Wages to fall 0.5% in 2009 — ILO
Agence France-Presse
Inquirer.net
GENEVA, Switzerland — Wages in industrialized countries will fall 0.5 percent next year due to the economic crisis, although on a global level, salaries will still grow by up to 1.1 percent, the International Labor Office (ILO) said Wednesday.
“In 2009, wages will in fact decline by 0.5 per cent in industrial countries and grow by no more than 1.1 per cent globally,” said the ILO’s latest Global Wage Report.
The global growth will come thanks to “emerging countries whose economies are undergoing a slowdown but which are continuing to grow,” said Manuela Tomei, who is in charge of the ILO’s program on employment conditions.
But the ILO warned that it was clear that the economic slowdown would bite into real wages of most workers, with the lowest paid to be hardest hit.
“For the world’s 1.5 billion wage-earners, difficult times lie ahead,” said Juan Somavia, ILO director-general.
“Slow or negative economic growth, combined with highly volatile food and energy prices, will erode the real wages of many workers, particularly the low-wage and poorer households. The middle classes will also be seriously affected,” he added.
To combat a global recession, the ILO warned against lowering companies’ costs by cutting workers’ wages.
Rather, it called on governments to protect the spending power of consumers through measures such as raising minimum wages.
“In the present context, governments are encouraged to display a strong commitment towards protecting the purchasing power of their populations and hence stimulating internal consumption,” said the ILO.
“The levels of minimum wages should be increased wherever possible to protect the purchasing power of the most vulnerable workers,” it added.
The ILO pointed out that salaries tend to lag behind overall economic growth during upswings but tend to drop more steeply during economic downturns.
During 1995-2007, for instance, every 1.0-percent fall in gross domestic product (GDP) led to a 1.55-percent fall in average wages.
Meanwhile, 1.0-percent growth in GDP per capita resulted in an average growth of just 0.75 percent in annual wage growth.
“If this pattern were to be followed in the rapidly spreading global downturn, it would deepen the recession and delay the recovery,” warned Somavia.
No Comments, Comment or Ping
Reply to “Wages to fall 0.5% in 2009 — ILO”