Report: U.S. Wages Barely Rising; Collective Bargaining Needed to Address Worldwide Inequality

Average wages have stayed almost stagnant in the developed world, while wages in developing countries have fluctuated wildly by region. (Source: International Labour Organization) – Click image for full size.

Wage growth in developed countries, including the U.S., has remained almost stagnant since 2006, according to the International Labour Organization’s (ILO) 2014-15 Global Wage Report.

Average wage growth in developed economies fluctuated up or down around 1 percent per year since 2006 and then slowed further in 2012 and 2013 to only 0.1 percent and 0.2 percent respectively.

Average wages went up only 1.4 percent in the U.S. in the seven-year time frame. Canada, an outlier among developed countries, saw average wages grow 5 percent, which the report attributes partially to natural-resource based growth during a boom in commodities.

“Wage stagnation must be addressed as a matter of fairness and of economic growth,” said Sandra Polaski, the ILO’s Deputy Director-General for Policy. “And because overall inequality is driven significantly by wage inequality, labor market policies are needed to address it.”

The report calls for more progressive tax systems and social protection policies, but says a comprehensive strategy that includes a minimum wage, strengthened collective bargaining, and the elimination of discrimination against groups such as women and minorities is needed to fully address worldwide inequality.

Wage increases in the developing world fluctuated greatly by region. Wages grew by around 6 percent in Asia and Eastern Europe, and nearly 4 percent in the Middle East, but rose by less than 1 percent in Latin America, the Caribbean and Africa. Wages in developed economies remain on average three times higher than in emerging and developing economies.

The gap between wages and productivity has also widened, especially in developed economies, meaning that although the value of goods has increased, it is not matched by higher wages.

“We welcome the conclusions of the report, which endorse our actions to achieve a living wage through both comprehensive national minimum wage campaigns and robust collective bargaining at the industry level,” said Jyrki Raina, General Secretary of the IndustriALL Global Union.