Global Wage Report 2024-25 (GS Paper 3, Indian Economy)
Context:
- The International Labour Organization (ILO) recently released the Global Wage Report 2024-25, which provides an in-depth analysis of global wage trends, wage inequality, and real wage growth.
- This report is an essential tool in understanding labor market dynamics worldwide.
About the ILO and the Global Wage Report:
- The ILO is a United Nations specialized agency founded in 1919 and headquartered in Geneva, Switzerland. It works to promote fair labor practices and decent work for all.
- The Global Wage Report is an annual publication that started in 2008. It analyzes trends in wages across various regions, highlights wage inequality, and provides projections for future wage growth.
Key Highlights of the Global Wage Report 2024-25
Decrease in Wage Inequality:
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- Wage inequality has decreased at an average rate of 11.1% per annum in about two-thirds of countries worldwide since 2000, indicating a positive trend towards more equitable wage distribution.
Global Wage Growth:
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- Global real wages grew by 1.8% in 2023 and are projected to grow by 2.7% in 2024, the highest rate in over 15 years.
- This marks a notable recovery after the global wage contraction of -0.9% in 2022.
Regional Disparities in Wage Growth:
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- While global wages have seen growth, there is significant regional disparity.
- Africa, Northern America, and parts of Europe recorded either stagnant or negative real wage growth, contrasting with the higher growth rates seen in emerging economies.
Persistent Inequality:
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- Low-income countries continue to suffer from higher wage inequality compared to high-income nations.
- In these countries, nearly 22% of workers earn less than half the median hourly wage, highlighting the stark income disparity.
Decoupling of Productivity and Wages:
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- In high-income countries, productivity has risen by 29% from 1999 to 2024.
- However, real wages have only grown by 15% during the same period, illustrating a failure to equitably share productivity gains with workers.
Gender Wage Gap:
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- The gender wage gap remains a persistent issue, especially in lower-middle-income countries, where women are often overrepresented in informal, precarious, and low-paying jobs.
India's Wage Trends:
- India has made some progress in reducing the share of low-paid wage workers and low-paid non-wage workers between 2008 and 2018.
- The share of low-paid wage workers earning less than 50% of the median hourly wage in India stands at 9.5%.
- For comparison, neighboring countries like Pakistan (9.4%), Nepal (10.5%), Bangladesh (11.2%), Bhutan (13.7%), and Sri Lanka (25.9%) have higher proportions of low-paid workers.
- The average annual rate of decline in the shares of low-paid wage workers in India was 6.3%, while for low-paid non-wage workers, it was 12.7%.
Analysis of Global Wage Trends:
- The overall trend in the Global Wage Report shows a recovery in wage growth compared to the negative growth observed in 2022.
- However, the recovery is not uniform, with emerging economies showing stronger wage growth than more developed economies.
- Despite the positive wage growth trends, significant wage differentials still exist, and challenges such as inequality, gender wage gaps, and regional disparities remain pressing concerns.
Policy Recommendations and Way Forward:
Minimum Wage Adjustments:
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- There is a need for more responsive minimum wage adjustments that keep pace with inflation, especially to protect low-wage workers who are most vulnerable to economic fluctuations.
Stronger Worker Protections:
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- Policies that address precarious and insecure forms of work are crucial.
- Workers in informal or temporary employment often face unstable wages and lack access to basic protections.
Closing the Gender Wage Gap:
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- Efforts to close the gender wage gap should focus on ensuring equal pay for equal work and addressing the structural barriers that prevent women from accessing better-paid, stable employment.
About the International Labour Organization (ILO):
- The ILO is the only tripartite UN agency, bringing together representatives from governments, employers, and workers to set international labor standards and promote decent work worldwide.
- Key reports published by the ILO include the World Employment and Social Outlook (WESO), World Social Protection Report, and the World of Work Report, among others.
Conclusion:
- The Global Wage Report 2024-25 presents a mixed but encouraging picture of global wage trends.
- While there has been significant wage growth globally, disparities still exist, especially between high and low-income countries and between genders.
- Policymakers need to address the structural issues, such as wage inequality and the gender pay gap, to ensure that wage growth benefits all workers equitably.
