Anjali Sharma
GG News Bureau
UNITED NATIONS, 1st Dec. International Labor agency on Thursday published a report which highlighted the urgent need for policies to prevent further poverty, inequality and social unrest as the rising inflation has caused a striking decline in real monthly wages in many countries.
The study showed global monthly wages fell in real terms to -0.9 per cent in the first half of the year, mark the first instance of negative growth this century.
ILO said the purchasing power of middle-class families has been reduced, while low-income households have been hit particularly hard.
Gilbert F. Houngbo, the ILO Director-General said “The multiple global crises we are facing have led to a decline in real wages. It has placed tens of millions of workers in a dire situation as they face increasing uncertainties,” and warned of the potential consequences.
“Income inequality and poverty will rise if the purchasing power of the lowest paid is not maintained,” he said.
“In addition, a much-needed post-pandemic recovery could be put at risk. This could fuel further social unrest across the world and undermine the goal of achieving prosperity and peace for all.”
The Global Wage Report 2022-2023 revealed how the severe inflationary crisis, combined with a slowdown in economic growth driven in part by the war in Ukraine and the global energy crisis -have affected pay packets worldwide, including in the G20 industrial nations.
It is estimated that in the first half of the year, real wages declined to -2.2 per cent in advanced G20 countries and grew by 0.8 per cent in emerging G20 countries. This is 2.6 per cent less than in 2019, the year prior to the COVID-19 pandemic.
ILO report noted that inflation rose proportionately faster in high-income countries, which includes regional and country data.
It noted that in Canada and the United States, average real wage growth dropped to zero in 2021, and then fell to -3.2 per cent in the first half of this year.
But in Latin America and the Caribbean it saw real wage growth decline to -1.4 per cent, and then to -1.7 per cent.
The agency stressed that real wage growth increased to 3.5 per cent last year in Asia and the Pacific in 2021 but slowed to 1.3 per cent during the first six months of 2022.
It said that China is excluded, growth increased by 0.3 per cent and 0.7 per cent, respectively.
ILO said the rising inflation has had greater impact on poorer families, as most of their disposable income is spent on essential goods and services which generally experience greater price increases compared to non-essential items.
The report noted that inflation is eroding the real value of minimum wages.
ILO has underscored the urgent need for well-designed policy measures to help wage workers and their families maintain their purchasing power and living standards.
They are critical to prevent the existing levels of poverty, inequality and social unrest.
Rosalia Vazquez-Alvarez, one of the authors of the report said “We must place particular attention on workers at the middle and lower end of the pay scale.”
She said “Fighting against the deterioration of real wages can help maintain economic growth, which in turn can help to recover the employment levels observed before the pandemic. This can be an effective way to lessen the probability or depth of recessions in all countries and regions.”
ILO said that one effective tool is the adequate adjustment of minimum wage rates, given that 90 per cent of its 187 Member States have minimum wage policies in place.
It said that collective bargaining and “strong tripartite social dialogue” that is, between government, employers and workers representatives can help to achieve adequate wage adjustments during a crisis.
The agency gave other recommendations include measures that target specific groups, such as providing vouchers to low-income households so they can purchase essential goods, or cutting Value Added Tax on these items which will reduce the burden inflation places on households while also helping to bring down inflation generally, the report concluded..
Comments are closed.