1. Global Wage Trends Economic crisis, wages and some policy issues
ACTRAV Symposium on the Right to Organize and Collective Bargaining, Geneva
Manuela Tomei, TRAVAIL

2. The Context
: The global economy, highlighting two wage-related issues:
The imbalance in the pre-crisis distribution of profits and wages
Malfunctioning executive pay systems and excessive bonuses.

3. What Impact on Wages?
Annual Wage Growth 2008 in Selected G-20 Countries
Global growth in average wages declined from 4.7% in 2007 to 1.5% in 2008, but variations across countries

4. What Impact on Wages? The picture is likely to worsen in 2009
Wages in Q1, 2009

5. Wages and employment
Changes in monthly wages reflect changes in hourly wages and in the number of hours worked
among 14 countries, hours worked fell from 38.9 to 38.2 hours/week, and from 36.6 hours to 36.1 for women
“composition effect”: when low-paid workers lose their jobs, the average hourly wage goes up !

6. How has the crisis affected GDP and wages
How has the crisis affected GDP and wages? Decades of wage moderation  Short episodes of catching up (2005-7)  Collapse

7. What about the distribution of wages?

8. Policy responses ILO’s Global Jobs Pact (June, 2009)
Principle
“Avoiding protectionism, deflationary wage spirals and worsening working conditions”
Policy options
social dialogue
collective bargaining
statutory or negotiated minimum wages
Governments as employers and procurers should respect and promote negotiated wage rates
Narrowing the gender pay gap
ILO work
Improved expertise on minimum wages-fixing
improving production and use of labour market information at country level

9. Minimum wages – mixed responses
Pre-crisis period: reactivation of statutory minimum wages ( )
During past downturns, concerns about minimum wage’s impact on labour costs and job displacements prevailed
In the current crisis, greater reliance on minimum wages upward adjustments (see next slide)

11. Minimum wages matter, even during recession Japanese experience: MW’s positive impacts on low-pay without negative employment effects (Kambayashi et al. 2008)

12. What impact on Collective Bargaining and Wages?
Wage responsiveness to GDP per capita growth (wage elasticity)
In pre-crisis period, higher wage elasticity where CB coverage is higher, but
Overall, limited and declining extent of CB and collective agreements
And during this crisis?

13. Means to stop wages from falling
“Active” government policies, combined with social dialogue (e.g., work-sharing, wage subsidies)
Upkeep or increase minimum wages
Procurement policies and employment guaranteed schemes as vehicles for expanding MW outreach
Collective bargaining?

14. What’s next?
The full-scale impacts on wages are yet to come – the worst is yet to come
Lagged adjustments in wages
Policies, especially government measures
Moving beyond wages as “labour costs”?
tensions between individual rationalities (enterprises) vs collective rationalities