Global Wage Report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power

ILOFlagshipReport ▶GlobalWageReport 2022–23 TheimpactofinflationandCOVID-19on wagesand purchasingpower ▶GlobalWageReport2022–23 TheimpactofinflationandCOVID-19onwagesandpurchasingpower InternationalLabourOrganization•Geneva Copyright©InternationalLabourOrganization2022 Firstpublished2022 ThisisanopenaccessworkdistributedundertheCreativeCommonsAttribution4.0InternationalLicense(https://creativecommons.org/licenses/by/4.0/).Userscanreuse,share,adaptandbuildupontheoriginalwork,asdetailedintheLicense.TheILOmustbeclearlycreditedastheowneroftheoriginalwork.TheuseoftheemblemoftheILOisnotpermittedinconnectionwithusers’work. Attribution–Theworkmustbecitedasfollows:GlobalWageReport2022–23:TheimpactofinflationandCOVID-19onwagesandpurchasingpower.Geneva:InternationalLabourOffice,2022. Translations–Incaseofatranslationofthiswork,thefollowingdisclaimermustbeaddedalongwiththeattribution:ThistranslationwasnotcreatedbytheInternationalLabourOffice(ILO)andshouldnotbeconsideredanofficialILOtransla-tion.TheILOisnotresponsibleforthecontentoraccuracyofthistranslation. Adaptations–Incaseofanadaptationofthiswork,thefollowingdisclaimermustbeaddedalongwiththeattribution:ThisisanadaptationofanoriginalworkbytheInternationalLabourOffice(ILO).ResponsibilityfortheviewsandopinionsexpressedintheadaptationrestssolelywiththeauthororauthorsoftheadaptationandarenotendorsedbytheILO. AllqueriesonrightsandlicensingshouldbeaddressedtoILOPublishing(RightsandLicensing),CH-1211Geneva22,Switzerland,orbyemailtorights@ilo.org. ISBN9789220365113(print);ISBN9789220365120(webPDF);ISBN9789220381267(html) https://doi.org/10.54394/ZLFG5119 wages/purchasingpower/COVID-19/wagedifferential/inflation/wagepolicy/report13.07 ILOCataloguinginPublicationData AlsoavailableinFrench:Rapportmondialsurlessalaires2022-23:l’impactdel’inflationetduCOVID-19surlessalairesetlepouvoird’achat,ISBN9789220365076(print),9789220365083(webPDF),9789220381274(html);andinSpanish:InformeMundialsobreSalarios2022-2023:ElimpactodelainflaciónydelaCOVID-19enlossalariosyelpoderadquisitivo,ISBN9789220365090(print),9789220365106(webPDF),9789220381281(html) ThedesignationsemployedinILOpublications,whichareinconformitywithUnitedNationspractice,andthepresen-tationofmaterialthereindonotimplytheexpressionofanyopinionwhatsoeveronthepartoftheILOconcerningthelegalstatusofanycountry,areaorterritoryorofitsauthorities,orconcerningthedelimitationofitsfrontiers. Theresponsibilityforopinionsexpressedinsignedarticles,studiesandothercontributionsrestssolelywiththeirauthors,andpublicationdoesnotconstituteanendorsementbytheILOoftheopinionsexpressedinthem. ReferencetonamesoffirmsandcommercialproductsandprocessesdoesnotimplytheirendorsementbytheILO,andanyfailuretomentionaparticularfirm,commercialproductorprocessisnotasignofdisapproval. InformationonILOpublicationsanddigitalproductscanbefoundat:www.ilo.org/publns. Coverphotocredit:MarcelCrozet/ILO ProducedbythePublicationsProductionUnit(PRODOC)oftheILO. TheILOendeavourstousepapersourcedfromforestsmanagedinanenvironmentallysustainableandsociallyresponsiblemanner. Code:DESIGN/WEI/PMSERV ▶Preface Thisyear’sILOGlobalWageReport,theeighthintheseries,presentsanin-depthempiricalanalysisofhowconcurrentcrises–theCOVID-19pandemicfollowedbythecost-of-livingcrisis–haveimpactedonwagesandpurchasingpoweracrosscountriesandregions.Thereportshowsthat,forthefirsttimethiscentury,globalrealwagegrowthhasbecomenegativewhilerealproductivityhascontinuedtogrow.Indeed,2022showsthelargestgaprecordedsince1999betweenreallabourproductivitygrowthandrealwagegrowthinhigh-incomecountries.Whiletheerosionofrealwagesaffectsallwageearners,itishavingagreaterimpactonlow-incomehouseholdswhichspendahigherproportionoftheirdisposableincomesonessentialgoodsandservices,thepricesofwhichareincreasingfasterthanthosefornon-essentialitemsinmostcountries. ThedeclineinrealwageshascomeontopofsignificantwagelossesincurredbyworkersandtheirfamiliesduringtheCOVID-19crisis.Usingquarterlydata,thereportfindsthatthekeyfactorbehindthedeclineinthetotalwagebill,particularlyduring2020andthefirstquarterof2021,wasthelossinemployment.Low-wageearners,workersintheinformaleconomyandwomenwageearnerswerethegroupsthatsufferedmost.Furthermore,duringtheharshestmonthsofthepandemic,thetotalwagebilldeclinedmostatthelowerendofthewagedistribution.HouseholdsthatwereforcedtogointodebttomakeendsmeetduringtheCOVID-19crisisnowfacethedoubleburdenofrepayingtheirdebtsathigherinterestrateswhileearninglowerincomes.Overall,theempiricalevidenceinthereportpointstothelikelihoodofincreasedincomeinequalitybothbetweenandwithincountries. Intheabsenceofcountervailingpolicies,thedeteriorationofworkers’realincomescanbe expectedtocontinueandleadtoafallinaggregatedemand.Thiswouldincreasetheprobabilityofadeeperrecession,ariskthatisalreadyworseningduetotherestrictivemonetarypoliciesadoptedbycentralbanksintheireffortstobringdowninflation.Thisinturnwouldendangertheeconomicandemploymentrecovery,furtherincreasinginequalitiesandfuellingsocialunrest. Inthistimeofgrowingsocialan