Global pay increased by 2.7% in 2023, following a 1.8% rise in 2022. This marks the largest wage gain in over 15 years. Emerging economies drove wage growth, with a near-6% increase in 2023. Developed nations saw modest growth of just 0.9% last year, said the UN International Labour Organization (ILO).
WAGE GROWTH ACROSS ECONOMIES: DIVERGING TRENDS
While global wages surged, the rise was notably absent in highly-industrialized economies, where wage growth barely touched 0.9% last year. In contrast, emerging economies enjoyed a near-6% increase in wages in 2023, after a more modest 1.8% rise in 2022. This strong trend continues into 2024, underscoring the resilience of these markets.
INFLATION STILL HURTS LOW-INCOME HOUSEHOLDS
Despite the rise in wages, inflation remains a significant challenge for low-income households, particularly in emerging and developing economies. Inflation has cooled compared to earlier years. Nevertheless, it still outpaces wage growth. This impacts the purchasing power of the most vulnerable.
REGIONAL WAGE TRENDS: A MIXED PICTURE
Regional wage trends paint a diverse picture. Wages grew fastest in Asia and the Pacific, Central and Western Asia, and Eastern Europe. Yet, regions like Africa, Northern America, and parts of Europe saw stagnation or negative wage growth. In fact, 2023 witnessed wage increases in most areas, with notable exceptions being Africa and certain parts of Europe.
2024 FORECAST: CONTINUED REGIONAL DISPARITIES
In 2024, wages are expected to rise across most regions. Yet, wages remained flat in Africa and Arab States. Central and Western Asia is set to see the largest growth at 17.9%, while Northern America lags behind with just 0.3%.
PRODUCTIVITY VS. PAY: THE PERSISTENT DISCONNECT
The ILO also highlights the growing disconnect between productivity and wages, particularly in high-income countries. From 1999 to 2024, productivity increased by 29%, while pay grew only 15%. This gap widened during the pre-2008 period, the financial crisis, and the COVID-19 pandemic, raising questions about fair compensation in prosperous economies.
WAGE INEQUALITY: A COMPLEX GLOBAL ISSUE
While wage inequality has narrowed in two-thirds of countries since the early 2000s, disparities persist. Low-income countries saw the most significant decreases in wage inequality, with an average annual decrease of 3.2% to 9.6% over the past two decades. Meanwhile, wealthier countries have seen slower progress, with annual reductions in wage inequality ranging from 0.3% to 1.3%.