Tuesday, March 5, 2024

Global wage growth worst in decades- ILO report


Global wage growth in 2017 was not only lower than in 2016, but fell to its lowest growth rate since 2008, far below the levels obtaining before the global financial crisis.

The latest report of International Labour Organisation on Global Wage Report 2018/19 has revealed that the overall global wage growth declined to 1.8 percent in 2017 from 2.4 percent in 2016.

The obvious impact of this low pace of wage growth has been on global economic growth. It’s because the consumption demand was hurt by restrained spending by wage-earners.

In Africa, real wages appear to have declined overall in 2017, mainly attributable to very high inflation rates owing to currency devaluation in Egypt, a large country which exerts a strong influence on weighted regional average, as well as by reported falling real wages in Nigeria, a report has shown.

If these two countries are taken out of the sample, real wages in Africa are estimated to have increased moderately in 2017.

From the report, wages in developing countries are increasing more quickly than those in higher-income countries. Pay rose by just 0.4 percent during last year in advanced economies, but grew at over 4 percent in developing countries. The real wages almost tripled in the developing and emerging countries of the G20 between 1999 and 2017.

However, in the advanced economies of G20, the increase over the same period aggregated to a far lower 9 percent. This is however seen positive in the sense of ‘convergence’ happening around the world. Nevertheless, salaries are still far too low in the developing world. The gaps are still significantly big as often the wage level is still not high enough for people to meet their basic needs.

Among high-income countries, wage inequality is lowest in Sweden and highest in Chile. Among low-income and middle-income countries, South Africa and Namibia have the highest inequality, Armenia and Mongolia the lowest.

In driving factor for growth, the report noted that a number of countries have recently undertaken measures to strengthen their minimum wage. The prevailing view was to provide more adequate labour protection. South Africa announced the introduction of a national minimum wage in 2018. India is also considering extending the legal coverage of the current minimum wage from workers in ‘scheduled’ occupations to all wage employees in the country.

For Botswana, Sunday Standard can reveal that, the parliament has been failing to pass the motion of considering a living wage policy over a minimum wage for a couple of times. Even with the minimum wage which is currently in place, the wages are low and do not match with the current living standards.

Some legislators argue that there is a thin line between a minimum wage and decent living wage. Unlike a minimum wage, with a decent living wage families would be better placed to afford basic households requirements.

The living wage is different from minimum wage in the sense that minimum wage is not adequate enough to address basic needs and decent standards of living, while decent living wage will address the idea to ensure that workers had decent standard of living.

Currently there is a huge disparity between the country’s working class. The lowest paid civil servant in Botswana earns P1, 600 and the highest paid gets around P75, 000 without including allowances.  For the private sector employees their minimum wage is still less than P1, 000.

On the gender pay gap the ILO report noted that despite some significant regional differences, men continue to be paid around 20 percent more than women. In high-income countries the gender pay gap is at its biggest in top-salaried positions. In low and middle-income countries which Botswana forms part of, however, the gap is widest among lower-paid workers. Data suggests that traditional notions like differences in the levels of education play only a “limited” role in explaining gender pay gaps. In many countries women are more highly educated than men but earn lower wages, even in the same occupational categories. The wages of both men and women also tend to be lower in enterprises/occupations with a predominantly female workforce.

The report then questions what can be done to progressively reduce gender pay gaps across the world? In response, the author of the report indicated that, while there is a range of policies and measures that can be taken to reduce these gaps, the answer to this question will necessarily be country-specific since the factors that drive and explain gender pay gaps vary from country to country and in different parts of the distribution.

The report also emphasizes the importance of good data and highlights the need in many countries for better data on the distribution of wages.

Measures that promote the formalization of the informal economy can also greatly benefit women, bringing them under the umbrella of legal and effective protection and empowering them to better defend their interests.

According to the Africa Human Development Report 2016  published by the United Nations Development Programme (UNDP) ; Gender inequality is costing Sub-Saharan Africa on average US$95 billion a year, peaking at US$105 billion in 2014 or six percent of the region’s GDP. This jeopardises the continent’s efforts for inclusive human development and economic growth.


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