Global Wage Report 201415 Manuela Tomei Director Conditions

Global Wage Report 2014/15 Manuela Tomei Director Conditions of Work and Equality Department International Labour office (ILO)

2 Global Wage Report 2014/2015 • ILO Flagship report published every 2 years since 2008 in multiple languages, including in English, French, Spanish, Portuguese, Chinese and Russian • Part I provides an overview of global and regional wage trends and part II focuses on income inequality and how it can be reduced

3 PART I MAJOR TRENDS IN WAGES • Shows trends in average wages • Compares wages and productivity trends • Shows implications on the share of GDP distributed to labour compensation (the “labour share”)

4 Average wages in Russian Federation Source: ILO Global Wage Report 2012/13. ILO calculations based on data from National Statistical Offices

5 Some varıatıon ın average real wage growth across countrıes (2) Source: ILO Global Wage Report 2014/15.

6 In developed economies, the gap between labour productivity growth and wage growth widens Index (base year =1999) 118 112 Labour Productivity Index (1999=100) 106 100 1999 Wage Index (1999=100) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: Wage growth is calculated as a weighted average of year-on-year growth in average monthly real wages in 36 economies (for a description of the methodology, see Appendix I). Index is based to 1999 because of data availability. Source: ILO Global Wage Report 2014/15.

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8 PART II WAGES AND INCOME INEQUALITY • Shows trends in household income inequality • Shows that wages and social transfer play a key role • Concludes that good wage polices support social transfers, and reductions in income inequality

9 Why does inequality matter? • For reasons of “social justice”: high inequality can harm poverty reduction objectives, reduce social mobility, and can lead to social unrest. Too much inequality is contrary to the objectives of inclusive growth and shared prosperity. • For the rate of economic growth: high inequality reduces domestic household consumption, and high inequality also reduces “the pace and durability of growth” because of its adverse effects on education and health (IMF, 2014).

10 Recent trends: Inequality declined in Russia and Brazil; increased in the U. S. , Spain, South Africa

11 Recent trends: average household income doubled in the last twelve years (in real terms)

12 In Russia inequality fell as incomes of the bottom 10% nearly tripled (2002 -2012) Real growth in household income by income source for the bottom 10 per cent Social transfers (including pensions) of the bottom 10% accounted for about a quarter of their increased incomes Wage increases of the bottom 10% accounted for about half of their increased incomes WG = wages; ST = Social Transfers; SEI = self-employment incomes; OI = Other income sources

13 Why did wages at the bottom increase? • The minimum wage policy was reactivated and accounted for the majority of the decline in lower -tail wage inequality (Lukiyanova. 2011) Source: Bolsheva, 2014

14 Policy implication: inequality reduction requires a comprehensive approach • Fiscal redistribution through taxes and social transfers, including progressive taxation, inwork benefits, and direct support to low-income households. • Market distribution policies that affect wages and wage distribution directly, including: minimum wages, collective bargaining, and promoting creation of wage-employment.

15 Another form of inequality: the gender pay gap => need for equal pay policies Gap Male female as % of males earnings

16 The continued need for adequate labour protection

17 Ratification of ILO Minimum Wage Fixing Convention No. 131? • In the Russian Federation, the national and regional minimum wages have contributed to more adequate labour protection. • ILO adopted the Minimum Wage Fixing Convention No. 131 in 1970. Ratification was relatively rapid in the 1970 s, and increased again since 2000. Total ratifications: 52 out of 181 Member States. No ratification by Russian Federation.