United Nations labour agency says rising costs of living led to the decrease in the global wages in 2022, potentially worsening global inequality and is likely to provoke social unrest.
Monthly wages, according to the agency, dropped by 0.9 per cent “in real terms in the first half of 2022.”
The International Monetary Fund has warned that global inflation will hit 8.8 percent by the end of 2022, before declining to 6.5 per cent in 2023 and 4.1 per cent in 2024.
The International Labour Organization (ILO) said in its latest global wage report that this is the first negative wage growth since 2008 when the world faced a far-reaching financial crisis.
The ILO’s Global Wage Report 2022–23 indicate that the “lower-income groups have been hit especially hard after suffering significant wage losses during the COVID-19 pandemic.”
The report argues that the minimum wage fell in real terms from 2020-2022 in Bulgaria, Spain, Sri Lanka, South Korea, the United Kingdom and the United States, despite evident progress in the face of inflation.
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Instructively, the report notes, “overall wages were lower in real terms in 2022 than in 2008 in Italy, Japan, Mexico and the UK.”
2022 registered the “biggest gap between real labour productivity growth and real wage growth in high-income countries since 1999.” However, the report stresses, the decrease in wages occurred despite the rising productivity.
According to ILO Director-General Gilbert F Houngbo, the deterioration in real wages is likely to continue if there will be no policy intervention by governments.
“This would increase the probability of a deeper recession, a risk that is already worsening due to the restrictive monetary policies adopted by central banks in their efforts to bring down inflation,” he was quoted as to saying.
He added: “This in turn would endanger the economic and employment recovery, further increasing inequalities and fuelling social unrest.”
In this time of growing, Houngbo argues, “social and economic uncertainties and insecurity, it is vital to rebuild and strengthen people’s sense of social justice and social cohesion.”
