The View | What China can teach the world about wage growth, as workers globally continue to get a raw deal
- Jayati Ghosh says China has bucked the trend of declining wage growth, even while pursuing trade and automation, by augmenting its focus on new, productive sectors with policies designed to improve labour conditions
In the advanced G20 economies, average real wages grew by a mere 0.4 per cent in 2017, compared to 1.7 per cent growth in 2015. While real wages were up by 0.7 per cent in the United States (versus 2.2 per cent in 2015), they stagnated in Europe, where small increases in some countries were offset by declines in France, Germany, Italy, and Spain. The slowdown in “success stories” like Germany and the US is particularly surprising, given the former’s expanding current-account surpluses and the latter’s falling unemployment and tight labour markets.
In emerging markets, average wage growth in 2017, at 4.3 per cent, was faster than in the advanced G20 economies, but still slower than the previous year (4.9 per cent). Asia enjoyed the fastest real wage growth, owing largely to China and a few smaller countries such as Cambodia, Sri Lanka and Myanmar. But, overall, wage growth in Asian economies mostly decelerated in 2017. And in Latin America and Africa, several countries experienced real-wage declines.
Moreover, the report finds that the gap between wage growth and labour productivity remained wide in 2017. In many countries, labour’s share of national income is still below the levels of the early 1990s.
That raises an obvious question: given the global output recovery of recent years, why have conditions for workers in most parts of the world not improved commensurately?
