Global Wage Report ANG - International Labour Organization

139 Pages·2010·5.14 MB·English

Global Wage Report 2010/11
Wage policies in times of crisis
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Global Wage Report
2010/11
Wage policies in times of crisis
International Labour Office · Geneva
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Copyright © International Labour Organization 2010
First published 2010
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ILO
Global Wage Report 2010/11: Wage policies in times of crisis
Geneva, International Labour Office, 2010
wage policy / wages / wage differential / low wages / economic recession / developed countries / developing countries
1 v.
13.07
ISBN 978-92-2-123621-4 (print)
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Preface
The global economic crisis has had devastating consequences on labour markets.
Unemployment has increased to 210 million, the highest level ever recorded, and many
millions more have simply dropped out of the labour force because they are too discour-
aged to continue looking for work. Paychecks have been affected too.
This second ILO Global Wage Report provides some evidence about the impact
of the crisis on wages around the world. It shows in particular that the global growth in
real average wages was reduced by half in 2008 and 2009, compared to earlier years.
This highlights how while the crisis has been dramatic for those who lost their jobs,
smaller than expected paychecks have also severely affected the purchasing power and
well-being of those who managed to stay in work.
In the future, a jobs- and income-based growth strategy is urgently needed to bring
the global economy back on track, to redress past imbalances and to place economic
growth on more solid foundations. This has also been the message of other ILO reports,
such as the report submitted to the G20 in September 2009, the annual World of Work
Report by the International Institute for Labour Studies, or the message delivered at the
Joint ILO–IMF Conference in Oslo, in September 2010.
Among the most pressing challenges to be dealt with are rising wage inequality,
the growing disconnect between wages and productivity, and the 330 million or so
employees who are now amongst the low paid in their country.
The present report provides policy-makers with some practical illustrations of
how collective bargaining, minimum wages and income policies can help to address
the fairness challenge which confronts policy-makers today. We hope these illustrations
can assist policy-makers and the social partners in advancing their decent work objec-
tives and contribute to converting into practice the internationally agreed ILO Declara-
tion on Social Justice for a Fair Globalization and the Global Jobs Pact, which received
vigorous support from governments and from employers’ and workers’ organizations
from all regions of the world.
Manuela Tomei
Director
Conditions of Work
and Employment Programme
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Contents
Preface............................................................... v
Acknowledgements .................................................... xiii
Introduction .......................................................... xv
Part I Major trends in wages
1 Growth of average wages............................................ 1
1.1 Global estimates................................................ 1
1.2 Regional estimates .............................................. 6
1.3 Average wages and productivity.................................... 18
2 The wage share .................................................... 18
2.1 Recent trends in national wage shares ............................... 22
2.2 Trends at the sectoral level........................................ 25
3 Wage inequality and low pay......................................... 31
3.1 Recent trends: Increasing incidence of low pay ....................... 34
3.2 Characteristics of low-paid workers................................. 47
Part II Wage policies in times of crisis
4 The role of wage policies ............................................ 47
4.1 Social justice and equity.......................................... 47
4.2 The macroeconomic effects of wages ............................... 48
4.3 Market imperfections ............................................ 50
4.4 Vulnerable workers: Low-wage jobs ................................ 53
5 Wage policies...................................................... 54
5.1 Collective bargaining ............................................ 56
Collective bargaining and average wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Collective bargaining and low pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
The challenge of inclusive systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.2 Minimum wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Recent trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Can minimum wages reduce low pay? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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viii Global Wage Report 2010 / 11
5.3 From minimum wages to minimum income for low-income households . . . . 74
Policies to weaken the linkage between low pay and poverty . . . . . . . . . . . . . 74
What policies? Scope and potentials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Part III Summary and conclusions
6 Main findings and policy implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7 Emerging issues and the way forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Appendices
Technical appendix I: Global wage trends: Methodological issues . . . . . . . . . . . . . . . . . 83
Technical appendix II: Definition and measurement of the wage share
and shift-share analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Statistical appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Bibliography
Background papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Tables
1. Cumulative wage growth, by region since 1999 (1999 = 100) . . . . . . . . . . . . . . . . . 15
2. The wage share in OECD countries for the real economy . . . . . . . . . . . . . . . . . . . . 23
3. Selected list of low-wage studies and their methodologies . . . . . . . . . . . . . . . . . . . 38
4. Different reasons why women are more vulnerable to low wages:
Arguments and implications from a literature review . . . . . . . . . . . . . . . . . . . . . . . 51
5. Minimum wages during the crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6. Minimum wages and inflation in selected countries
in Latin America (in percentages) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7. Recent developments in minimum wage policies in selected countries . . . . . . . . . . 67
8. Poverty rates by pay and employment in China, 2002–07 (in per cent) . . . . . . . . . . 75
9. In-work benefits programmes in selected industrialized countries . . . . . . . . . . . . . . 76
10. Examples of cash transfer policies in selected countries . . . . . . . . . . . . . . . . . . . . . 77
B1. Sources of employment-related income data in Africa . . . . . . . . . . . . . . . . . . . . . . . 16
B2. Variables increasing the risk of low pay in selected developing countries . . . . . . . . 44
B3. Domestic workers as a percentage of total employment by sex . . . . . . . . . . . . . . . . 62
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Contents ix
Figures
1. The global recession and recovery, 1995–2010
(year-on-year changes in GDP at constant prices, in per cent) . . . . . . . . . . . . . . . . . 2
2. Global wage growth, 2006–09 (year-on-year changes, real terms, in per cent) . . . . 3
3. Wage growth in the G20, 2006–09 (year-on-year changes, real terms, in per cent) . 4
4. Nominal wage growth and inflation in four selected countries, 2006–09
(in per cent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. Regional wage growth, 2000–09 (in per cent p.a.) . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6. Index of nominal and real average weekly earnings in the United States
(all non-farm employees), March 2006 to March 2010 (March 2006 = 100) . . . . . 9
7. Wage growth in selected advanced countries, 2007–09 (in per cent) . . . . . . . . . . . . 10
8. Weekly hours worked or paid in selected advanced countries, 2007–09
(changes in annual averages) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9. Wage growth in selected countries in Central and Eastern Europe
and Central Asia, 2007–09 (in per cent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10. Wage growth in selected countries in Asia, 2007–09 (in per cent) . . . . . . . . . . . . . . 14
11. Wage growth in selected countries in Latin America and the Caribbean,
2007–09 (in per cent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12. Wage growth in selected countries and territories in Africa and the Middle East,
2007–09 (in per cent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13. Regional growth in GDP, employment and labour productivity, 2000–09
(in per cent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14. Wages and productivity during the crisis, 2008–09 (in per cent) . . . . . . . . . . . . . . . 21
15. Explaining changes in the wage share: A “shift-share” analysis
(in percentage points) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
16. Changes in wage shares in the manufacturing sector (in percentage points) . . . . . . 28
17. Changes in wage shares in the construction sector (in percentage points) . . . . . . . . 29
18. Changes in wage shares in financial intermediation, real estate,
renting and other business activities (in percentage points) . . . . . . . . . . . . . . . . . . . 30
19. Changes in wage inequality (selected countries), 1995–2000 and 2007–09 . . . . . . 32
20. Changes in low-wage employment in selected countries, 1995–2000
and 2007–09 (in percentage points) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
21. Low-wage employment: A global comparison, latest available year
(in per cent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
22. Output per worker (productivity) and low-wage employment
in 34 countries, latest available year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
23. Incidence of low-wage employment by major demographic characteristics,
selected countries, various years (in per cent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
24. Female share of low-wage employment in selected countries, latest year
(percentage of total low-wage employment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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