is on the rebound, the International Labor Organization in its latest study on global wages says that income for workers worldwide is likely to decrease further in 2009.
In an update to its Global Wage Report, the ILO said the increase in average wages in a sampling of 53 developed and developing countries fell from 4.3 percent in 2007 to 1.4 percent in 2008 and is likely to fall even further.
“The continued deterioration of real wages worldwide raises serious questions about the true extent of an economic recovery, especially if government rescue packages are phased out too early,” said lead author Manuela Tomei, director of the ILO’s Conditions of Work and Employment Program. “Wage deflation deprives national economies of much needed demand and seriously affects confidence.”
The ILO based its prediction on two factors: First, real monthly wages in the first quarter of 2009 fell in comparison with those in the first quarter of 2008 in more than half the 35 countries for which recent data are available. Second, rising unemployment continues to depress wages as workers settle for lower-paying jobs or refrain from demanding wage increases. The ILO also found that the crisis has had an equal impact on men and women, freezing women’s wages at about 80 percent of men’s on average after a seeming trend toward pay equity.
On a positive note, says the report, many countries have increased their minimum wage, as a means of both deterring the crisis and strengthening social protections. Others are exploring various means of minimum wage reform and enforcement mechanisms.
The ILO is discussing the report at its Governing Body meetings, November 5-20, 2009, and will provide a comprehensive assessment in its 2010 update.
