The International Labour Organization’s (ILO) Director-General Gilbert Houngbo stated that if the current trend continues, it will be the largest increase in wages in over 15 years. However, this positive development is not evenly distributed across different regions.
During the launch of ILO’s Global Wage Report in Geneva, Mr. Houngbo highlighted that the recent global wage gains show a significant recovery compared to the previous year’s decline of 0.9%. This decline was due to high inflation rates and rising prices that outpaced wage growth.
Although there has been a noticeable increase in wages in emerging economies, the trend is not as prominent in highly industrialized countries, where wages only grew modestly by 0.9% in 2023. This is in contrast to the nearly 6% increase in wages in emerging economies, which has continued in 2024 after a 1.8% rise in 2022.
Despite the positive trend in wages, low-income households are still struggling with the high cost of living. Mr. Houngbo pointed out that inflation remains a harsh reality in many emerging and developing countries, although it has decreased.
From a regional perspective, average wages have increased at a faster rate in Asia and the Pacific, Central and Western Asia, and Eastern Europe compared to the rest of the world.
In 2022, only Africa, Asia and the Pacific, and Central and Western Asia saw an increase in average wages, while all other regions experienced a decline in real wages. The decrease ranged from -0.8% in Eastern Europe to -3.7% in Northern, Southern, and Western Europe, according to ILO.
In 2023, most regions saw positive wage growth, with the exception of Africa, Northern America, and Northern, Southern, and Western Europe.
In 2024, wages increased in all regions except for Africa and the Arab States, where they remained stable. The growth ranged from 17.9% in Central and Western Asia to 0.3% in Northern America.
Despite these improvements, ILO noted that productivity has increased at a faster rate than wages in high-income countries from 1999-2024, with a 29% increase in output compared to a 15% increase in wages. This disparity was most significant between 1999 and 2006, during the 2008-2009 financial crisis, and more recently, due to the COVID-19 pandemic.
According to data from ILO, wage inequality, which measures the gap between the lowest and highest-paid workers, has decreased in two-thirds of countries since the early 2000s, with an average annual decrease of 0.5-1.7%.
The most significant decreases were seen in low-income countries, with an annual decrease of 3.2-9.6% over the past two decades, according to the UN agency. In contrast, wage inequality remains persistent in wealthier countries, with an annual decrease of 0.3-1.3% in upper-middle-income countries and 0.3-0.7% in high-income countries. The decreases were more significant among workers at the higher end of the pay scale, ILO stated.