Jobs in Tajikistan

GLOBAL WAGE REPORT 2016/17 WAGE INEQUALITY IN THE WORKPLACE Mariko Ouchi ILO-Budapest [email protected] Some preliminary remarks The 2008 ILO Declaration on Social Justice for a Fair Globalisation calls for policies designed to ensure a just share of the fruits of progress to all, and a minimum living wage to all employed and in need of such protection : rce of income u o s y e k a re Wages a to 80% % 0 7 t

n e s re p re they often eholds with s u o h r fo e m ur of total inco er in the labo b m e m e n o t at leas

force. n the rtant effect o ct on o p im an e av t impa Wages h y have a direc economy: The ess, competitiven nd a consumption and. m aggregate de trends have In many countries, wage changing the , become a political issue nature of political

discussion. 2 Global Wage Report 2016/17 Outline Part I: Major Trends in Wages Global trends Wages, productivity and labour shares Part II: Wage Inequality in the Workplace The extent of wage inequality Within & between enterprises Gender pay gaps Part III: Summary & Conclusion 3 Global Wage Report 2016/17

Global wage growth has decelerated since 2012 Annual average global real wage growth (2006-15) Weighted average; data from ILO global wage database, % 4 Major Trends in Wages Wage growth has increased in developed countries; but declined in emerging economies Annual average real wage growth in the G20 (2006-15) Weighted average; data from ILO global wage database, % Developed G20 2 1.7 4 1 0.2 0.4

0.5 0 3 2.7 2.6 -1 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1.9 2 2.0 Emerging 10 8 6 1 4 6.6

6.0 3.9 2.5 2 0 5 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Major Trends in Wages 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Real wage growth in Moldova is steady Real wage growth (2010-14) Nominal monthly average wage (2010-14) Calculated by ILO, based on nominal wage data from National statistics office & IMF cpi % Data from national statistics office;

Moldovan Leu (MDL) RWG 8 5000 6.4 5.9 6 4090 4000 2 2972 3042 0 1000 6

0.7 2010 2011 2012 2013 4.6 4.6 2012 2013 2014 CPI 2000 0 3.7 3.1

3674 3386 3000 4 2010 2011 2012 Wage Inequality in the Workplace 2013 2014 9 8 7 6 5 4 3 2

1 0 7.4 2010 7.7 2011 5.1 2014 In the last 10 years, real wage gaps have opened up between developed countries 7 Major Trends in Wages and also between emerging economies Average real wage index (2006-15) base year=2006; developing G20 countries 240

225.47 220 200 180 160 155.24 161.45 143.14 141.87 140 120 100 2006; 100 2011; 113.95 2011; 113.01 2009; 109.15 2010; 110.76

2007; 105.46 2008; 105.57 2010; 104 2007; 102.54 2008; 100.41 2009; 97.44 2012; 120.02 2012; 117.24 2014; 135.55 129.47 2013; 127.76 129.11123.15 2013; 2014; 123.6 123.06 111.87 86 80 2006 8 2007 Major Trends in Wages

2008 2009 2010 2011 2012 2013 2014 2015 In developed countries, real wages growth has lagged behind the growth of labour productivity Labour productivity 10ps 2x 5ps 7ps 9

Major Trends in Wages Wage and there has been a global decline in labour income shares Adjusted labour income share, % Note: China data is unadjusted 10 Major Trends in Wages But in Moldova, growth trends of wage and productivity are synchronized Moldova total labour income share (2000-14) Moldova wage vs productivity (2006-14) Data from ILO global wage database Calculation based on ILO wage database Index 80%

160 70% Wag e 150 60% 140 50% 40% Productivit y 130 30% 120 20% 110 10% 0%

00 0 1 02 03 04 05 06 07 08 0 9 10 11 12 13 14 2 0 20 20 2 0 20 2 0 2 0 20 2 0 20 20 2 0 2 0 20 2 0 11 Major Trends in Wages 100 2006 2007 2008 2009 2010 2011 2012 2013 2014 In conclusion

Emerging economies Some emerging economies have performed well in terms of average wage growth, but the pace of convergence is slowing down Developed economies Wage growth has been slow in many developed economies, lagging overall behind productivity growth Coordination Coordination of wage policies should take into account the relationship between wages & productivity, and labour income shares. 12 Major Trends in Wages Outline Part I: Major Trends in Wages Global trends

