Global Asian Wage Trends Implications for Wage Policy
Global & Asian Wage Trends: Implications for Wage Policy & Union agenda Data Source: Malte Luebker, Senior Regional Wage Specialist, ILO Regional Office for Asia and the Pacific AND TRAVAIL/ILO
What is Wage?
Wages matter for global economy - almost half of all workers are wage workers Ø 645 million wage earners in Asia. Ø 1. 5 billion globally. Ø Wage employment grows strongly in Asia.
Pre-crisis wage trends • In Asia, real wage growth had been strong at 7 % - 8 % per annum. • Performance in advanced countries was weak. • Wage level is still much lower in Asia.
Crisis impact on global wage growth Annual average global real wage growth, 2006– 11 (%) • Global wage growth remains far below precrisis level. • If China is excluded, global wages have been almost flat in 2008, 2009 and 2011. * Annual growth rates published as "provisional estimates” (based on coverage of c. 75 %). Note: Global wage growth is calculated as a weighted average of year-on-year growth in real average monthly wages in 124 countries, covering 94. 3% of all employees in the world (for a description of the methodology, see the Technical appendix IV). Source: ILO Global Wage Database.
Real average wages: Long-term trends • Conditional convergence of wages over the past decade: – Near-stagnation in the developed world. – Strong catch-up in Asia, driven by China.
What’s behind Asia’s performance? Annual average real wage growth in Asia, 2006– 11 (%) • China’s wage growth carries big weight in the Asia figure. • If China is excluded, real wages in the rest of Asia are below 2007 level. Wage growth in China (and also ILO’s new global estimates) may have been overestimated [because of “composition effects” whereby low-paid workers drop out of the labour market first during recessions]
… but Chinese profits have grown even faster • Chinese wages have lagged behind productivity growth. • Steep fall in labour share (and real unit labour cost) since 2002.
What about the rest of Asia? South Asia • Slow growth and wage erosion in South Asia: – Some question marks about data from India
South-East Asia • Slow growth and wage erosion in S-E Asia: – Some question marks about data from India
East Asia • Take-off in China and Mongolia. • Stagnation in the high-income economies.
… global differences in wage levels remain large • Harmonized series for manufacturing allow to compare on a like-forlike basis. • Huge differences in pay levels between advanced countries, Eastern Europe and emerging economies. International comparison of hourly direct pay in manufacturing, 2010 (US$)
Asian Hourly wage Rates in US $ Source: JOC, IMA Asia-Asia Forecasts 2010 (Vickerman)
“Collapsing bottom” Increase in low-paid workers The share of low-pay in selected G 20 countries 40. 0% 35. 0% 30. 0% 25. 0% 20. 0% 1995 -2000 2007 -2009 15. 0% 10. 0% 5. 0% 0. 0% Japan Australia UK Germany China Canada Mexico US Korea (Rep. ) Indonesia Argentina South Africa
Interpreting wage trends: Some caveats in interpreting global and regional trends: • National Statistical Offices use different concepts and methodologies, so wage levels are not always comparable (though this has less impact on trends). • Bias due to a composition effect: If low-wage workers lose their jobs, average wages rise – even if no individual worker obtained a pay rise. • Changes in monthly average wages reflect (a) changes in the hourly wage rate, and (b) changes in the number of hours worked.
Many wage workers in Asia live in poverty n q q Despite strong economic growth, working poverty remains high in many Asian countries. Poverty incidence in households headed by paid employees is lower than on average. However, paid employment is not a guarantee against poverty.
For sustainable growth & a re-balanced world economy, what should be done? • Promote & Ensure Fo. A & Right to Collective Bargaining – helps in wages moving in line with productivity, prevent low pay & raises domestic demand & employment (C 87 & 98) • Pro-active Minimum Wage policy – especially for those sectors where rate of unionisation is low [to prevent deterioration in the purchasing power of the lowest paid workers] • Social Security & Social Protection floor for all • Tax policies – as instrument of decent work (including tax credits for low paid workers, mobilise resources for public goods & services) • Public investment in education, health and housing - to break the intergenerational pattern of low-education and low-pay & promote domestic demand • What else?
Group Work: Country Situation Review G 1. What impact the ‘economic crisis’ had on your country & workers? What policies Government initiated to deal with the impact of crisis? Any example of union response? G 2. What are the factors that prevent unions from playing effective role in dispute resolution & collective bargaining? (focus on drawbacks in law, capacity of unions, employers behaviour, role of authorities – give examples) G 3. What are the main demands of the employers in your country? G 4. What are the ‘means’ available to unions to enforce workers rights? • What are main priorities of Trade Unions in your country? List top 3 priorities
- Slides: 18