the story So Far: The International Labor Organization (ILO) recently released two reports that indicated the post-pandemic global employment scenario. The ‘Global Salary Report 2022-2023: Inflation and the Impact of COVID-19 on Wages and Purchasing Power’ discusses the twin crises, inflation and economic slowdown, which caused a “severe decline” in real monthly wages across the globe. The report blames the situation on the war in Ukraine and the global energy crisis. Another report, ‘Asia-Pacific Employment and Social Outlook 2022: Rethinking Sectoral Strategy for a Human-Centered Future of Work’, states that the Asia-Pacific region will lose around 22 million jobs in 2022. ILO Director General Gilbert F. Hongbo said the shortfall in wages is putting millions of workers in dire straits. He warned, “If the purchasing power of the lowest wage earners is not maintained, income inequality and poverty will increase.”
What does the data show?
The ILO’s report on wages looked at the real and nominal wages of workers. The term “wages” was defined as the total gross remuneration received by employees for a specified period of time (monthly for reports) as well as regular bonuses received by employees for time not worked, such as pay Annual leave and paid sick leave. Nominal wage data shows figures adjusted after accounting for consumer price inflation, while real wage growth refers to the year-over-year change in the real average monthly wage of all employees. On the methodology of its report, the ILO said, “The objective in each edition of the Global Wage Report is to collect wage data from a number of countries and territories (around 190), which are then grouped into five distinct regions.”
In India, nominal wages increased from ₹4,398 in 2006 to ₹17,017 per month in 2021. The data was sourced from the Ministry of Statistics and Program Implementation, Government of India. But when inflation is taken into account, real wage growth in India is projected to drop from 9.3% in 2006 to -0.2% in 2021. In China, the growth rate has declined from 5.6% in 2019 to 2% in 2022. In Pakistan, the increase is – 3.8%. Figures for Sri Lanka were not available. Negative growth started in India after the pandemic.
The report states that the rising cost of living has the greatest impact on low-income people and their families because they have to spend most of their disposable income on essential goods and services, which are generally higher than on non-essential goods. experiences a greater price rise.
Inequality growing?
At the Asia-Pacific level, only high-skill occupations saw a recovery from the COVID-19 crisis, which was true across all sub-regions. The ILO said that it is raising concerns about rising inequality. While there has been an employment gain of 1.6% among high-skilled workers between 2019 and 2021, no such significant gain has occurred among low- to middle-skill workers. Among G-20 countries, the report found significant differences in the average level of real wages between advanced G-20 countries and emerging G-20 countries such as India. It is at the level of around $4,000 per month in advanced economies and around $1,800 per month in emerging economies.
What are ILO measures?
The report suggests a set of policy options and responses to the crisis of livelihoods. Citing studies, the report said that 75 to 95 million people were pushed into extreme poverty during COVID-19. It states that the bargaining process for future nominal wage adjustments should include a sufficiently large but prudent price expectation. “This can contribute to protecting the standard of living – especially for low-income households – against unexpected future inflationary increases while avoiding unwanted wage-inflation spirals.” The report states that labor market institutions and wage policies need to be strengthened. The ILO states that the creation of decent formal wage employment is a prerequisite for a more equitable distribution of wages and income, and is an important contributor to equitable and sustainable wage growth. It wants governments to address the gender pay gap because when women leave the labor market, they are less likely to return than men. Most importantly, the report says that a multilateral approach is the key to solving the crises around us. There is an urgent need to address the negative effects of climate change; growing inequalities; Millions of people endure poverty, discrimination, violence and exclusion, including discrimination against women and girls in many parts of the world; lack of vaccines and access to adequate sanitation and essential healthcare for all; and the growing digital divide between poor and rich countries.