Growth in real wages has slowed down globally in 2008 because of the economic crisis and the trend is expected to continue in 2009, despite signs of economic recovery, says the International Labour Organisation (ILO).
In its Global Wages Report 2009 Update, released this week, the ILO, says that globally, growth in average wages reduced from 4.3 % in 2007 to 1.4% in 2008.
Real wages in the first quarter of 2009 also fell in more than half of 35 countries, compared to the annual average of 2008, said the ILO report.
“The picture on wages is likely to get worse in 2009 – despite the beginning of a possible economic recovery,” said the ILO report.
The ILO also raises concerns about the impact of lowering wages on national economies.
“Wage deflation deprives national economies of much needed demand and seriously affects confidence,” said the Director of the ILO Conditions of Work and Employment Programme, and lead author of the report, Manuela Tomei.
However, the report finds that both developed and developing countries have strengthened their minimum wages in recent years.
In 2008, half of the 86 countries for which data is available – including major economies such as the U.S., Russia, Japan and Brazil – increased minimum wages by more than inflation figures.
The report says minimum wages are an important policy tool for social protection and proposes that minimum wages be combined with other income support measures and/or tax reductions.
The findings of the Global Wage Report: 2009 Update will be discussed at the ILO Governing Body in Geneva this month, as well as the implementation of the Global Jobs Pact adopted at the International Labour Conference in June. The Jobs Pact calls for measures to maintain employment and avoid the damaging consequences of deflationary wage spirals and worsening working conditions. |
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