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Vaccine arrival may not stop pressure on wages: ILO

GENEVA, December 4, 2020

Global pressure on wages from Covid-19 will not stop with the arrival of a vaccine, the head of the International Labour Organisation (ILO) has warned, coinciding with a major report showing how the pandemic had slowed or reversed a trend of rising wages across the world, hitting women workers and the low-paid hardest.
 
"It's going to be a long road back and I think it's going to be turbulent and it's going to be hard," said ILO Director-General Guy Ryder, as he announced the findings of the ILO’s flagship Global Wage Report, which is published every two years, Wam news agency report said.
 
Except for China, which was bouncing back remarkably quickly, most of the world would take a considerable period of time to get back to where it was before the pandemic, which had dealt an "extraordinary blow" to the world of work almost overnight.
 
"The aftermath is going to be long-lasting and there is a great deal, I think, of turbulence and uncertainty," Ryder said. "We have to face up to the reality, at least a strong likelihood that as wage subsidies and government interventions are reduced, as they will be over time, that we are likely to face continued downward pressure on wages."
 
But he added that it was unlikely and in many ways undesirable that the world should simply try to return to how it was before the coronavirus struck.
 
"This pandemic has revealed in a very cruel way, I have to say, a lot of the structural vulnerabilities, precariousness, that is baked into the current world of work. And we need to take the opportunity - it's almost indecent isn't it, to speak of opportunity arising out of this mega global tragedy of the pandemic? - but we do have to extract from it, the types of opportunities that allow us to think about some of the fundamentals of the global economy and how we can, in the bounce back process, make it function better."
 
The report found that monthly wages fell or grew more slowly in the first six months of 2020, as a result of the Covid-19 pandemic, in two-thirds of countries for which official data was available, and that the crisis is likely to inflict massive downward pressure on wages in the near future.
 
The wages of women and low-paid workers have been disproportionately affected by the crisis.
 
Furthermore, while average wages in one-third of the countries that provided data appeared to increase, this was largely as a result of substantial numbers of lower-paid workers losing their jobs and therefore skewing the average, since they were no longer included in the data for wage-earners.
 
In countries where strong measures were taken to preserve employment, the effects of the crisis were felt primarily as falls in wages rather than massive job losses.
 
The Global Wage Report 2020/21  shows that not all workers have been equally affected by the crisis. The impact on women has been worse than on men. Estimates based on a sample of 28 European countries find that, without wage subsidies, women would have lost 8.1 per cent of their wages in the second quarter of 2020, compared to 5.4 per cent for men.
 
The crisis has also affected lower-paid workers severely. Those in lower-skilled occupations lost more working hours than higher-paying managerial and professional jobs. Using data from the group of 28 European countries the report shows that, without temporary subsidies, the lowest paid 50 per cent of workers would have lost an estimated 17.3 per cent of their wages.
 
Without subsidies, the average amount of wages lost across all groups would have been 6.5 per cent. However, wage subsidies compensated for 40 per cent of this amount.
 
“The growth in inequality created by the COVID-19 crisis threatens a legacy of poverty and social and economic instability that would be devastating,” said ILO Director-General Guy Ryder. “Our recovery strategy must be human-centred. We need adequate wage policies that take into account the sustainability of jobs and enterprises, and also address inequalities and the need to sustain demand. If we are going to build a better future we must also deal with some uncomfortable questions about why jobs with high social value, like carers and teachers, are very often linked to low pay.”
 
“Adequate minimum wages can protect workers against low pay and reduce inequality,” said Rosalia Vazquez-Alvarez, one of the authors of the report. “But ensuring that minimum wage policies are effective requires a comprehensive and inclusive package of measures. It means better compliance, extending coverage to more workers, and setting minimum wages at an adequate, up-to-date level that allows people to build a better life for themselves and their families. In developing and emerging countries, better compliance will require moving people away from informal work and into the formal sector”.
 



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