The world is witnessing its most significant wage growth in over 15 years, according to the International Labour Organization (ILO). In its latest Global Wage Report, the UN agency reported an average global wage increase of 1.8% in 2023, followed by a 2.7% rise in the first half of 2024, marking a strong recovery from the 0.9% decline in 2022 caused by high inflation.
"If this trend is confirmed, it will be the largest gain in more than 15 years... however, this positive trend is not shared equally across regions," said ILO Director-General Gilbert Houngbo during the report's launch in Geneva.
Uneven Growth Across Regions
The ILO report highlights significant regional disparities in wage growth. While regions like Asia-Pacific, Central and Western Asia, and Eastern Europe experienced robust increases, other areas such as Africa, North America, and Western Europe lagged behind, with wage growth remaining modest or stagnant.
In 2024, for instance, Central and Western Asia led the global wage growth with a staggering 17.9% increase, while Northern America recorded only 0.3% growth. Meanwhile, wages in Africa and Arab States remained largely unchanged.
Despite these gains, inflation continues to erode the purchasing power of low-income households. "Inflation -- albeit reduced -- remains a harsh reality in many emerging and developing countries," Mr. Houngbo noted.
The Productivity-Wage Gap
The report also pointed out a growing gap between productivity and wages in high-income countries. Since 1999, productivity has increased by 29%, while wages have only risen by 15%. This disparity has been attributed to key global crises, including the 2008 financial crisis and the COVID-19 pandemic.
Moreover, wage inequality has seen mixed results. In two-thirds of countries, inequality has decreased since the early 2000s, with the sharpest declines in low-income nations, where reductions ranged from 3.2% to 9.6% annually. However, in wealthier countries, wage inequality remains persistent, with only slight annual decreases of 0.3% to 1.3%.
Challenges Ahead