Wage growth decelerates worldwide

By Pia Lee-Brago (The Philippine Star), Dec. 19, 2016

MANILA, Philippines – Earnings around the world have dropped to their lowest level since 2012, according to a new report of the International Labor Organization (ILO).

Wage growth around the world “has decelerated since 2012, falling from 2.5 percent to 1.7 percent in 2015, its lowest level in four years,” according to ILO’s Global Wage Report 2016/17: Wage Inequality in the Workplace.

And If China, with the fastest wage growth in the world, is not included, the drop would be from 1.6 percent to 0.9 percent, the report added.

“In an economic context in which lower demand leads to lower prices (or deflation), falling wages could be the source of great concern, as it could add further pressure to deflation,” said Deborah Greenfield, ILO’s deputy director-general for policy.

The report also said in much of the period following the 2008-2009 financial crisis, wage growth was propelled by relatively strong growth in developing countries and regions. However, more recently, this trend has slowed or reversed.

Among emerging and developing G20 countries, real wage growth declined from 6.6 percent in 2012 to 2.5 percent in 2015. Among developed G20 countries, it rose from 0.2 percent in 2012 to 1.7 percent in 2015, the highest rate in the last decade.

The report also showed vast differences between regions among developing economies.

In 2015, growth in South and East Asia and the Pacific was relatively robust at four percent but this declined to 3.4 percent in Central and Western Asia, and is estimated at 2.1 percent in the Arab countries and at two percent in Africa. However, real wages fell by 1.3 percent in Latin America and the Caribbean, and by 5.2 percent in Eastern Europe.

The report also showed stark distribution among wages within countries.

In Europe, for instance, the top 10 percent of best-paid employees took an average 25.5 percent of the total wages in their respective countries, almost as much as what the lowest paid 50 percent received (29.1 percent).