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Inflation Causes Global Wages To Decline For First Time In 21st Century
Following his graduation with an Honors in Business Administration, Nick redirected his focus from conventional stocks and bonds to the world of sports team performance investments. He employs a unique blend of advanced statistics and historical data to construct intricate sports investment models, pinpointing value opportunities and consistently yielding profits. Nick's contributions extend beyond a single platform, as his work can be discovered on outlets such as Pistons Powered, Winners And Whiners, and numerous other publications.
All posts by Nick RaffoulUpdated07 Apr 2023
Rising inflation has caused an alarming fall in real monthly wages in many countries, including the US, Canada, and the UK.
According to the 2022-23 Global Wage Report by the International Labour Organization, global real monthly wages fell globally for the first time in the 21st century.
The -0.9% decline represented the first decline in real earnings at a global scale since the first edition of the Global Wage Report in 2008. The 2022 figure was estimated using data from the first half of the year.
The report also suggested that the cost-of-living crisis could dominate wage trends until the end of 2023.
Here are the main highlights of the Global Wage Report:
- Real Wages Decline in North America, European Union
- Women Expected To Lose More Jobs Than Men in 2022
- Advanced G20 Countries Experience Decline In Real Wages
- USA and Canada Among Countries Most Affected by Inflation
Real Wages Decline in North America, European Union
In many countries, job retention schemes and wage subsidies protected employment and wage levels during the pandemic. However, many of those government programs are now over and working class people around the world are paying the price.
In Canada and the United States, average real wage growth fell to zero in 2021 and dropped to minus 3.2 percent in the first half of 2022, the second-lowest mark of any region in the study.
Meanwhile, real wage growth increased to 1.3 percent in the European Union in 2021 but declined to minus 2.4 percent in the first half of 2022.
Real wage growth in Latin America and the Caribbean declined to minus 1.7 percent in the first half of 2022.
Meanwhile, Eastern Europe was the most affected region. Real wage growth in Eastern Europe went from plus 4.0 percent in 2020 and plus 3.3 percent in 2021 to minus 3.3 percent in the first half of 2022, the biggest drop in any region.
Asia, Arab States Lead Regions With Positive Wage Growth in 2022
Despite the overall decline, there were some regions that experienced positive wage growth this year.
In Asia and the Pacific, real wage growth increased to 3.5 percent in 2021. While the report estimates that growth has slowed down in the first half of 2022, real wage growth was still up 1.3 percent in the region. Even when excluding China from the results, real wage growth in Asia and the Pacific was still up 0.7 percent in the first half of 2022.
Central and Western Asia also experienced positive wage growth for the second straight year. Real wage growth recovered strongly by 12.4 percent in 2021 but slowed down to 2.5 percent in the first half of 2022.
In Africa, real wage growth fell to minus 1.4 percent in 2021, but that number has moved back towards zero to minus 0.5 percent in the first half of 2022.
Meanwhile, estimates pointed to low wage growth in the Arab States. Real wage growth in the region went from 0.5 percent in 2021 to 1.2 percent in 2022.
- Eastern Europe: -3.3%
- US & Canada: -3.2%
- European Union: -2.4%
- Latin America: -1.7%
- Africa: -0.5%
- Asia & Pacific: +0.7%
- Arab States: +1.2%
- Central & Western Asia: +2.5%
Women Lost More Employment Than Men in 2022
Driven in part by the war in Ukraine, the global energy crisis is causing an alarming decline in real monthly wages in many countries.
According to the report, the crisis is affecting the purchasing power of the middle classes and hitting low-income households particularly hard.
These households are forced to spend most of their disposable income on essential goods and services, which generally experience greater price increases than non-essential items.
COVID-19 also had a major impact on wages, as wage employees lost an average of six weeks of pay during 2020-21.
The wage report also found that women generally lost more employment than men in 2022 and during the COVID-19 crisis.
In fact, since the second quarter of 2020, the global employment of women has been reduced by 1.2 percentage points more than for men.
Advanced G20 Countries Experience Decline In Real Wages
Accelerating inflation has quickly eroded the real value of minimum wages in many countries, including many developed nations.
In fact, advanced G20 countries have been some of the hardest hit by inflation over the past two years.
Among advanced G20 countries, real wages in the first half of 2022 are estimated to have declined to minus 2.2 percent.
On the other hand, real wages in emerging G20 countries grew by 0.8 percent. While the growth in emerging countries was encouraging, it was still 2.6 percent less than in 2019, the year before the COVID-19 pandemic.
