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CAW Conference Decent Wage, Decent Work: Working ourselves out of poverty. Economic Crisis: Confronting wage deficits in the Asian Decent Work Decade Silvia Cormaci Associate Expert Gender Equality and Migration ILO Bangkok Bangkok, Thailand 28 April 2010. Issues for Discussion.

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CAW Conference Decent Wage, Decent Work: Working ourselves out of poverty

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CAW ConferenceDecent Wage, Decent Work: Working ourselves out of poverty

Economic Crisis: Confronting wage deficits in the Asian Decent WorkDecade

Silvia Cormaci

Associate Expert Gender Equality and Migration

ILO Bangkok

Bangkok, Thailand

28 April 2010

Issues for Discussion

  • Global and regional wage trends

  • Impact of global economic crisis on wages

  • Gender dimension

  • Suggestions to promote decent wages and work

Trends in Wages (1995-2007)


  • Low wage growth: average 1.9%/year.

    But regional variations: Asia 1.7% (China: 10%; Japan: 0%)

  • Wages lag behind GDP per capita: growth in real wages increased at slower rate than productivity

  • Growing Income inequality: top-bottom wages gap (e.g. China, Thailand); gender pay gap (GPG)- Asia

Trends in wages 2008/09: global context

Global economic crisis => wage growth in 2008 fell sharply & dropped even further in 2009

  • 2008: more than a quarter of countries experienced flat or falling monthly wages in real terms (USA, Taiwan, China, Hong Kong, Japan)

  • 2009: despite beginning of economic recovery, in Q1 2009 real wages fell in more than half of the 35 countries for which recent data is available

  • However: considerable variation in the behaviour of wages across countries (positive wage growth /deep wage cuts)

  • The wage share of GDP typically increased between 0 -5 % in 2008/09, irrespective of the size of GDP growth or decline (temporary phenomenon?)

    Source: ILO Global Wage Report 2008/09

Trends in wages 2008/09: Asia

ASIA : The case of Japan

Sharp fall in wages in Q1 2009 and flat wages in Q2.

This occurs in the context of a long period of deflation and flat wages

Similarly in the Republic of Korea, sharp fall in wages in Q1 & Q2 2009 mostly due to cuts in overtime work & in quarterly bonuses

Trends in wages 2008/09: concerns

  • downward trend in wages raises questions about the ability of workers and their families to sustain consumption, especially if government rescue packages are phased out too early

  • impact of the crisis: wage-arrears have increased

Gender Impact of the crisis

Data on average wages by sex collected for 22 countries, 2008 =>

Crisis has impacted women at least as much as men:

(GPG has frozen with women earning about 80 % of men’s wage)


In the majority of countries worldwide, women’s wages represent on average between 70 -90% of men’s wages (much lower ratios in Asia)

GPG in East Asia

The overall gender pay gap (GPG) in East Asia is pronounced: Women’s income amounts to:

  • less than or just 1/2 of men’s income in Japan, Malaysia, Korea and Singapore

  • around 60% of men’s income in Hong Kong SAR, the Philippines and Thailand

  • around two-thirds of men’s income in China and Vietnam.

Ratio of estimated overall female to male earned income*

Source: UNDP. Human Development Report 2005

GPG: Manufacturing wages in East Asia

  • The GPG is pronounced across the region:

    Women’s wages as % of men’s:

    • Over 70%: Philippines, Thailand

    • Below 65%: Hong Kong, Malaysia, Singapore

    • Below 60%: Japan, Korea

F/M Ratio of Wages in Manufacturing, 1993/2003

*As in source (specification of year not given)

Note: Data on China and Vietnam are not available

Source: United Nations (2005). The World’s Women 2005.

ILO response to the crisis

In June 2009, ILO Member States adopted the Global Jobs Pact in which they agreed to strengthen:

  • social dialogue

  • collective bargaining

  • minimum wages (MW)

    … avoid wage deflation & enhance social protection

Minimum wages: trends


  • 2001/07: MW back on the agenda of many countries (+ 5.7%/year)

  • 2008: trend to increased minimum wages in real terms (by more than inflation figures)


  • NO MW in some countries (e.g. Malaysia, Myanmar, Pacific Islands)

  • Crisis: MW decreased in Thailand & Cambodia

  • Philippines & Vietnam improving MW system with ILO assistance

Minimum wages:

Important policy tool for social protection, can reduce wage inequality & GPG, but requires:

  • Involvement of social partners in setting the level

  • Avoid using MW as substitute for collective bargaining

  • Income support measures or tax reduction, especially for most vulnerable workers

  • Extend coverage to vulnerable groups (e.g. Domestic workers)

  • Credible enforcement mechanisms (labour inspectors, social partners)

Decent wages & decent work ….

Possible measures:

  • Introduce fair MW mechanism (increase MW to protect purchasing power of vulnerable workers)

  • Reduce the GPG

  • Promote wage negotiation, collective bargaining & social dialogue

  • Closing the gap between productivity and wages (+ productivity= + wages)


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