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Employees work in an automobile spare parts factory near Bangkok in this photo taken on Dec. 7, 2012. From 2000 to 2011, real wages grew globally by just less than a quarter. They almost doubled in Asia while in the developed world they rose 5 per cent. (SUKREE SUKPLANG/REUTERS)
Employees work in an automobile spare parts factory near Bangkok in this photo taken on Dec. 7, 2012. From 2000 to 2011, real wages grew globally by just less than a quarter. They almost doubled in Asia while in the developed world they rose 5 per cent. (SUKREE SUKPLANG/REUTERS)

Developed nations suffer wage squeeze Add to ...

Workers in richer nations have suffered a “double dip” squeeze on their wages as earnings growth slows across the world, the International Labour Organization has said.

The UN agency said wage growth remained far below pre-crisis levels and turned negative last year in developed countries, despite continuing increases in emerging economies.

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Global monthly average wages grew 1.2 per cent in 2011, adjusted for inflation, down from 3 per cent in 2007 and 2.1 per cent in 2010, the ILO said in its Global Wage Report 2012-13, published on Friday.

If China were excluded from the calculations, global wage growth would have been just 0.2 per cent last year.

In developed economies, real wages shrank 0.5 per cent in 2011, following a 0.3 per cent dip in 2008. The ILO said wage growth in these countries this year was likely to be zero.

However, it said real wage growth had remained positive throughout the crisis in Asia, Latin America, the Caribbean and Africa.

The biggest changes were in eastern Europe and central Asia, which went from double-digit pre-crisis increases to a hard landing in 2009, but have recovered to a growth rate of just more than 5 per cent.

The report warned policy makers against promoting a “race to the bottom” on wages in the hope of gaining a competitive edge and exporting their way out of the recession.

Not all countries could run a current-account surplus at the same time, it said, while wage cuts ran the risk of depressing domestic consumption more than it increased exports.

From 2000 to 2011, real wages grew globally by just less than a quarter. They almost doubled in Asia while in the developed world they rose 5 per cent.

The ILO found wide differences in wage levels between countries. A manufacturing worker in the Philippines took home $1.40 (U.S.) for every hour worked, compared with nearly $5.50 in Brazil, $13 in Greece, $23.30 in the U.S., $24.23 in Canada and almost $35 in Denmark.

The report said wages had grown more slowly than labour productivity - the value of goods and services produced per person employed - in recent decades in a majority of countries.

This trend had resulted in a change in the distribution of income, meaning that workers were benefitting less from the fruits of their work while the owners of capital were benefitting more.

“Where it exists, this trend is undesirable and needs to be reversed,” said Guy Ryder, ILO director-general. “On a social and political level its clearest interpretation is that workers and their families are not receiving the fair share they deserve.”

The ILO called for wages to grow in line with productivity and urged more countries to adopt minimum wage policies to protect vulnerable employees.

In developed economies, it said labour productivity had increased more than twice as fast as wages since 1999.

Even in China, where wages tripled over the past decade, workers’ share of national income had gone down as gross domestic product increased more rapidly than the total wage bill.

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