The Citizen (Dar es Salaam)
Damas Kanyabwoya
5 November 2009
The growth in real wages slowed down in 2008 as a result of the global economic downturn, and is expected to decline even further this year despite signs of economic recovery, a study by the International Labour Organisation (ILO) indicates.
According to the summary of the findings of the Global Wage Report: 2009 Update, released by the Dar es Salaam ILO office yesterday, real monthly wages fell in the first quarter of 2009 in half of the 35 countries for which figures are available compared to their average in 2008. This was attributed to cuts in working hours.
"Continued deterioration of real wages worldwide, raises serious questions about the true extent of economic recovery, especially if government rescue packages are phased out too early," Ms Manuela Tomei, a director of ILO and lead author of the study, was quoted as saying in a statement released yesterday in Dar es Salaam.
In a sample of 53 countries, growth in real average wages in the median country had declined from 4.3 per cent in 2007 to 1.4 per cent in 2008. Among the ten G-20 countries for which data is available, growth in real average wages in the median country had declined from 1.0 per cent in 2007 to -0.2 per cent in 2008.
The study also indicates that both developed and developing countries have strengthened their minimum wages in recent years, reflecting the growing concerns about increasing inequality and low pay.
While during past downturns concerns about the impact on labour costs were widespread, in the current crisis a number of countries have adjusted their minimum wages upwards.
In 2008, 43 countries increased minimum wages by more than inflation figures.
The current deterioration in wages follows a decade of wage moderation before the global economic crisis.
The report considers that years of stagnating wages relative to productivity gains - together with growing inequalities - have contributed to the crisis by limiting the ability of many households to increase consumption other than through debt.
"In the future, restoring the link between productivity growth and wage increases is essential for economic and social sustainability."
Companies should be able to achieve competitiveness through rising productivity rather than by cutting labour costs, and workers should have sufficient bargaining position to defend their wages.
"This will go a long way towards addressing income inequalities", Ms Tomei said.
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