Friday, 23 June 2017

Wage decrease: Bad news for workers

The International Labour Organisation’s (ILO) Global Wage Report 2014/2015 has warned of stalled wages in many countries, and points to the labour market as a driver of inequality.

According to the report, wage growth around the world slowed in 2013 to 2.0%, compared to 2.2% in 2012, and has yet to catch up to the pre-crisis rates of about 3.0%.

It indicated that the modest growth in global wages was driven almost entirely by emerging G20 economies, where wages increased by 6.7% in 2012 and 5.9% in 2013.

The report said, by contrast, average wage growth in developed economies had fluctuated around 1% per year since 2006 and then slowed further in 2012 to 0.1% and to 0.2% in 2013.

It said for labour productivity, the value of goods and services produced per person employed continues to outstrip wage growth in developed economies, including in the most recent years, adding that this continues a longer trend, which briefly paused during the financial crisis years of 2008 and 2009.

According to the report, the growing gap between wages and productivity had translated into a declining share of gross domestic product going to labour while an increasing share goes to capital, especially in developed economies.

It explains that this trend means that workers and their households are getting a smaller share of economic growth while the owners of capital are benefitting more.

The report includes a detailed analysis of recent trends in household income inequality and the role played by wages in these trends.

It noted that wages are a major source of household income in developed, emerging and developing countries alike, particularly for middle-income households, while the top 10% and bottom 10% depend somewhat more on other sources of income.

It said in developed economies, wages frequently represent 70 to 80% of household income in households with at least one member of working age.

This report mirrored the situation in Ghana.

Workers, especially public sector employees, have not seen any significant increase in wages and salaries.

Employers have cited the decline in economic growth as a reason for not increasing salaries and wages of workers.

Public sector workers embarked on massive demonstrations to demand wage increases.

Many employees have been impoverished in the past decade because of lack of, or insignificant, salary increase.

Currently, some workers have been forced to accept wage cuts to remain in employment or be retrenched.

For the Ghanaian worker, there is no light at the end of the tunnel because the private sector, which under normal circumstances should create jobs, cannot do so due to the high cost of doing business in Ghana.

The opportunity exists for the creation of sustainable jobs in Ghana. However, this can only materialise if policymakers put on their thinking cap.

The economy cannot grow if workers’ wages continue to decline, eroding the purchasing power of Ghanaians.

 

 

 

 

Read 56 times Last modified on Friday, 27 November 2015 14:09