Wages are still below pre-crisis levels and deflation is a real risk, UN labour experts warn

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They pay us miserable salary and want us to keep silent… This photo was awarded the ‘Youth’ prize of the ILO ‘Work4Youth’ photo contest.
© Lidiia Kozhenikova, Ukraine

Wages are still below pre-crisis levels in developed countries which are now on the cusp of damaging deflation, according to the International Labour Organization  (ILO).

At the launch of its global salary review, ILO economists warned that the little progress there had been in the last two years was driven by emerging economies.

China’s been responsible for more than half this salary growth, along with other Asian economies including Viet Nam and Cambodia, ILO said.

This meant that in reality countries in the Eurozone had seen zero growth.

Just as worrying is the growing gap between workers’ rising productivity and their wages, the UN agency added.

That’s because it shows that households are getting a smaller share of economic growth and have less to spend at the end of the month.

ILO economist Sandra Polaski offered a solution.

“What can you do about the increasing inequality that arises from wages, there are a number of policy tools there, minimum wages being one…Minimum wages began to be used very aggressively in a number of Latin American countries over the last 10,15, 20 years and beginning about 15 years ago China also decided to use minimum wage policies as a major tool to increase incomes.”  (23″)

The UN agency also called for anti-discrimination laws and policies to combat inequality after noting significant pay gaps between men and women and migrants.

In the United States, women’s wages are up to 36 per cent less than men’s and this trend gets stronger “the higher you go up the pay scale”, ILO ‘s Ms Polaski told reporters in Geneva.

On a more positive note, the ILO said that countries such as Brazil and Russia had made significant pay gap reductions since the last report two years ago.

Daniel Johnson, United Nations

Duration:  1’42″