ILO's Global Wage Report: Nothing to be happy about

The GWR 2014/15 has been published and is available here. I'm sure I'll post more on it later. Here just one of the several things to take into account. Wages in advanced economies fell in 2008 and 2011, and have grown very little since the beginning of the crisis in 2008. Basically stagnated. Disaggregating by country you get the figures below.

The declines are in Japan, Italy, UK, Portugal, Ireland, Spain and Greece. Japan in eternal deflation, and the European periphery under Troika's adjustment programs. In Greece a collapse of about 24% since 2009. This is not only result of the austerity policies, but also of specific policies to reduce wages, like a 22% cut in the minimum wage for unskilled workers aged 25 and over and a 32% cut for those under 25, the weakening of collective bargaining, and the massive cuts in public wages and employment. Internal devaluation. But the recovery of the current account balance, I'd bet, is related to collapse of imports, not expanding exports (more on that later).

New ILO Book: "Transforming Economies - Making industrial policy work for growth, jobs and development"

From the introduction

Building on a description and assessment of the contributions of different economic traditions (neoclassical, structural, institutional and evolutionary) to the analysis of policies in support of structural transformation and the generation of productive jobs, this book argues that industrial policy goes beyond targeting preferred economic activities, sectors and technologies. It also includes the challenge of accelerating learning and the creation of productive capabilities. This perspective encourages a broad and integrated approach to industrial policy. Only a coherent set of investment, trade, technology, education and training policies supported by macroeconomic, financial and labour market policies can adequately respond to the myriad challenges of learning and structural transformation faced by countries aiming at achieving development objectives. The book contains analyses of national and sectoral experiences in Costa Rica, the Republic of Korea, India, Brazil, China, South Africa, sub-Saharan Africa and the United States. Practical lessons and fundamental principles for industrial policy design and implementation are distilled from the country case studies. Given the fact that many countries today engage in industrial policy, this collection of contributions on theory and practice can be helpful to policy-makers and practitioners in making industrial policy work for growth, jobs and development.

Be sure to see the chapter by Robert Hunter Wade - "The mystery of US industrial policy: the developmental state in disguise" - on page 379.

The book is available as a pdf for free download here.

Decent work is all you need

The International Labor Organization (ILO) argues that beyond the Millennium Development Goals (MDGs), the international community should also address the structural underpinnings behind poverty, inequality and sustainability, the lack of decent jobs.

Real wage growth around the world

The new edition of the International Labour Organization's Global Wage Report (2012/13) has been published. The figure below shows the rates of growth in real wages by region.

Note that real wages have basically stagnated in the developed world, and have fallen in the Middle East, while they have grown in the rest of the world. One should take with a grain of salt the incredible increase in Eastern Europe. For example, the graph below, showing Russia's real wages, gives a more accurate picture.

Real wages are now slightly above the levels associated with the pre-liberalization, and market reform period. In other words, the commodity boom and the Natural Resource Nationalism have allowed a significant recovery in real wages. Not dissimilar to the Latin American story, by the way.

In Asia a lot of the growth in real wages is explained by the vast migration of rural workers to urban areas in China.

Note that without China the rate of growth in real wages has been considerably less impressive. At any rate, as always, the ILO report provides a wealth of data, which is worth to take into consideration.

Modern slavery in numbers

There are slightly less than 30 million people in slave labor conditions in the world (the ILO puts the figure at around 21 millions; see here). Most of them are in South Asia and Africa (see map below). By percentage of the population Mauritania and Haiti, followed by Pakistan and India, lead in this dreadful statistic.

By absolute numbers the main countries are India and China, for obvious reasons. The numbers are in the table below. The causes are obviously complex, but result ultimately of poverty, labor market informality and the inability to incorporate workers into the formal labor market. In addition, it is more prevalent in areas where national governments have little access, and as a result more likely in failed States.

The Global Slavery Index 2013 Report, where you can find the map and table shown above, is available here.

Real wage growth in the center and the periphery

From the International Labor Organization's Global Wage Report 2012/13 the rates of growth of real wages around the globe.

Note that Eastern Europe and Central Asia and Asia (China playing a big role) lead the pack. Developed countries basically have stagnant wages and the Middle East is the only region with some real contraction.

Note that these are rates of growth, and that levels are very different in each region. According to the report (p. 10):

"The hourly rate of pay varied from almost US$35 in Denmark, through a little more than US$23 in the United States, to US$13 in Greece, between US$5 and US$6 in Brazil, and less than US$1.50 in the Philippines. Using a different and non-comparable methodology, total hourly compensation costs in manufacturing were estimated at US$1.36 in China for 2008 and at US$1.17 in India for 2007 (United States Department of Labor, Bureau of Labor Statistics, 2011)."

These levels are measured in current exchange rates (not Purchasing Power Parity, PPP), which is in my view good, since it reflects the actual costs that firms do face in international markets.

A leader for the ILO

Vijay Prashad writes on the very important election for the head of the International Labour Organization, and the need to support Jomo K.S. a progressive economist, in particular in the middle of the current global crisis. He says:

On May 28, a select group of delegates will enter a room in the International Labour Organization (ILO) in Geneva to elect the body's next Director-General. Nine candidates are in line for the post. The ILO's byzantine process revolves around a tripartite structure, with the employers (the International Organisation of Employers), the workers (largely the International Trade Union Confederation, ITUC) and the governments sharing the task of selecting the next Director.

Read the rest here.