The International Labour Organization (ILO) released its Global Wage Report 2024-2025 (November 2024). It analyses national wage and income data to identify key national and regional trends for workers over the past several years and more broadly since 2000. It also makes policy recommendations for governments.
Human Level’s Take:
- The ILO’s latest wage report found that the last couple of years have held both positives and negatives for global wages and wage inequality.
- While real wages (wages adjusted for inflation) grew by 1.8% in 2023 and 2.7% in the first half of 2024—marking the largest gain in over 15 years—low-wage workers are still facing challenges. Despite more countries raising minimum wages in response to inflation, these increases often fall short of offsetting the rising cost of living. The 2021-2022 cost-of-living crisis hit low-wage earners hardest, especially since they spend a larger share of their income on essentials.
- In addition, labour income inequality remains high, especially for women, informal workers and migrant workers in low- and middle-income economies. While global wage inequality is slowly decreasing, non-wage workers — many of whom are women or in the informal sector—experience even higher levels of inequality compared to wage earners.
- The ILO urges governments to take steps to remedy these issues, many of which are also relevant for companies as they set their own wages and work with business partners to ensure fair wages are paid to supply chain workers.
- What can this entail in practice for companies? Ensuring that wage-setting practices are informed by worker perspectives and ideally driven by collective bargaining; accounting for gender equality among all levels of the organisation; looking to data like global living wage calculators to ensure that wages are fair; and considering the local context when setting wages and working with suppliers, like the strength of social protection systems, whether there are informal workers in the supply chain, and the strength of governments institutions and regulatory practices to ensure fair wages are paid.
- Businesses also have a critical role to play by advocating for fair wage policies, supporting the rights to freedom of association and collective bargaining in the places where they operate, and supporting skills development for a changing economy.
Some key takeaways:
- Real wages increased, but challenges remain for low-wage workers: After decreasing in 2022, real wage growth (wages adjusted for inflation) increased by 1.8% in 2023 and by 2.7% in the first half of 2024, marking the largest gain in more than 15 years. Real wage growth differs by region, with average wages increasing more quickly in Asia and the Pacific, Central and Western Asia, and Eastern Europe compared to the rest of the world. In parallel, in 2022 and 2023, more countries than usual raised their minimum wage levels in response to inflation. However, these increases were generally not enough to fully offset the rising cost of living for minimum wage workers. The report flags this as a priority, especially as evidence shows that the 2021-2022 cost-of-living crisis had a greater impact on low-wage earners and their families, who spend more of their income on essential goods and services.
- Declining overall labour income inequality, but with caveats for some workers: The report also explores inequality between different groups over the last two decades by examining trends in overall labour income. Labour income includes the earnings of both wage workers and non-wage workers (employers, own-account workers, contributing family workers or workers in cooperatives). For wage workers, there are persistently high levels of inequality around the world though this varies based on country income level: low-income countries, on average, have the highest wage inequality and high-income countries have the lowest. Women and informal workers are “overrepresented” among the lowest-paid wage workers, and men earn more than women across all countries and the entire wage scale. Meanwhile, the situation of migrant workers depends on host country income level; in low-income and lower-middle-income countries, migrant workers tend to be at the top end of the wage distribution, but in high-income and upper-middle-income countries they are often at the lowest end. In positive news, within-country wage inequality has declined in the 21st century to date and there is a reduction in global wage inequality as well. However, adding in non-wage workers to the analysis shows higher levels of labour income inequality. Non-wage workers account for nearly half of the total global working population, meaning that the earnings of both wage workers and non-wage workers contribute significantly to overall household income. This is particularly the case in low- and middle-income countries, where non-wage workers represent a large proportion and in some cases the majority of all workers. These workers tend to be disproportionately located at the low end of labour income distribution. Moreover, the majority of these workers are women and workers in the informal economy, indicating that they experience higher levels of income inequality.
- Moving forward: According to the ILO, “the existing levels of wage inequality – and, to an even greater extent, the existing levels of labour income inequality – remain unacceptably high.” The report provides recommendations to States to develop and adapt wage policies, many of which are also relevant to companies as they set wages and implement fair wage strategies. The ILO recommends that wage-setting practices: (1) should be grounded in collective bargaining and tripartite social dialogue; (2) must consider both the needs of workers and their families, along with economic factors; (3) should promote gender equality and non-discrimination; (4) should rely on reliable data and statistics for an evidence-based approach (e.g., living wage calculators); and (5) should take into account national contexts and underlying causes of low wages, such as unequal value distribution, low productivity, informality, and weak institutions and compliance systems. In addition, strategies to reduce inequality should also consider “horizontal” inequalities, i.e. those between genders and between different groups of workers. In practice, this can entail promoting equal opportunities, equal participation and equal treatment, including equal remuneration for women and men for work of equal value; support to workers to enable more balanced sharing of family responsibilities; and promoting investment in the care economy. Finally, fair tax policies and strong social protection systems are key to create an enabling system for fair wages. Companies can play their part by advocating for these policies with governments in the places where they operate.