Wages, productivity and labour shares Part II: Wage Inequality in the Workplace The extent of wage inequality Within & between enterprises Gender pay gaps Part III: Summary & Conclusion 13 Global Wage Report 2016/17 Motivation and Data Sources Motivation for Part II Excessive inequality is bad for economic growth; It reduces social mobility and creates divisions within society. Debate has mostly focused on the characteristics of workers, and the effects of technology and globalization. A new literature looks

at the role of the workplace. 14 Wage Inequality in the Workplace Data sources for Part II For Europe, we use EMPLOYEREMPLOYEE matched data (Structure of Earnings Survey, Eurostat). 22 Countries, 2002 to 2010, 22 million wage employees from about 1.1 million enterprises For Emerging & Low income Economies, such data is not available. Instead, we used labour & household surveys & enterprise level surveys Wage inequality increases sharply at the top Gross monthly wage of employee (2010) Weighted average by centile; data from 22 European economies, Euro (thousand) 7.4x 15 Wage Inequality in the Workplace

There are differences across countries; some have much lower wages inequality Gross hourly wage of employee (2010) Weighted average by centile; data from 22 European economies, Euro 4.4x 6.5x 160 13.3 x 6.2x 12 16 Wage Inequality in the Workplace Top decile of highest-paid employees earns as much as the bottom 50% of the population Real gross monthly wage share of employee (2010) Weighted average; data from 22 European economies, %

3.6% D90 17 Wage Inequality in the Workplace Education is correlated with wage levels, but does not explain everything Education of wage employee (2010) Weighted average by centile; data from 22 European economies, % Having college degree does not help you move to top 1% 18 Wage Inequality in the Workplace Economic sector and other factors also play a role Economic sector of wage employee (2010) Weighted average by centile; data from 22 European economies, %

1 in 5 top 1% wage earner work in Real estate and Finance 19 Wage Inequality in the Workplace Next, we therefore bring enterprises into the analysis 20 Wage Inequality in the Workplace Inequality between enterprises A recent chart from the OECD 21 Wage Inequality in the Workplace Inequality within enterprises About 80% of employees earn less than the average wage in their enterprises

Wage inequality is much higher among enterprises that pay high average wages A few workers in a few enterprises earn extremely high wages 22 Wage Inequality in the Workplace Decompose total variance in wages as the sum of the within and between Average hourly wages of individuals & enterprises (2010) Wage variance; data from 22 European economies, % of total Within-enterprise inequality is as nearly important as between- establishments inequality 23 Wage Inequality in the Workplace Countries with more between inequality also have more within inequality Decomposition of variance (2010) .2 Average hourly wage; data from 22 European economies

s2 (ln) Netherlands Luxembourg WITHIN .15 Portugal Poland Lithuania United Kingdom Estonia Hungary Latvia Czech Republic Slovakia Cyprus Europe Finland France Italy .1 Romania

Greece Bulgaria Spain .05 Belgium Sweden Norway 0 24 Wage Inequality in the Workplace .1 BETWEEN .2 .3 Fewer women in top deciles; more woman in low-pay

Gender of wage employee (2010) Weighted average by centile; data from 22 European economies, % 4x 1.4x 25 Wage Inequality in the Workplace Gender wage gap is even wider among top 1% of wage employees Gender of wage employee (2010) Ratio of female to male hourly earnings among total population; data from 22 European economies, % 26 Wage Inequality in the Workplace Outline Part I: Major Trends in Wages

Global trends Wages, productivity and labour shares Part II: Wage Inequality in the Workplace The extent of wage inequality Within & between enterprises Gender pay gaps Part III: Summary & Conclusion 27 Global Wage Report 2016/17 Proposing country-specific measures to reduce excessive wage inequality 1 Productivity growth for sustainable enterprises Minimum wages & collective

bargaining No necessary trade-off between growth and inequality ILO Conclusions concerning the promotion of sustainable enterprises Top salaries 28 Summary & Conclusion Gender & other pay gaps Proposing country-specific measures to reduce excessive wage inequality 1 Productivity growth for sustainable enterprises Minimum wages & collective bargaining The need for institutions How to design sustainable wage policies?

Top salaries 29 Summary & Conclusion Gender & other pay gaps Proposing country-specific measures to reduce excessive wage inequality 1 Productivity growth for sustainable enterprises Minimum wages & collective bargaining Regulation or self-regulation? Transparency and shareholder say over pay Top salaries 30 Summary & Conclusion

Gender & other pay gaps Proposing country-specific measures to reduce excessive wage inequality 1 Productivity growth for sustainable enterprises Minimum wages & collective bargaining Equal pay legislation Job evaluations Top salaries 31 Summary & Conclusion Gender & other pay gaps THANK YOU FOR YOUR ATTENTION! For further information on Global Wage Report or research conducted by the ILO wage group,

please refer to: Global Wage Report 2016/17 http://www.ilo.org/global/research/global-reports/ global-wage-report/2016/WCMS_537846/lang--e n/index.htm Minimum Wage Guide & Other Publications http://www.ilo.org/global/topics/wages/publicatio ns/lang--en/index.htm 32 Global Wage Report 2016/17

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