ILO has published a Global Wage Report 2022-23 on ‘‘the impact of inflation and COVID-19 on wages and purchasing power of the people’’ all over the world. The report estimates that global monthly wages fell in real terms to -0.9 per cent in the first half of 2022—the first dip in global wage increase recorded since 2008. And the fall in real wages during the same period is estimated at -1.4 per cent. While the erosion of real wages affects all wage earners, it is having a greater impact on low-income households which spend a higher proportion of their disposable incomes on essential goods and services, the prices of which are increasing faster than those for non-essential items in most countries.
The report says that the Global inflation increased sharply to 4.7 per cent in 2021 and is expected to reach 8.8 per cent by the end of 2022. Rise in food prices hitting the purchasing power of vulnerable populations in low-income countries is the hardest. Consumer prices have been on the rise throughout 2021 and have continued to increase even faster since the beginning of 2022, further affecting the living standard of the people all over the world. The data clearly shows that wages have fallen all over the world during the pandemic and still have not recovered to pre-covid levels. The first half of 2022 reveal a striking fall in real monthly wages. Low-wage earners, workers in the informal economy and women wage earners were the groups that suffered most. Households that were forced to go into debt to make ends meet during the COVID-19 crisis now face the double burden of repaying their debts at higher interest rates while earning lower incomes. The deterioration of workers’ real incomes can be expected to continue and lead to a fall in aggregate demand. This would increase the probability of a deeper recession, a risk that is already worsening due to the restrictive monetary policies adopted by central banks in their efforts to bring down inflation (by increasing the interest rates).
This in turn would engender further economic downturn and rise in unemployment. ILO’s report says that in the absence of adequate policy responses, ‘‘the near future could see a sharp erosion of the real incomes of workers and their families and an increase in inequality, threatening the economic recovery and possibly fuelling further social unrest’’.
The ILO’s report has shown that the gap between wage growth and labour productivity growth is widening further: in fact, the gap in 2022 is at its widest since the beginning of the twenty first century. The report has also demonstrated how inflation rates are also eroding the purchasing power of minimum wages.
In fine, the ILO report is a reflection of the acute crisis global imperialism-capitalism is mired in and the excruciating suffering of the toiling masses who are inching towards utter ruination because of ruthless capitalist exploitation.