The International Labour Organization (ILO) recently released its Global Wage Report, revealing a positive trend in wage growth that has not been seen in more than 15 years. ILO Director-General Gilbert Houngbo expressed optimism about the significant increase in global wages, which marks a notable recovery from the 0.9 per cent decline experienced in 2022 due to high inflation and rising prices.
However, the positive trend in wage growth is not distributed evenly across regions. While emerging economies saw a substantial near-six per cent increase in wages in 2023 following a 1.8 per cent rise in 2022, highly industrialized economies only experienced modest growth of 0.9 per cent. This disparity highlights the ongoing challenges faced by low-income households, who continue to struggle with the high cost of living despite the overall improvement in global wages.
Mr. Houngbo emphasized that inflation remains a harsh reality for many emerging and developing countries, underscoring the need for continued efforts to address economic disparities and ensure fair wages for all workers. The report also highlighted regional variations in wage growth, with Asia and the Pacific, Central and Western Asia, and Eastern Europe experiencing faster increases compared to other parts of the world.
In 2022, Africa, Asia and the Pacific, and Central and Western Asia were the only regions that saw an increase in average wages, while all other regions experienced a decline. By 2023, wage growth had become positive in most regions, except for Africa, Northern America, and Northern, Southern, and Western Europe. In 2024, wages increased in all regions except for African and Arab States, where average real wages remained stable.
Despite the overall improvement in global wages, the report also highlighted a concerning trend of productivity outpacing wage growth in high-income countries. Over the period from 1999 to 2024, productivity increased more rapidly than wages, with a 29 per cent output increase compared to a 15 per cent change in wages. This productivity-wage gap was particularly pronounced during the financial crisis of 2008-2009 and the COVID-19 crisis.
Data from ILO revealed that wage inequality, defined as the difference between the lowest and highest-paid workers, has decreased in two-thirds of countries since the early 2000s. In low-income countries, wage inequality saw significant decreases ranging from 3.2 to 9.6 per cent annually over the past two decades. However, wage inequality has remained persistent in wealthier countries, with annual decreases ranging from 0.3 to 1.3 per cent in upper-middle-income countries and 0.3 to 0.7 per cent in high-income countries.
The report’s findings underscore the importance of addressing wage inequality and ensuring fair wages for all workers, regardless of their location or economic status. Mr. Houngbo called for continued efforts to promote inclusive economic growth and reduce disparities in wage growth to create a more equitable and sustainable global economy.
