United Nations Radio

A new report from the International Labour Organization (ILO) is predicting lighter pay packets for millions of workers in 2009.

NARR:The report is the first in a series of studies aimed at providing information on wage distribution, while advocating for more prominent wage policies--particularly in a time of global financial turmoil. It was launched this week by the International Labour Organization, the ILO. Manuela Tomei is chief of the ILO's Conditions of Work and Employment Programme.

TOMEI :Average wages have been growing more slowly than GDP per capita, and this suggests that wage growth has been lagging behind increases in labour productivity.

NARR:The ILO says that over the past decade, average wages were increasing by less than two per cent in roughly half of 83 countries surveyed. That figure represents approximately 70 per cent of the global population. Tomei notes significant differences by region, and even by country.

TOMEI :For instance, we have Latin American countries that on average have been growing at 0.5 per cent, and the US that has been growing at one per cent. In the case of the countries that have experienced an average growth over two per cent, we have India or South Africa, along with China, Russia, Ukraine, whose wages have been growing at over 10 per cent a year.

NARR:Several factors could be behind the downturn in wages says one of the co-authors of the report, Shangeon Lee.

LEE :In the context of globalization, many countries are competing (against) each other and they may actually exercise some kind of downward pressure on wages. That's our guess, but we don't have any conclusive answer. The other possibility of course is the decline in union power or other social and labour policies.

NARR:Any reduction in wages means decreased purchasing power for workers, particularly those at the bottom of the economic ladder. Manuela Tomei observes that this is being reflected in the rise in wage disputes.

TOMEI:In the past days, Indonesia adjusted minimum wage in a way that didn't really compensate for increases in inflation. And this has led to massive protest by those workers that are affected by the minimum wage adjustment. Since workers will have less disposable income for purchasing goods and services, overall consumption will decline. And therefore this will deepen the recession further and delay the process of economic recovery.

NARR:With 2009 just weeks away, the International Labour Organization envisages there'll be little reason to celebrate in the New Year.

TOMEI 3:We estimate that globally, wages in real terms will increase by 1.1 percentage point and this is essentially due to the fact that emerging economies will continue to grow next year, even though of course to slower rate than they have done so far. But in the industrialized countries, we will see a decline in real wages of 0.5 per cent.

Producers: Chuck Appel/Dianne Penn

(duration: 4'41")