Wage Gap Widens as Wages Fail to Keep Pace with Productivity

Michael Renner | Jan 30, 2013

The economic crisis in 2008 was one of the harsher signs that economic globalization has gone hand in hand with increased volatility and turbulence. It caused the ranks of the unemployed to swell from 169 million in 2007 to 198.4 million in 2009, according to the International Labour Organization (ILO).1Although the number temporarily dipped to 193.1 million in 2011, a preliminary estimate for 2012 indicates it was back up to 197.3 million.2 And the number of workers in vulnerable employment globally is estimated at close to 1.54 billion in 2012—about 55 percent of total employment worldwide—up from 1.39 billion in 2000.3

For the global workforce as a whole, the crisis has translated into a slowdown of wage growth, from an average of 3 percent in 2007 to 2.1 percent in 2010 and then to 1.2 per cent in 2011.4

Cumulatively, from 2000 to 2011 global real monthly average wages grew by just under a quarter.5 (See Figure 1.) But global figures hide considerable regional differences. Wages almost doubled in Asia, whereas they increased by 18 percent in Africa and 15 percent in Latin America and the Caribbean.6Wages in the Eastern Europe and Central Asia region (which includes Russia) nearly tripled.7 But this surge came on the heels of economic collapse after the fall of communism, which led wages to contract severely. In Russia, the subsequent growth only returned wages to what they had been at the beginning of the 1990s.8 In the Middle East, the limited wage data available suggest stagnation during the last decade.9 In industrial economies, wages increased by a comparatively tiny 5 percent, albeit from a much higher base than in other parts of the world.10

Global Wages Figure 1

 

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