The International Labor Organization (ILO) published the results of a new report that found stagnant wage growth in developed nations has actually reduced global wage growth and could very well diminish economic growth worldwide.
According to the report, international wage growth last year tumbled to two percent, down from 2.2 percent from the year prior. This means it still remains below the pre-crisis level of just around three percent. The average rate was in fact decreased by the stagnant wage hike in the developed countries, where it fell to a minuscule 0.3 percent last year, up from 0.2 percent from the previous year.
Some of the biggest wage gains were concentrated in Asian regions. This part of the world saw their wages go up by an average six percent, far beyond the quoted two percent number. Specifically, China had one of the biggest increases with nine percent, while southeast Asia received a 5.3 percent gain.
Business analysts blame this lack of pay raise on the economic crisis because employers continue to be uncertain as to whether or not it should increase its workers wages and salaries. Despite the fact that there has been some moderate boosts in wages situated in the United Kingdom and the United States, it’s still not enough to contribute significant to the international statistic.
“Wage growth has slowed to almost zero for the developed economies as a group in the last two years, with actual declines in wages in some,” said Sandra Polaski, the ILO’s deputy director-genera for policy, in a statement. “This has weighed on overall economic performance, leading to sluggish household demand in most of these economies and the increasing risk of deflation in the euro zone.”
The study authors noted that this lack of pay shouldn’t entirely be blamed on cheap labor competition in China and elsewhere in Asia but rather everyone’s “penny-pinching bosses.”
The U.S. unemployment rate was released Friday and the figure was as expected: 5.8 percent. However, economists were hoping for growth in wages, considering that a large chunk of the payroll numbers are part-time, low-paying or in the service sector.