As a result, the recent downturn in the global economy has erased the gains that some countries have made since the last financial crisis in 2008.
Between 2008 and 2022, the real wage growth among all G20 countries was highest in China, where real monthly wages were equal to about 2.6 times their real value in 2022 compared to 2008. In four countries (Italy, Japan, Mexico and the UK), real wages were actually lower in 2022 than they were in 2008.
The report also estimated the average wage in both advanced and emerging G20 economies.
Workers in advanced G20 countries earned an average of $4,000 USD per month compared to approximately $1,800 USD per month for workers in the emerging G20 countries.
USA and Canada Among Countries Most Affected by Inflation
According to the data, Hungary experienced the most growth in 2022, as real wages increased by a healthy 12.4 percent. Australia (5.0%), Serbia (3.5%), and Vietnam (3.4%) were among the countries that experienced the highest real wage growth.
On the other hand, Nicaragua was hit hardest by inflation with real wages declining by minus 7.6 percent in 2022. Poland (-6.9%), Brazil (-6.9%) and Czech Republic (-6.8%) also experienced a steep decline in real wage growth while several other developed nations also landed in the bottom-10.
Italy (5.0%), Spain (-3.5%), Sweden (-3.4%), and Canada (-3.4%) were among the other developed countries hit hard by inflation.
The United States narrowly missed out on the bottom-10 with real wages growth declining by minus 3.2 percent, the 11th-worst mark of any country in the study.
Here are the top-10 and bottom-10 countries in terms of real wage growth in 2022.
Top-10 Countries in Real Wage Growth (2022)
- Hungary: 12.4%
- Australia: 5.0%
- Serbia: 3.5%
- Vietnam: 3.4%
- Argentina: 2.2%
- China: 2.0%
- Republic of Korea: 1.1%
- China: 0.5%
- Finland: 0.4%
- Tajikistan: 0.0%
Bottom-10 Countries in Real Wage Growth (2022)
- Nicaragua: -7.6%
- Poland: -6.9%
- Brazil: -6.9%
- Czech Republic: -6.8%
- Italy: -5.9%
- Netherlands: -5.0%
- Denmark: -3.5%
- Spain: -3.5%
- Canada: -3.4%
- Sweden: -3.4%
The real wage growth data (%) for all countries with data for 2022 in the study can be found in the table below.
| Country | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Hungary | 4.1 | – | 1.3 | -3.5 | -3.4 | 1.3 | -0.9 | 1.7 | 3.2 | 4.4 | 5.7 | 10.3 | 8.3 | 7.8 | 6.2 | 3.4 | 12.4 |
