Geneva: Global wage growth has slowed significantly, a worrying development that could fuel further inequality and suppress consumption worldwide, a United Nations report said today.
A dramatic slowdown in the developing world is the key driver of the trend, the UN’s International Labour Organisation said in the report.
The report, published by the ILO every two years since 2008, looks at worker compensation in all regions and aims to offer a broad view of where the world is headed in terms of household income and consumer purchasing power.
Overall, “wage growth around the world has decelerated since 2012 from 2.5 per cent to 1.7 per cent in 2015, the lowest level in four years,” ILO said in a statement.
Deborah Greenfield, ILO deputy director for policy, called those figures “a matter of major concern.”
Following the 2008 financial crisis, global wage growth was sustained by a strong performance in developing nations, notably places like Brazil, India and South Africa.
That apparent “catching up” by poorer nations raised hopes of more global equality, said Greenfield.
But that progress “has slowed down, perhaps even halted,” Greenfield told reporters in Geneva, noting the exception of China where wages were still growing significantly faster than elsewhere.
Problems in developing nations have partly been driven by the collapse in oil and commodity prices, the report’s lead author Patrick Belser said.
Wages in richer nations had been growing at a better pace, the report found, although Greenfield warned that progress there remained tenuous as “growing economic, social and political uncertainty” in the developed world could derail gains made.
The report also highlighted glaring gender pay gaps and discrepencies between executives and junior staff compensation.
In Europe, women were on average making 20 percent less than men per hour, ILO said. At the executive level, European women are paid roughly 50 per cent less their male counterparts.
In an analysis of selected high-paying companies, ILO found that the bottom one percent of workers made an average of 7.10 euros (USD 7.40) per hour, while the top one percent of workers made 844 euros per hour.
“We don’t see huge progress in dealing with inequality,” Greenfield said. “In fact we see the reverse.