Crisis-hit developed countries see wages fall: ILO
Crisis-hit developed countries see wages fall: ILO
"The global crisis has had significant negative repercussions for labor markets in many parts of the world," said ILO director general Guy Ryder.
In its Global Wage Report, the UN's labor agency said that monthly average wages adjusted for inflation grew globally by just 1.2 percent last year, down from 2.1 percent in 2010 and 3.0 percent in 2007.
It added that if China — a country where wages roughly tripled over the past decade — was omitted from the equation, global wages grew by just 0.2 percent last year from 1.3 percent in 2010 and 2.3 percent in 2007.
Developed countries, many of them suffering from the euro zone debt crisis, had been especially hard-hit with average salaries slipping by 0.5 percent in 2011 compared with the year before, the report said.
Ryder pointed out to reporters in Geneva that in developed economies, the crisis led to a "double dip" in wages, with average salaries falling into the red first in 2008 and again last year.
"And the trend seems to be for zero growth in 2012," he said.
Other regions of the world fared far better, with Asia seeing wages jump 5.0 percent, as salaries grew 5.2 percent in Eastern Europe and Central Asia and 2.2 percent in Latin America and the Caribbean, the report showed.
In a longer perspective, the ILO report pointed out that since 2000, average global wages had grown by nearly a quarter, although the regional differences again were striking.
Salaries in Asia had for instance almost doubled over the 11-year-period, while developed countries saw a mere 5.0 percent increase in wages.
But although wages were falling in developed countries as they grew in developing nations the wage gap between them remained overwhelming, Ryder said.
While a worker in the manufacturing sector in the Philippines on average took home $ 1.40 an hour last year, a US worker earned $ 23.30 and in Denmark the hourly pay was $ 34.80, he said.
In its analysis of wage developments, the ILO underscored that salary increases in recent years have not kept pace with labor productivity and that workers have seen their share of national incomes shrink as a result.
"There is a break in the linkage between wages and labor productivity," Ryder lamented, pointing out that this basically means that "workers and their families are not receiving the fair share they deserve."
This is true both in countries where wages have long been stagnant, and perhaps more surprisingly in countries where wages have grown significantly, like China, he said.
In developed countries, labor productivity — or the amount of goods and services produced compared to the number of hours worked — has increased roughly twice as fast as wages since 1999, the report showed.
And since the 1970s, workers in these countries have seen their share of the countries' national income slip from 75 percent to around 65 percent.
In Germany, for instance, labor productivity surged by nearly 25 percent in the past two decades, while salaries remained flat, the report showed.
This trend is not only bad for employees, it is also bad for national economies, it cautioned.
"A decrease in the labor share not only affects perceptions of what is fair... It also hurts household consumption," the report pointed out.
In this time of crisis, it also cautioned against over-zealous austerity and the "simplistic view that countries can cut their way out of the recession" in terms of wages.
Instead, Ryder insisted, countries should invest in setting minimum wages at a level that allows workers to "live in reasonable dignity."
Asian stocks hit as Trump drops Kim summit but losses tempered
- Traders had already been nervous in recent days after the US president warned he could pull out of the June 12 meeting with the North Korean leader, while also voicing his displeasure at a deal to avert a trade war with China.
- In a letter released by the White House, Trump told Kim he was canceling the summit because of North Korea’s “anger” and “hostility.”
HONG KONG: Asian markets mostly fell on Friday as Donald Trump shocked the world by pulling out of next month’s historic summit with Kim Jong Un, though analysts said the losses were tempered by hopes the talks can be rekindled.
Traders had already been nervous in recent days after the US president warned he could pull out of the June 12 meeting with the North Korean leader, while also voicing his displeasure at a deal to avert a trade war with China and threaten tariffs on car imports.
The news Thursday took many by surprise — including North and South Korean officials — and fueled concerns about the future of a rapprochement that has had many hoping for peace on the divided peninsula.
In a letter released by the White House, Trump told Kim he was canceling the summit because of North Korea’s “anger” and “hostility.” The message came after a key aide to Kim hit out at comments from Vice President Mike Pence, saying they were “ignorant and stupid” and warning the talks could be canceled.
However, Trump’s letter added that the talks could still go ahead “at a later date.”
For its part, Pyongyang said the decision “unexpected” and “regrettable” but added: “We again state to the US our willingness to sit face-to-face at any time in any form to resolve the problem.”
“It looks like we are back to fire and fury as the modus operandi for the White House again after President Trump (threatened) a new 25 percent car import tariff and canceled the summit with North Korea,” said Greg McKenna, chief market strategist at AxiTrader.
“Not only was the summit canceled but it was back to threatening the DPRK with a military response.”Wall Street ended lower, while Asian trading was muted. Tokyo ended the morning slightly higher, while Hong Kong slipped 0.3 percent and Shanghai was barely moved. Sydney and Singapore each fell 0.1 percent while Seoul was 0.2 percent lower.
Manila and Kuala Lumpur also fell but Wellington, Taipei and Jakarta were in positive territory.
While warning the issue remained fragile, analysts said there was still hope the meeting will go ahead.
“As we’ve seen countless times before, the president tends to walk back some of his more boisterous rhetoric time and time again,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
“While the US and their allies have offered a way to prosperity for North Korea, it was never going to come without some significant concession on the nuclear non-proliferation front.”
And Eli Lee, Bank of Singapore’s head of investment strategy, added: “Given the US’ surprising acceptance of the meeting only in March, the cancelation... may simply be due to the fact that both sides need simply more time for preparation and to find a middle ground in terms of their demands.”
On oil markets, both main contracts extended Thursday’s more than one percent losses after Russia said an agreement with OPEC to cap production — which has provided support to prices in recent years — could be up for revision at a meeting next month .
The comments from Energy Minister Alexander Novak dented a rally in the commodity, which has hit three-and-a-half-year highs on the back of improving demand and supply worries from Venezuela and Iran.
Tokyo — Nikkei 225: UP 0.1 percent at 22,457.20 (break)
Hong Kong — Hang Seng: DOWN 0.3 percent at 30,666.38
Shanghai — Composite: FLAT at 3,154.04
Euro/dollar: DOWN at $1.1705 from $1.1725 at 2100 GMT
Pound/dollar: DOWN at $1.3364 from $1.3385
Dollar/yen: UP at 109.53 from 109.30 yen
Oil — West Texas Intermediate: DOWN nine cents at $70.62
Oil — Brent North Sea: DOWN 12 cents at $78.67
New York — Dow: DOWN 0.3 percent at 24,811.76 (close)
London — FTSE 100: DOWN 0.9 percent at 7,716.74 (close)