The International Labour Organisation (ILO) has reported a significant decrease in global wage inequality, with two-thirds of countries witnessing reductions since the year 2000. The findings, presented in the ILO’s Global Wage Report 2024-25, indicate an average annual decline in wage inequality globally ranging from 0.5 to 1.7 percent. This reduction marks a positive trend in economic equity, though the report highlights ongoing disparities, especially in low-income nations where wage inequality remains pronounced. In these countries, wage disparities have decreased by an impressive 3.2 to 9.6 percent annually over the past two decades, whereas wealthier nations have experienced slower progress, with reductions of only 0.3 to 1.3 percent in upper-middle-income countries and 0.3 to 0.7 percent in high-income economies.
While the overall decline in inequality is encouraging, the ILO report emphasizes that substantial gaps persist among wage earners. Alarmingly, the bottom 10 percent of earners globally account for merely 0.5 percent of the total wage bill, contrasted with the top 10 percent, who earn nearly 38 percent. The report also reveals that women and workers in the informal economy are disproportionately represented among the lowest earners, highlighting deeper structural issues within the labor market that require attention. Therefore, despite narrowing gaps in a broad sense, the data brings attention to the urgent need to address the plight of the lowest-paid workers to foster a more equitable economic landscape.
The ILO’s findings also point to uneven global wage growth, revealing that while real wages grew by an average of 1.8 percent in 2023, with projections of a more robust 2.7 percent rise for 2024—the fastest growth rate noticed in over 15 years—this growth has not been uniform across economies. Emerging market economies, particularly those within the G20, experienced notable wage gains, enjoying a real wage growth of 6.0 percent in 2023. In stark contrast, advanced economies within the G20 faced declines in real wages for two consecutive years, emphasizing the widening gap between emerging and advanced economies. This disparity raises concerns about the sustainability of wage growth in various contexts and reinforces the need for targeted policy interventions to address the disparities.
Regionally, the report highlights that Asia, the Pacific, and Central and Western Asia have recorded some of the fastest real wage increases, signaling potential growth opportunities in these areas. However, the ILO cautions that high inflation rates in preceding years have negatively impacted purchasing power for many workers, which remains a critical issue as millions continue to grapple with cost-of-living pressures. The ongoing challenge of inflation underscores the complexity of wage growth, where nominal increases may not translate into real purchasing power due to rising living costs, further exacerbating the economic challenges faced by vulnerable populations.
The ILO Director-General, Gilbert Houngbo, provides a nuanced perspective on the positive trends in wage growth while reiterating the importance of addressing persistent inequalities. He acknowledges the return to positive real wage growth as a welcome development but stresses that wage disparities between and within countries continue to be unacceptably high. Moreover, the ongoing cost-of-living crisis poses significant challenges for families around the world, necessitating a comprehensive approach to sustain and enhance wage growth while also ensuring that such growth translates into improved living standards.
To combat ongoing wage inequality and the issues faced by low-income workers, the ILO advocates for strengthening wage-setting mechanisms and enhancing collective bargaining initiatives. The organization emphasizes the need to target the root causes of low pay, promote decent work, and reduce informality in the labor market. ILO Economist Giulia De Lazzari underscores the significance of inclusive economic growth by advocating for national strategies that unite robust wage policies with broader efforts aimed at formalizing economies and advancing decent work conditions. Through such measures, the ILO envisions a more equitable economy where wage growth benefits all segments of society, particularly the most marginalized workers.
