ILO: Wage Growth Remains Below Pre-Crisis Level

    18 December, 2014

    From VOA Learning English, this is the Economics Report.

    The International Labor Organization recently released a report suggesting that real wage growth in developed economies is close to unchanged. Real wage measure includes the effects of inflation. Developing economies are mainly responsible for world wage growth.

    The ILO report says world wage growth is below the 3 percent rate that existed before the economic crisis of 2008. It says wage growth has slowed to nearly zero percent in developed economies over the last two years.

    Wages are growing by 6 percent in developing economies, like China and other Asian nations. Wage growth in Eastern Europe and central Asia is almost as high.

    The ILO report says wages in rich nations are still about three times higher than in poor countries. It says workers in developed countries earn $3,000 a month on average compared to $1,000 a month for workers in developing nations.

    Sandra Polaski is the Deputy Director-General for Policy at the ILO. She says wages affect inequality differently in different economies.

    "The report shows that in many countries, wages represent the largest source of income for households with at least one member of working age. In developed economies, wages account for about 60 to 80 percent of total income before households pay taxes. In emerging and developing economies, wages are about 30 to 60 percent of total household income," said Polaski.

    The report says developed nations had increased inequality because of job losses and big differences between the highest and lowest wage earners. But differences between highest and lowest wage earners decreased in some developing countries.

    The ILO says minimum wage policies -- rules for the lowest permitted wages, can play a strong part in dealing with poverty and inequality. Ms. Polaski disagrees with conservative critics of minimum wage policies. They say higher minimum wages mean fewer jobs.

    "What the evidence shows is that increases in minimum wages in the order of magnitude that we actually see, whether in the U.S. or in other economies, in fact do not have that negative effect on employment. Instead, employers find ways of making up through increases in productivity, better work organization, etc.," said Polaski.

    The ILO says the weakening of collective bargaining in many countries has hurt wages. The report says labor productivity -- a measure of economic productivity, continues to rise faster than wages in developed economies. The result, says the ILO, is that workers and their families are seeing fewer gains than the owners of capital.

    And that's the VOA Learning English Economics Report. I'm Christopher Cruise.