ILO says global wage inequality has declined but many challenges remain

Wage inequality has declined in two-thirds of countries since the start of the 21st century, according the International Labour Organization’s (ILO) latest report published on Thursday.

The report showed that wage inequality has decreased globally at an annual rate of 0.5 to 1.7 per cent since 2000.

Low-income countries experienced the sharpest reductions -- between 3.2 and 9.6 per cent annually.

But they are also the nations where wage inequality is the highest, with close to 22 per cent of salaried workers classified as low paid.

“If the trend that we are observing in this report are confirmed, that means it will be a unique situation since the 21st century began,” said ILO Director-General Gilbert Houngbo.

Despite the progress, the ILO says wage inequality remains a pressing issue across all countries and regions.

“It is important for us to keep in mind that we still have too many workers, millions of workers that are really still at the low end, with low wages and low paid,” he said.

Houngbo said this negatively impacts families who continue to suffer from the cost-of-living crisis that has eroded their living standards.

Globally, the lowest-paid 10 per cent of workers earn only 0.5 per cent of the world’s salary bill, while the top 10 per cent command nearly 38 per cent.

In addition, he said wage disparities between and within countries remain unacceptably high, as does inequality, particularly when it comes to salaries paid to women.

“The pay gap between women and men, and as well as people working in the informal economy is still a major, major, major concern,” he said.

The ILO said it recommends that states strengthen wage-setting mechanisms through collective bargaining and minimum wage systems, promote equality, and address gender and sectoral pay gaps.

They should also formalise the informal economy to boost income security and utilise reliable data to guide informed policy decisions.