China and Russia are leading the wage recovery while rich economies lag behind, the UN says. Real wages are rising again, but remain below their pre-pandemic levels in many parts of the world, although they are rising in China and Russia, the UN said in its annual wage survey.
Real wages are rising again as inflation falls, but remain below their pre-pandemic levels in many parts of the rich world, although they are rising in China and Russia, the United Nations said in a report released on Thursday.
In its annual survey of wage developments, the U.N.’s International Labor Organization said wage inequality has narrowed in all countries since the start of this century, with the largest declines in poorer countries.
In many countries around the world, wages failed to keep pace with increases in the prices of energy, food and other goods and services during 2022, resulting in a sharp decline in real wages as wages. In some countries, that decline continued into 2023, but there are clear signs of a broader recovery in 2024.
The ILO said global wages rose by 2.7% in the first six months of 2024 compared with the same period a year earlier, up from 1.3% in 2023, after a 1.5% decline the previous year. That was the fastest growth in 15 years.
However, the recovery in wages has been led by Asia, followed by Europe and North America. In most rich members of the Group of 20 largest economies and in many poor countries, real wages remain below the levels seen before the Covid-19 pandemic.
“The return to positive real wage growth is a welcome development,” said ILO Director-General, Gilbert F. Hongbo. “However, we must not forget that millions of workers and their families are suffering from a cost-of-living crisis that has reduced their standards of living.”
In the first half of this year, real wages in Germany, France, Italy and the UK, Japan and South Korea also fell below 2019 levels. The decline in earnings has accelerated a wave of defeats for ruling parties in recent elections.
Real wages were higher in the US, but only by 1.4%, while Canada saw a big increase.
By contrast, China’s real wages have risen by 27% since 2019, while Brazil has also seen a big increase. In Russia, real wages have risen sharply since the start of 2023 as potential workers fight the war in Ukraine while arms manufacturers are forced to increase their production.
The ILO said that real wages in some countries – the UK, Japan and Italy – remain below levels recorded in 2008, the year the financial crisis plunged many rich economies into deep recession.
A recovery in real wages is expected to support global economic growth as households spend more freely, but this has yet to happen in some parts of the world. Consumer spending in Europe has been weak as many households have chosen to increase their savings in anticipation of fresh economic shocks, including the possibility of a transatlantic trade conflict following the election of Donald Trump as US president.
Consumer spending has also fallen in China, where households have increased their savings to offset losses from the property market downturn.
The ILO expects the global economy to slow this year, with output expanding by 3.2%, down from 3.3% in 2023.
The ILO’s analysis of inequality trends this century shows a possible rebound in inflation by 2021, with only comparable data available. By that time, two-thirds of the countries sampled – accounting for 73% of all wage earners – had seen a decline in wage inequality since 2000.
“While strong across all country income groups, the decline in wage inequality is more pronounced in low-income and lower-middle-income countries,” it said.
However, the earnings gap between the world’s best and worst-paid workers is wide. The ILO calculated that in 2021, and adjusted for purchasing power, the bottom 10% of workers earned $250 per month, while the top 10% earned $4,199 per month for full-time work.
“This means that the purchasing power of the average wage earner in low-income countries is about 6 percent of the purchasing power of the average wage earner in high-income countries,” the ILO said.
Globally, the lowest paid 10% of workers earned just 0.5% of total wages, while the highest paid 10% received 38% of the global wage bill.
Globally, the lowest paid 10% of workers earned just 0.5% of total wages, while the highest paid 10% received 38% of the global wage bill.
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