Wages impacted by inflation

 

As expected, the severe inflationary crisis combined with the slowdown in economic growth around the world is leading to a significant drop in real monthly wages in many countries, the International Labor Organization (ILO) said on Wednesday, 30 November in its “Global Wage Report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power”.

According to all the studies, monthly wages worldwide fell in real terms by 0.9% in the first half of 2022. This is the first time in over 20 years that negative real wage growth has been recorded.

In the G20 countries, real wages in the first half of 2022 are estimated to have fallen by 2.2%, while real wages in the emerging G20 countries have grown by 0.8%.

Rising inflation has a more significant impact on the cost of living for low-income people. This is because they spend a large proportion of their disposable income on essential goods and services, the prices of which tend to rise more than those of non-essentials, the report says. In North America (Canada and the US), average real wage growth fell to zero in 2021 before falling to -3.2% in the first half of 2022.

In Europe, where job-saving programs and wage subsidies have significantly protected employment and wage levels during the pandemic, real wage growth was 1.3% in 2021 before falling to -2.4% in the first half of 2022.

In the Asia-Pacific region, real wage growth slowed from 3.5% in 2021 to 1.3% in the first half of 2022. If China is excluded from these calculations, real wage growth has grown much less, to 0.3% in 2021 and 0.7% in the first half of 2022.

“We need to pay particular attention to those in employment in the middle and lower end of the wage scale. Tackling the deterioration in real wages can help maintain economic growth, which can help return to pre-pandemic employment levels. This is an effective way to reduce the likelihood or depth of recessions in all countries and regions of the world,” said one of the report’s authors Rosalia Vazquez-Alvarez, quoted in an ILO statement.

Share on
Facebook
Twitter
LinkedIn
Pinterest

Leave a Reply

Your email address will not be published. Required fields are marked *

image - 2022-12-02T120734.855

Wages impacted by inflation

  As expected, the severe inflationary crisis combined with the slowdown in economic growth around the world is leading to a significant drop in real monthly wages in many countries, the International Labor Organization (ILO) said on Wednesday, 30 November in its "Global Wage Report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power". According to all the studies, monthly wages worldwide fell in real terms by 0.9% in the first half of 2022. This is the first time in over 20 years that negative real wage growth has been recorded. In the G20 countries, real wages in the first half of 2022 are estimated to have fallen by 2.2%, while real wages in the emerging G20 countries have grown by 0.8%. Rising inflation has a more significant impact on the cost of living for low-income people. This is because they spend a large proportion of their disposable income on essential goods and services, the prices of which tend to rise more than those of non-essentials, the report says. In North America (Canada and the US), average real wage growth fell to zero in 2021 before falling to -3.2% in the first half of 2022. In Europe, where job-saving programs and wage subsidies have significantly protected employment and wage levels during the pandemic, real wage growth was 1.3% in 2021 before falling to -2.4% in the first half of 2022. In the Asia-Pacific region, real wage growth slowed from 3.5% in 2021 to 1.3% in the first half of 2022. If China is excluded from these calculations, real wage growth has grown much less, to 0.3% in 2021 and 0.7% in the first half of 2022. "We need to pay particular attention to those in employment in the middle and lower end of the wage scale. Tackling the deterioration in real wages can help maintain economic growth, which can help return to pre-pandemic employment levels. This is an effective way to reduce the likelihood or depth of recessions in all countries and regions of the world," said one of the report's authors Rosalia Vazquez-Alvarez, quoted in an ILO statement.
Facebook
Twitter
LinkedIn
Pinterest

Leave a Reply

Your email address will not be published. Required fields are marked *