COVID-19 driving wages down, says global labor agency

GENEVA

The pandemic has driven wages down and is likely to inflict massive downward pressure on the workers' wages globally, the International Labor Organization (ILO) chief said Wednesday.

Guy Ryder said a report has found that monthly wages fell or grew more slowly in half of this year due to the COVID-19 pandemic in two-thirds of countries for which official data was available.

"The crisis is likely to inflict massive downward pressure on wages in the near future," said Ryder.

At a virtual UN news conference, he said the wages of women and low-paid workers have been disproportionately affected by the pandemic, according to the report published every two years by the organization.

"Our recovery strategy must be human-centered. We need adequate wage policies that take into account the sustainability of jobs and enterprises, and also address inequalities and the need to sustain demand," said the ILO chief.

While average wages in one-third of the countries which provided data appeared to rise, this was mostly due to the substantial numbers of lower-paid workers losing their jobs and the figures skewed the average, since they were no longer included in the data for wage-earners.

In countries where strong measures were taken to preserve employment, the effects of the crisis were felt primarily as falls in wages rather than massive job losses.

Build better future

"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 that of caretakers and teachers, are very often linked to low pay," said Ryder.

The impact on women has been worse than on men. Estimates based on a sample of 28 European countries find that, without wage subsidies, women would have lost 8.1% of their wages in the second quarter of this year, compared to 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.

Using data from the group of 28 European countries, the report shows that, without temporary subsidies, the lowest paid 50% of workers would have lost an estimated 17.3% of their wages.

"The growth in inequality created by the COVID-19 crisis threatens a legacy of poverty and social and economic instability that would be devastating," Ryder said.

He noted that the report relates to those people who earn wages and that there is a large section of the workforce located in the informal economy.

"We have estimated, in other reports, that the hit to global income from labor abroad measure has been of the order of $3.5 trillion in the first nine months of this year," he said.

Ryder underlined that equity is needed to stop a resurgence of poverty and prevent an aggravation of already, unacceptably high levels of inequality, and to keep demand up to keep the economy moving.

"We've seen the OECD projections overnight of a return to growth, predicated on an assumption about vaccines and vaccine roll out.

"It's going to take a considerable period of time for the global economy … to bounce back to where it was, even before the pandemic…. So it's going to be a long road back. And I think it's going to be turbulent," he said.