Global Wage Trends Economic crisis, wages and some policy issues ACTRAV Symposium on the Right to Organize and Collective Bargaining, Geneva Manuela Tomei, TRAVAIL

The Context 2008-2009: The global economy, highlighting two wage-related issues: The imbalance in the pre-crisis distribution of profits and wages Malfunctioning executive pay systems and excessive bonuses.

What Impact on Wages? Annual Wage Growth 2008 in Selected G-20 Countries Global growth in average wages declined from 4.7% in 2007 to 1.5% in 2008, but variations across countries

What Impact on Wages? The picture is likely to worsen in 2009 Wages in Q1, 2009

Wages and employment Changes in monthly wages reflect changes in hourly wages and in the number of hours worked among 14 countries, hours worked fell from 38.9 to 38.2 hours/week, and from 36.6 hours to 36.1 for women “composition effect”: when low-paid workers lose their jobs, the average hourly wage goes up !

How has the crisis affected GDP and wages How has the crisis affected GDP and wages? Decades of wage moderation  Short episodes of catching up (2005-7)  Collapse

What about the distribution of wages?

Policy responses ILO’s Global Jobs Pact (June, 2009) Principle “Avoiding protectionism, deflationary wage spirals and worsening working conditions” Policy options social dialogue collective bargaining statutory or negotiated minimum wages Governments as employers and procurers should respect and promote negotiated wage rates Narrowing the gender pay gap ILO work Improved expertise on minimum wages-fixing improving production and use of labour market information at country level

Minimum wages – mixed responses Pre-crisis period: reactivation of statutory minimum wages (2001-07) During past downturns, concerns about minimum wage’s impact on labour costs and job displacements prevailed In the current crisis, greater reliance on minimum wages upward adjustments (see next slide)

Minimum wages matter, even during recession Japanese experience: MW’s positive impacts on low-pay without negative employment effects (Kambayashi et al. 2008)

What impact on Collective Bargaining and Wages? Wage responsiveness to GDP per capita growth (wage elasticity) In pre-crisis period, higher wage elasticity where CB coverage is higher, but Overall, limited and declining extent of CB and collective agreements And during this crisis?

Means to stop wages from falling “Active” government policies, combined with social dialogue (e.g., work-sharing, wage subsidies) Upkeep or increase minimum wages Procurement policies and employment guaranteed schemes as vehicles for expanding MW outreach Collective bargaining?

What’s next? The full-scale impacts on wages are yet to come – the worst is yet to come Lagged adjustments in wages Policies, especially government measures Moving beyond wages as “labour costs”? tensions between individual rationalities (enterprises) vs collective rationalities