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CAW Conference Decent Wage, Decent Work: Working ourselves out of poverty

CAW Conference Decent Wage, Decent Work: Working ourselves out of poverty. Economic Crisis: Confronting wage deficits in the Asian Decent Work Decade Silvia Cormaci Associate Expert Gender Equality and Migration ILO Bangkok Bangkok, Thailand 28 April 2010. Issues for Discussion.

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CAW Conference Decent Wage, Decent Work: Working ourselves out of poverty

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  1. CAW ConferenceDecent Wage, Decent Work: Working ourselves out of poverty Economic Crisis: Confronting wage deficits in the Asian Decent WorkDecade Silvia Cormaci Associate Expert Gender Equality and Migration ILO Bangkok Bangkok, Thailand 28 April 2010

  2. Issues for Discussion • Global and regional wage trends • Impact of global economic crisis on wages • Gender dimension • Suggestions to promote decent wages and work

  3. Trends in Wages (1995-2007) Globally: • Low wage growth: average 1.9%/year. But regional variations: Asia 1.7% (China: 10%; Japan: 0%) • Wages lag behind GDP per capita: growth in real wages increased at slower rate than productivity • Growing Income inequality: top-bottom wages gap (e.g. China, Thailand); gender pay gap (GPG)- Asia

  4. Trends in wages 2008/09: global context Global economic crisis => wage growth in 2008 fell sharply & dropped even further in 2009 • 2008: more than a quarter of countries experienced flat or falling monthly wages in real terms (USA, Taiwan, China, Hong Kong, Japan) • 2009: despite beginning of economic recovery, in Q1 2009 real wages fell in more than half of the 35 countries for which recent data is available • However: considerable variation in the behaviour of wages across countries (positive wage growth /deep wage cuts) • The wage share of GDP typically increased between 0 -5 % in 2008/09, irrespective of the size of GDP growth or decline (temporary phenomenon?) Source: ILO Global Wage Report 2008/09

  5. Trends in wages 2008/09: Asia ASIA : The case of Japan Sharp fall in wages in Q1 2009 and flat wages in Q2. This occurs in the context of a long period of deflation and flat wages Similarly in the Republic of Korea, sharp fall in wages in Q1 & Q2 2009 mostly due to cuts in overtime work & in quarterly bonuses

  6. Trends in wages 2008/09: concerns • downward trend in wages raises questions about the ability of workers and their families to sustain consumption, especially if government rescue packages are phased out too early • impact of the crisis: wage-arrears have increased

  7. Gender Impact of the crisis Data on average wages by sex collected for 22 countries, 2008 => Crisis has impacted women at least as much as men: (GPG has frozen with women earning about 80 % of men’s wage) BUT In the majority of countries worldwide, women’s wages represent on average between 70 -90% of men’s wages (much lower ratios in Asia)

  8. GPG in East Asia The overall gender pay gap (GPG) in East Asia is pronounced: Women’s income amounts to: • less than or just 1/2 of men’s income in Japan, Malaysia, Korea and Singapore • around 60% of men’s income in Hong Kong SAR, the Philippines and Thailand • around two-thirds of men’s income in China and Vietnam. Ratio of estimated overall female to male earned income* Source: UNDP. Human Development Report 2005

  9. GPG: Manufacturing wages in East Asia • The GPG is pronounced across the region: Women’s wages as % of men’s: • Over 70%: Philippines, Thailand • Below 65%: Hong Kong, Malaysia, Singapore • Below 60%: Japan, Korea F/M Ratio of Wages in Manufacturing, 1993/2003 *As in source (specification of year not given) Note: Data on China and Vietnam are not available Source: United Nations (2005). The World’s Women 2005.

  10. ILO response to the crisis In June 2009, ILO Member States adopted the Global Jobs Pact in which they agreed to strengthen: • social dialogue • collective bargaining • minimum wages (MW) …..to avoid wage deflation & enhance social protection

  11. Minimum wages: trends Globally: • 2001/07: MW back on the agenda of many countries (+ 5.7%/year) • 2008: trend to increased minimum wages in real terms (by more than inflation figures) Asia: • NO MW in some countries (e.g. Malaysia, Myanmar, Pacific Islands) • Crisis: MW decreased in Thailand & Cambodia • Philippines & Vietnam improving MW system with ILO assistance

  12. Minimum wages: Important policy tool for social protection, can reduce wage inequality & GPG, but requires: • Involvement of social partners in setting the level • Avoid using MW as substitute for collective bargaining • Income support measures or tax reduction, especially for most vulnerable workers • Extend coverage to vulnerable groups (e.g. Domestic workers) • Credible enforcement mechanisms (labour inspectors, social partners)

  13. Decent wages & decent work …. Possible measures: • Introduce fair MW mechanism (increase MW to protect purchasing power of vulnerable workers) • Reduce the GPG • Promote wage negotiation, collective bargaining & social dialogue • Closing the gap between productivity and wages (+ productivity= + wages)

  14. THANK YOU! cormaci@ilo.org www.ilo.org www.ilo.org/public/english/protection/condtrav/wages/index.htm

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