Page 13 - Policy Economic Report - November 2024

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

5. Wage inequality has declined in two-thirds of countries worldwide since start of 21st Century-
International Labor Organization (ILO)

A new report from the International Labour Organization (ILO) reveals that wage inequality has decreased
in about two-thirds of all countries since 2000. Despite this positive trend, significant wage differentials
persist worldwide.

The Global Wage Report 2024-25, finds that since the early 2000’s, on average, wage inequality, which
compares the wages of high and low wage earners, decreased in many countries at an average rate that
ranged from 0.5 to 1.7 per cent annually. The most significant decreases occurred among low-income
countries where the average annual decrease ranged from 3.2 to 9.6 per cent in the past two decades.

Wage inequality is declining at a slower pace in wealthier countries, shrinking annually between 0.3 and
1.3 per cent in upper-middle-income-countries, and between 0.3 to 0.7 per cent in high-income countries.
Moreover, even though wage inequality narrowed overall, decreases were more significant among wage
workers at the upper end of the pay scale.

The report also finds that global wages have been growing faster than inflation in recent times. In 2023,
global real wages grew by 1.8 per cent with projections reaching 2.7 per cent growth for 2024, the highest
increase in more than 15 years. Such positive outcomes mark a notable recovery when compared to the
negative global wage growth, of -0.9 per cent, observed in 2022, a period when high inflation rates
outpaced nominal wage growth.

However, wage growth has been uneven across regions, with emerging economies experiencing stronger
growth than advanced economies. While advanced G20 economies registered a decline in real wages for
two consecutive years (-2.8 per cent in 2022 and -0.5 per cent in 2023), real wage growth remained
positive for both years in emerging G20 economies (1.8 per cent in 2022 and 6.0 per cent in 2023).

Despite recent progress high levels of wage inequality remain a pressing issue. The report shows that
globally, the lowest-paid 10 per cent of workers earn just 0.5 per cent of the global wage bill, while the
highest-paid 10 per cent earn nearly 38 per cent of this wage bill. Wage inequality is the highest in low-
income countries, with close to 22 per cent of wage workers there classified as low-paid.

Women and wage workers in the informal economy are more likely to be among the lowest paid. This
finding reinforces the need for targeted actions to close wage and employment gaps and ensure fair wages
for all wage workers.

Strengthening wage policies to reduce inequality

The study emphasizes the need for targeted policies to foster inclusive economic growth.

The report concludes that reducing wage inequality requires both strong wage policies and structural
support for equitable growth. By addressing these challenges countries can make real progress towards
reducing wage gaps and promoting fair, sustainable, economic growth for workers worldwide.

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