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Wage Growth Slowed During Economic Downturn, Report Says

The global economic downturn caused the growth in wages worldwide to be halved in 2008 and 2009, according to the International Labour Organisation’s (ILO) recent Global Wage Report, Agence France-Presse reports (12/16).

The report “shows that growth in average monthly wages globally slowed from 2.8 percent in 2007, on the eve of the crisis, to 1.5 percent in 2008 and 1.6 percent in 2009. Excluding China, global average wage growth dropped to 0.8 percent in 2008 and 0.7 percent in 2009,” the U.N. News Centre writes (12/16).

The data, which covers 115 countries and territories and was the ILO’s second survey on the topic, shows “there were important regional differences, notably with average wages still powering ahead in Asia but treading water in the West,” the New York Times reports. “In advanced economies, the report estimated, real wages fell 0.5 percent at the onset of the crisis in 2008 before growing 0.6 percent in 2009. In 2007, they rose 0.8 percent. In Asia, real wages grew 8 percent in 2009 after 7.1 percent in 2008 and 7.2 percent in 2007 as growth remained robust in emerging economies like India and China, the agency said,” the newspaper writes.

“In Eastern Europe and Central Asia, real wage growth contracted 2.2 percent in 2009 after growth of 10.6 percent in 2008 and 17 percent in 2007, when wages were still recovering from the collapse that took place early in the transition to a market economy. In Latin America and the Caribbean, growth stood at 2.2 percent in 2009, compared with 1.9 percent in 2008 and 3.3 percent in 2007. For Africa, wages grew 2.4 percent in 2009, from 0.5 percent in 2008. The report said that it did not have enough data to make estimates for the Middle East,” according to the New York Times (Saltmarsh, 12/15).

“For low paid workers, who are especially vulnerable to fall into poverty, there is need for a better articulation between minimum wages and social and labour market policies,” according to the report, an ILO press release states. “This study shows another face of the lingering employment crisis,” said ILO Director-General Juan Somavia. “The recession has not only been dramatic for the millions who lost their jobs, but has also affected those who remained in employment by severely reducing their purchasing power and their general well-being,” Somavia added. “Looking ahead, the report says the pace of the recovery will depend, at least partly, on the extent to which households are able to use their wage to increase consumption,” according to the press release (12/15).

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