Wages set to fall next year says ILO
GENEVA (AP) — Workers in rich countries can expect to see their net income drop next year as the impact of the global economic crisis means the rising cost of living will outstrip wages, stated a UN report to be released this morning.
Poorer workers will be worst hit, but the middle classes will also be seriously affected, the head of the International Labor Organisation said.
"For the world's 1.5 billion wage earners, difficult times lie ahead," ILO Director-General Juan Somavia said.
Real wages in the industrialised world will fall 0.5 percent in 2009, compared to an increase of 0.8 percent this year, the 106-page report said.
With China, Russia and other rapidly developing nations added to the equation wages worldwide are going to rise by 1.1 percent next year, down from 1.7 percent in 2008.
"Emerging economies will continue to grow next year, even though of course it will be at a slower rate than they have done so far," said Manuela Tomei, one of the authors of the report.
The ILO said governments should consider workers' wages when putting together stimulus packages aimed at steering their economies away from recession.
Britain announced this week that it will lower sales tax by 2.5 percentage points to encourage consumer spending.
"We tend to forget the fact that most consumers are wage earners," Tomei told reporters in Geneva.
Unless workers' disposable income increases, she said, "overall consumption will decline and therefore this will deepen the recession further and delay the process of economic recovery".
The ILO also encouraged more union-brokered wage deals, and a general increase in the minimum wage.
The report says minimum wages in most industrialised countries increased in real terms from 2001-2007. The US was one of the few exceptions, with minimum wages declining by about 0.7 percent annually in real terms during the period.