Coronavirus drags down wages – ILO

As well as hitting global economic activity, the coronavirus has also dragged down wages, an International Labour Organization (ILO) report found on Wednesday, December 2.

The ILO found "the crisis is likely to inflict massive downward pressure on wages in the near future" in a report issued weeks after it estimated the pandemic had slashed trillions off global earnings.

"The wages of women and low-paid workers have been disproportionately affected by the crisis," indicated the report on global wage trends unveiled by ILO Director-General Guy Ryder and economist Rosalia Vazquez-Alvarez.

The ILO found January-June monthly wages fell or grew more slowly owing to the pandemic in two-thirds of countries for which official data was available, with women disproportionately hit.

Although average wages in one-third of countries studied "appeared to increase, this was largely as a result of substantial numbers of lower-paid workers losing their jobs and therefore skewing the average," said the ILO, amid a greater trend towards a decline in wages than job losses.

Taking an average of 28 European countries, the report found that, without taking state wage subsidies into account, salaries had slipped 6.5% – with the average impact 8.1% for women and 5.4% 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," said the ILO, calculating the lowest paid 50% of workers suffered a 17.3% wage drop.

"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 Ryder, urging a "human-centered" recovery strategy around "adequate" wage policies.

"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."

The ILO also noted that while some 90% of ILO member states had implemented forms of minimum wage, some 266 million people were earning less than the hourly minimum wage through firms' non-compliance or employee exclusion even prior to the pandemic.

"In developing and emerging countries, better compliance will require moving people away from informal work and into the formal sector," reducing inequality, said Vazquez-Alvarez, one of the report's authors.

Ryder urged "adequate wage policies that take into account the sustainability of jobs and enterprises, and also address inequalities and the need to sustain demand."

In September, Ryder estimated that by June, global working hours had declined by 17.3% compared to last December – equivalent to nearly 500 million full-time jobs, as the virus had a "catastrophic" impact valued at around $3.5 trillion or 5.5% of global gross domestic product. – Rappler.com