The International Labor Organization warns of wages in developed economies

The International Labor Organization (ILO) warns in a report published today on the stagnation of wages in developed economies, which in 2013 remained at the same level or even declined over previous years.

Average real wages which take into account inflation in developed economies grew by 0.2% in 2013 compared with 0.1% of 2012 and have not reached the level they were before 2007, said the organization of Nations United in its biennial report.

In countries like Spain, Greece, Ireland, Italy, Japan and the UK average wages are even lower than in 2007.

According to the ILO, the overall stagnation of wages is one of the causes of brake global economy.

“All this affects the overall economic performance and leads to a weak economic recovery in most of these economies and an increased risk of deflation in the euro zone,” said Sandra Polaski, deputy director general of the organization.

Given all regions of the world, wage growth worldwide was 2% in 2013, less than 3% of the previous six years.
However there are large disparities between countries.

In Asia wages increased by 6% in 2013 and 5.8% in Eastern Europe and Central Asia. But in other regions the increase was limited, as in the case of Latin America and the Caribbean (0.8%) and Africa (0.9%). In the Middle East the increase was 3.9%.

The United Nations organization is also concerned about the growing gap between labor productivity, which is growing, and its redistribution in the form of wages.

“The widening gap between wages and productivity translates into a fall in the share of labor compensation in GDP, while an increasing share going to capital, especially in developed economies,” says the report.

This trend means that workers and their families benefit only a small part of economic growth while capital owners benefit more from it.

The ILO also recalls that wage inequalities between men and women still exist and we must fight “against discriminatory practices and prejudices based on sex” with effective policies that enable parenthood “better sharing of family responsibilities.”

The organization further recalls that “there is a negative correlation between increased minimum wages and employment levels”.