Global & Asian Wage Trends: Implications for Wage Policy & Union agenda Data Source: Malte Luebker, Senior Regional Wage Specialist, ILO Regional Office for Asia and the Pacific AND TRAVAIL/ILO

What is Wage?

Wages matter for global economy - almost half of all workers are wage workers 645 million wage earners in Asia. 1.5 billion globally. Wage employment grows strongly in Asia.

Pre-crisis wage trends In Asia, real wage growth had been strong at 7 % - 8 % per annum. Performance in advanced countries was weak. Wage level is still much lower in Asia.

Crisis impact on global wage growth Annual average global real wage growth, 2006–11 (%) Global wage growth remains far below pre-crisis level. If China is excluded, global wages have been almost flat in 2008, 2009 and 2011. * Annual growth rates published as "provisional estimates” (based on coverage of c.75 %). Note: Global wage growth is calculated as a weighted average of year-on-year growth in real average monthly wages in 124 countries, covering 94.3% of all employees in the world (for a description of the methodology, see the Technical appendix IV). Source: ILO Global Wage Database.

Real average wages: Long-term trends Conditional convergence of wages over the past decade: Near-stagnation in the developed world. Strong catch-up in Asia, driven by China.

What’s behind Asia’s performance? Annual average real wage growth in Asia, 2006–11 (%) China’s wage growth carries big weight in the Asia figure. If China is excluded, real wages in the rest of Asia are below 2007 level. Wage growth in China (and also ILO’s new global estimates) may have been overestimated [because of “composition effects” whereby low-paid workers drop out of the labour market first during recessions]

… but Chinese profits have grown even faster Chinese wages have lagged behind productivity growth. Steep fall in labour share (and real unit labour cost) since 2002.

What about the rest of Asia? South Asia Slow growth and wage erosion in South Asia: Some question marks about data from India

South-East Asia Slow growth and wage erosion in S-E Asia: Some question marks about data from India

East Asia Take-off in China and Mongolia. Stagnation in the high-income economies.

… global differences in wage levels remain large International comparison of hourly direct pay in manufacturing, 2010 (US$) Harmonized series for manufacturing allow to compare on a like-for-like basis. Huge differences in pay levels between advanced countries, Eastern Europe and emerging economies.

Asian Hourly wage Rates in US $ Source: JOC, IMA Asia-Asia Forecasts 2010 (Vickerman)

“Collapsing bottom” Increase in low-paid workers

Interpreting wage trends: Some caveats Some caveats in interpreting global and regional trends: National Statistical Offices use different concepts and methodologies, so wage levels are not always comparable (though this has less impact on trends). Bias due to a composition effect: If low-wage workers lose their jobs, average wages rise – even if no individual worker obtained a pay rise. Changes in monthly average wages reflect (a) changes in the hourly wage rate, and (b) changes in the number of hours worked.

Many wage workers in Asia live in poverty Despite strong economic growth, working poverty remains high in many Asian countries. Poverty incidence in households headed by paid employees is lower than on average. However, paid employment is not a guarantee against poverty.

For sustainable growth & a re-balanced world economy, what should be done? Promote & Ensure FoA & Right to Collective Bargaining – helps in wages moving in line with productivity, prevent low pay & raises domestic demand & employment (C 87 & 98) Pro-active Minimum Wage policy – especially for those sectors where rate of unionisation is low [to prevent deterioration in the purchasing power of the lowest paid workers] Social Security & Social Protection floor for all Tax policies – as instrument of decent work (including tax credits for low paid workers, mobilise resources for public goods & services) Public investment in education, health and housing - to break the inter- generational pattern of low-education and low-pay & promote domestic demand What else?

Group Work: Country Situation Review G1. What impact the ‘economic crisis’ had on your country & workers? What policies Government initiated to deal with the impact of crisis? Any example of union response? G2. What are the factors that prevent unions from playing effective role in dispute resolution & collective bargaining? (focus on drawbacks in law, capacity of unions, employers behaviour, role of authorities – give examples) G3. What are the main demands of the employers in your country? G4. What are the ‘means’ available to unions to enforce workers rights? What are main priorities of Trade Unions in your country? List top 3 priorities