June 18, 2024

Global wages have gone down

Global wages have gone down

Adjusted for inflation, it fell for the first time in twenty years

According to the results of the first half of 2022, real monthly wages on average around the world did not increase for the first time in the last 20 years, but decreased by 0.9%, according to a report by the International Labor Organization (ILO). The reasons for the change in the trend in the dynamics of real wages, ILO experts called the superimposition of a “serious inflationary crisis” on the slowdown in global economic growth, which was partly caused by the conflict in Ukraine and the rise in world energy prices.

For the first half of 2022, the global wage growth rate, on average, failed to outpace accelerated inflation for the first time in the last 20 years and fell by 0.9% year-on-year. Such calculations in the Global Wage Survey are given by the International Labor Organization.

It follows that, in general, employment indicators in the global labor market have partially recovered by the beginning of this year after rising unemployment due to the pandemic.

However, while high-income countries have returned to the levels of the fourth quarter of 2019 in terms of this indicator, in low- and middle-income countries it is still 2% lower than “pre-pandemic” figures. The intensity of the recovery was also different for groups of workers – the number of unemployed among young people in 2021 in the world was higher than the “pre-pandemic” level by 6 million people.

Further reduction in global unemployment, ILO analysts predict, will slow down due to hostilities in Ukraine. As you know, they have already led to a reduction in forecasts for world GDP growth. According to the latest expectations of the International Monetary Fund, the global economy will grow only by 3.2% this year, while global inflation will reach 8.8% by the end of the year.

ILO analysts note that if we exclude China (where wage growth is usually higher than the world average) from the global indicator of the decline in real wages, the fall in monthly wages will already be 1.4%. The maximum decline among the regions of the world is in Eastern Europe (3.3%), where, obviously, Ukraine made the largest contribution to the reduction of the indicator. By the end of 2022, the labor market of this country may lose about 15.5% of jobs (for more details, see Kommersant of November 3). In second place in terms of wage cuts are the countries of North America (3.2%), the third is South America (1.7%). The maximum positive dynamics was recorded in the countries of Central Asia (plus 2.5%), in the Asia-Pacific region (plus 1.3%).

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