Context:

According to a recent report by the International Labour Organization (ILO), there has been a promising decline in wage inequality in two-thirds of countries since 2000. 

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• The report is titled ‘Global Wage Report 2024-25: Is wage inequality decreasing globally?’.
• It gives a unique picture of wage trends globally, by region and at the country level.

Key Findings

Global real wage growth:

• It grew by 1.8% in 2023, with projections for 2024 showing a 2.7% increase.

Regional differences:

• Emerging G20 economies saw real wages rising by 6.0% in 2023.
• Advanced G20 economies experienced a decline in real wages by 0.5% in 2023.

Global decline  in wage inequality: 

• It decreased at an average annual rate of 0.5 to 1.7 %.

Regional differences:

• Low-Income Countries: Significant reductions in wage inequality were seen, with annual decreases ranging from 3.2% to 9.6%.
• Wealthier Countries: In high and upper-middle-income countries, reductions in wage inequality were slower, ranging from 0.3% to 1.3% annually.

Persistent wage disparities: 

• The lowest-paid 10% of workers earn just 0.5% of the global wage bill, while the highest paid 10% earn nearly 38%.
• High-wage earners saw a higher rate of decrease in wage inequality compared to low-wage earners. 
• Wage inequality highest in low-income countries, with 22% of wage workers are classified as low-paid.

Decoupling between productivity and wages:

• Despite a 29% rise in productivity in high-income countries between 1999 and 2024, real wages have only risen by 15%, highlighting a failure to share productivity gains equitably with workers.

Minimum Wage Adjustments:

• Around 60% of countries adjusted their minimum wage in 2022, but only about 25% of these increases kept pace with inflation.
• In 2023, 55% of countries saw real increases in minimum wages, though many did not fully compensate for past declines.

Persistent gender wage gap:

• Women, especially in lower-middle-income countries, remain disproportionately affected by wage inequality due to overrepresentation in informal, precarious and low-paid work.

Indian Scenario:

• Between 2008 and 2018, the share of low-paid wage workers in India declined at an average annual rate of 6.3%, while low-paid non-wage workers decreased by 12.7%. 
• Combined, both categories saw a decline of 11.1% annually over the 10 years.
• The share of low-paid wage workers — those earning less than 50% of the median hourly wage in the country — stands at 9.5% in India. On the other hand, it is Pakistan (9.4%), Nepal (10.5%), Bangladesh (11.2%), Bhutan (13.7%), and much higher in Sri Lanka (25.9%).

The Palma ratio

• The report employs the Palma ratio to measure wage inequality.
• It is calculated by dividing the share received by the richest 10% by the share of the poorest 40%.
• The lower the ratio is, the lower the inequality is.

International Labour Organization (ILO)

• A specialized agency of the United Nations promoting social justice, human rights, and labour rights. 
• Created in 1919 as part of the Treaty of Versailles that ended World War I. 
• It became the first specialized agency of the UN in 1946.
• Its unique tripartite structure gives an equal voice to workers, employers and governments providing a unique platform for promoting decent work for all women and men.