Pay increases worldwide hit an average of 1.8 percent in 2023, surging further to 2.7 percent in the first half of 2024, the International Labour Organization (ILO) reported on Thursday. This marks a significant recovery compared to the 0.9 percent wage decline in 2022, driven by high inflation and escalating costs.
“If this trend is confirmed, it will be the largest gain in more than 15 years… however, this positive trend is not shared equally across regions,” said ILO Director-General Gilbert Houngbo during the launch of the agency’s Global Wage Report in Geneva.
While wages in emerging economies soared nearly six percent in 2023 after a 1.8 percent rise in 2022, growth was modest in highly industrialized nations, where pay packets increased by only 0.9 percent last year.
Regional Highlights
Wage growth varied significantly across regions. In Asia, the Pacific, Central and Western Asia, and Eastern Europe, wages rose faster than the global average in 2023. However, Africa, Northern America, and Northern, Southern, and Western Europe experienced either stagnation or declines.
By 2024, most regions saw wage growth, ranging from a remarkable 17.9 percent increase in Central and Western Asia to just 0.3 percent in Northern America. However, African and Arab states recorded stable real wages without significant increases.
Inflation and Cost-of-Living Struggles
Despite the upward trend in wages, inflation continues to strain low-income households, particularly in emerging and developing nations. “Inflation – albeit reduced – remains a harsh reality,” Mr. Houngbo noted, emphasizing the ongoing challenge of rising living costs for the most vulnerable populations.
Productivity vs. Wages: The Persistent Gap
A troubling discrepancy persists between productivity gains and wage growth, particularly in high-income countries. From 1999 to 2024, productivity increased by 29 percent, while wages rose only 15 percent, a gap exacerbated during crises such as the 2008 financial downturn and the COVID-19 pandemic.
Wage Inequality: Mixed Results
On a positive note, wage inequality has narrowed in two-thirds of countries since the early 2000s, with significant reductions observed in low-income nations. Annual decreases ranged from 3.2 to 9.6 percent in these economies over the past two decades. Conversely, wage inequality has been more persistent in wealthier nations, with only modest annual reductions of 0.3 to 1.3 percent, particularly among higher earners.
Looking Ahead
While the ILO report highlights encouraging signs of recovery in global wages, it also underscores the uneven distribution of these gains and the persistent challenges of inflation, inequality, and wage stagnation in wealthier nations. Addressing these issues will require targeted efforts to ensure that wage growth benefits all workers, particularly those most in need.
(Source: UN News)
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