| Australia | 1.0 | 2.1 | -0.7 | 2.6 | 2.4 | 0.5 | 2.5 | 1.5 | -1.0 | -0.1 | 0.5 | 0.0 | 0.7 | 1.0 | 2.7 | -0.9 | 5.0 |
| Serbia | 11.4 | 14.8 | 3.9 | 0.2 | 0.6 | 0.1 | 1.0 | -1.9 | -1.7 | -2.4 | -1.7 | 0.9 | 3.9 | 8.4 | 7.8 | 5.2 | 3.5 |
| Vietnam | 8.0 | 4.5 | 14.1 | 14.1 | -3.7 | 3.9 | 10.9 | 2.9 | 4.3 | 4.8 | 4.3 | 4.1 | 3.7 | 13.2 | -4.1 | -3.5 | 3.4 |
| Argentina | 11.6 | 12.2 | 18.2 | 13.9 | 12.1 | 18.6 | 12.8 | 15.5 | 6.9 | 6.9 | 6.9 | -4.8 | -5.6 | -10.2 | -6.0 | 2.2 | 2.2 |
| China | 12.9 | 13.1 | 10.4 | 11.0 | 9.3 | 9.1 | 9.7 | 9.0 | 6.0 | 6.7 | 5.5 | 5.9 | 7.0 | 5.6 | 4.6 | 7.6 | 2.0 |
| Korea, Republic of | 3.4 | 2.9 | -6.6 | -0.1 | 3.8 | -2.9 | 3.1 | 2.5 | 1.2 | 2.7 | 2.8 | 0.8 | 3.5 | 2.8 | -1.8 | 2.4 | 1.1 |
| Taiwan (China) | 0.2 | 0.3 | -3.4 | -3.9 | 4.5 | 1.5 | -1.6 | -0.6 | 2.4 | 2.8 | -0.9 | 1.8 | 2.4 | 1.4 | 1.6 | 1.0 | 0.5 |
| Finland | 1.8 | 2.2 | 1.2 | 1.6 | 0.6 | -1.0 | 0.0 | 0.2 | -0.5 | 0.9 | 0.7 | 0.0 | 0.9 | 0.6 | 1.7 | 1.7 | 0.4 |
| Tajikistan | 15.6 | 17.8 | 15.4 | 15.4 | 17.1 | 10.9 | 18.7 | 19.1 | 10.7 | 7.7 | 0.2 | -0.4 | 0.3 | -2.6 | 1.6 | 0.7 | 0.0 |
| Bangladesh | -0.6 | 0.5 | 1.7 | 11.5 | 1.2 | -2.7 | 2.8 | 7.0 | 2.1 | 3.3 | 3.4 | 3.1 | 0.6 | 0.9 | 0.4 | 0.5 | -0.4 |
| United Kingdom | 1.7 | 0.7 | 0.8 | -0.5 | -1.8 | -3.5 | -1.9 | -0.5 | -1.4 | 1.1 | 2.8 | -0.2 | 0.7 | 1.2 | -0.1 | 0.9 | -0.5 |
| Thailand | 1.5 | 0.8 | 4.5 | -1.6 | 3.1 | 3.3 | 8.5 | 5.8 | 8.3 | 2.8 | 1.6 | -0.7 | 0.3 | 1.6 | 2.8 | -0.3 | -0.5 |
| Malaysia | 0.0 | 3.2 | -3.3 | 0.0 | 4.0 | 4.0 | 3.7 | 4.7 | 1.2 | 4.0 | 3.4 | 2.2 | 7.9 | 2.2 | -9.6 | -2.2 | -0.5 |
| Mexico | 2.9 | 1.7 | -2.5 | -3.5 | -2.6 | -2.9 | -0.5 | -0.6 | -4.3 | 0.5 | 1.3 | -2.0 | -0.3 | 1.4 | 8.2 | -0.5 | -0.6 |
| Japan | -0.2 | -0.1 | -1.9 | -1.9 | 2.3 | 0.5 | 0.6 | -0.8 | -1.0 | 0.3 | 0.2 | -0.5 | -0.1 | -0.1 | -2.2 | 1.5 | -0.7 |
| Indonesia | 1.7 | 2.9 | -2.2 | 9.0 | 1.5 | 2.9 | 2.9 | 10.1 | -4.3 | -0.4 | 19.2 | 3.5 | -0.1 | 0.2 | -7.3 | -2.2 | -0.7 |
| North Macedonia | 4.6 | 2.5 | 0.3 | 14.9 | -0.5 | -2.6 | -3.0 | -1.6 | 1.3 | 3.0 | 2.3 | 1.3 | 4.2 | 4.3 | 6.7 | 2.7 | -0.8 |
| Russian Federation | 13.3 | 17.3 | 11.5 | -3.4 | 5.2 | 2.9 | 8.4 | 4.8 | 1.2 | -9.4 | 0.8 | 2.9 | 8.5 | 4.8 | 3.8 | 3.2 | -0.9 |
| Romania | 8.9 | 14.8 | 16.5 | -1.5 | -3.7 | -1.8 | 1.0 | 0.8 | 6.4 | 10.2 | 11.8 | 12.8 | 8.0 | 8.8 | 5.0 | 1.1 | -1.0 |
| Norway | 2.3 | 4.9 | 1.9 | 1.3 | 1.5 | 2.5 | 3.2 | 1.4 | 1.1 | -1.4 | -1.1 | 0.5 | 0.3 | 1.5 | 0.9 | 0.7 | -1.3 |
