ILO Turin Training Centre, December 11-13, 2007 Wage policy: Basics.

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Presentation transcript:

ILO Turin Training Centre, December 11-13, 2007 Wage policy: Basics

The basic key principles Global wage developments indicators Wage policy tools Wage policy determination levels Wage policy objectives

CHANGES IN REAL WAGES IN SELECTED COUNTRIES, CountryIncrease in real wages (%) Data sources and remarks Brazil Labour overview: Latin America and the Caribbean; Chile Labour overview: Latin America and the Caribbean; China163.3 China Statistical Yearbook 2006; Colombia Labour overview: Latin America and the Caribbean; Ecuador Labour overview: Latin America and the Caribbean; Egypt36.3 LABORSTA database, ILO; Kazakhstan105.6 LABORSTA database, ILO; Mauritius14.0 LABORSTA database, ILO Mexico Labour overview: Latin America and the Caribbean; Philippines10.9 LABORSTA database, ILO; Republic of Korea52.9 LABORSTA database, ILO; Singapore19.9 LABORSTA database, ILO; South Africa20.0 LABORSTA database, ILO;

WAGE SHARE IN SELECTED COUNTRIES,

Income disparities around the world, 1990–2005 Africa Latin America Asia Europe and the USA Sources: WDI, World Bank; WIDER, United Nations; EIU: national statistical offices.

Wage development indicators Real wages (wages/inflation) Minimum wage (in real terms; /average wage; /subsistence minimum); Wage share (wages and economic growth; wages and productivity at national but also sectoral level) Wage and income differentials Basic principle one: Look at complementary wage and income development indicators

Main wage policy tools Legal regulations (wage protection, anti-discrimination) Wage fixing in the public sector Minimum wage fixing machinery Tripartite wage framework Wage bargaining Wage structure (basic wages, bonuses, etc.) Classification and pay grids at enterprise level Provision of statistics Second basic principle: 1) Need not to confuse tools 2) Use them in a complementary way

Main levels of wage policy National level (legal regulations, minimum wage; recommendations on wage increases etc.) Sectoral level (Minimum wages, but mainly bargaining on annual wage increases) Regional level (Minimum wages, wage bargaining etc.) Enterprise level (wage bargaining, payment systems related to productivity, skills premia) Third basic principle: Need to develop wage policy at these different levels in a multi-level and interactive process

Wage policy objectives Preserve purchasing power: real wages Limit dispersion public/private or between categories Protect low pay and working poor: minimum wage Motivation & productivity: individual/collective incentives Wage flexibility: profit-sharing Social dialogue: wage bargaining Labour costs: wage moderation Fourth basic principle: select tools according to objectives