Pay cut misery for millions predicted as recession goes global

“Painful” wage cuts for millions of workers worldwide are expected next year, experts predict.

The Global Wage Report 2008/09 by the International Labour Organization (ILO) predicts that global growth in wages will be just 1.1% in 2009, down from 1.7% in 2008. Overall pay growth in industrialised countries is also expected to contract, from 0.8% in 2008 to -0.5% in 2009.

Juan Somavia, ILO director-general, said difficult times lay ahead for the world’s 1.5 billion wage earners.

“Slow or negative economic growth, combined with highly volatile food and energy prices, will erode the real wages of many workers, particularly the low-wage and poorer households,” said Somavia.

“The legitimacy of globalisation and of open economies and societies hinges critically on greater fairness in outcomes,” he said. “Central to this fairness is the ability of working women and men to obtain a fair share of the wealth they create.”

The report recommends that governments and social partners work to prevent a further deterioration in the share of wages relative to the share of profits. It also said minimum wages would protect the most vulnerable workers, but should be complemented by public intervention through income support measures.

Earlier this month, a campaign to boost employee awareness of the increased national minimum wage in the UK was launched by business secretary Peter Mandelson.