| Bulgaria | 3.6 | 11.1 | 13.0 | 9.1 | 3.3 | 2.4 | 4.1 | 5.6 | 7.7 | 8.0 | 9.5 | 8.1 | 7.7 | 7.9 | 8.4 | 8.4 | -1.3 |
| Chile | 2.0 | 2.8 | -0.3 | 4.8 | 2.2 | 2.5 | 3.3 | 3.9 | 1.8 | 1.8 | 1.4 | 5.7 | 4.5 | 4.7 | 3.7 | 5.6 | -1.4 |
| Germany | -0.9 | -0.7 | -0.2 | -0.2 | 1.5 | 1.0 | 0.7 | 0.6 | 2.2 | 2.2 | 2.1 | 0.9 | 1.2 | 1.6 | -0.5 | 0.0 | -1.7 |
| France | -0.6 | 1.1 | -1.1 | 0.3 | -1.3 | 1.8 | 1.0 | 2.1 | 0.6 | 2.1 | 0.8 | 0.1 | -0.6 | 0.4 | 1.1 | -0.7 | -1.7 |
| Mauritius | -3.9 | -2.5 | -1.8 | 14.1 | 5.0 | 1.2 | 3.1 | 8.9 | 0.2 | 1.8 | 7.8 | 2.9 | 1.3 | 3.0 | 4.7 | 3.1 | -1.9 |
| Switzerland | 0.1 | 0.9 | -0.4 | 2.6 | 0.1 | 0.7 | 1.5 | 1.0 | 0.8 | 1.5 | 1.1 | -0.1 | -0.4 | 0.5 | 1.5 | -0.8 | -2.1 |
| South Africa | 4.9 | 0.3 | -0.2 | 4.0 | 9.7 | 2.7 | 3.1 | 0.0 | -0.3 | 2.1 | -0.1 | 3.5 | 1.6 | 1.0 | -1.4 | 1.2 | -2.3 |
| Slovakia | 4.2 | 4.3 | 3.3 | 1.4 | 2.2 | -1.6 | -1.2 | 1.0 | 4.2 | 3.2 | 3.9 | 3.5 | 4.4 | 1.9 | -0.4 | 3.7 | -3.0 |
| Portugal | -0.1 | 0.7 | 1.9 | 3.5 | 2.6 | -2.8 | -1.6 | -0.6 | 0.1 | 3.8 | 3.8 | 0.0 | 0.6 | 2.9 | 3.1 | 2.5 | -3.1 |
| United States | 1.0 | 1.0 | -1.1 | 1.8 | 0.9 | -0.4 | 0.3 | 0.4 | 0.8 | 2.2 | 0.7 | 0.7 | 0.9 | 1.0 | 4.1 | 0.0 | -3.2 |
| Sweden | 1.4 | 0.9 | 1.8 | 3.0 | 0.4 | -0.4 | 2.1 | 2.5 | 2.8 | 2.0 | 1.5 | 1.1 | 0.4 | 0.4 | 1.9 | 0.4 | -3.4 |
| Canada | 0.5 | 2.1 | 0.5 | 1.2 | 1.8 | -0.4 | 1.0 | 0.8 | 0.7 | 0.7 | -0.9 | 0.4 | 0.3 | 0.7 | 6.0 | -0.4 | -3.4 |
| Spain | 1.2 | 1.2 | 1.0 | 3.5 | -0.9 | -2.1 | -3.0 | -1.4 | 0.1 | 1.6 | -0.1 | -1.8 | -0.6 | 1.2 | -2.3 | 3.1 | -3.5 |
| Denmark | – | – | – | – | 1.0 | -0.4 | -0.3 | 0.6 | 0.8 | 1.4 | 1.3 | 1.1 | 1.2 | 1.3 | 2.0 | 0.4 | -3.5 |
| Netherlands | 0.5 | 0.4 | 1.1 | 3.3 | -0.2 | -1.5 | -1.2 | -1.0 | 0.6 | 1.7 | 1.2 | -0.3 | 0.3 | 0.0 | 3.4 | -0.3 | -5.0 |
| Italy | 0.8 | 0.1 | -0.6 | -0.6 | 0.5 | -1.9 | -4.3 | -0.4 | 0.1 | 1.1 | 0.9 | -1.0 | 0.3 | 0.4 | -4.2 | 4.3 | -5.9 |
| Czech Republic | 3.1 | 4.4 | 0.7 | 0.2 | -0.7 | -6.5 | -1.6 | -0.7 | 1.9 | 3.4 | 3.8 | 4.5 | 6.0 | 5.0 | 2.9 | 1.7 | -6.8 |
| Brazil | 4.0 | 3.2 | 3.4 | 3.2 | 3.7 | 2.7 | 4.1 | 3.0 | 2.1 | -1.3 | -2.0 | 1.7 | 1.5 | 0.4 | 4.4 | -7.0 | -6.9 |
| Poland | 3.6 | 5.4 | 5.5 | 1.6 | 1.3 | 1.3 | 0.0 | 2.5 | 3.1 | 4.4 | 4.4 | 3.7 | 5.3 | 4.8 | 1.6 | 4.2 | -6.9 |
| Nicaragua | 3.7 | -7.3 | -10.2 | 8.5 | -0.3 | -3.2 | -1.5 | -0.4 | 3.0 | 2.8 | 3.0 | 6.1 | 0.1 | -3.5 | -3.2 | -4.3 | -7.6 |
