Global wages rose 2.7% in 2024, the strongest in 15 years, but uneven gains and inflation still affect low-income households, says ILO.
Global wages are on the rise, showing significant improvement after a period of stagnation and decline during the pandemic and the inflationary shocks of 2022. According to the latest Global Wage Report released by the UN International Labour Organization (ILO), average pay increased by 1.8% in 2023, followed by a more robust 2.7% growth in the first half of 2024, marking the highest gains in over 15 years. However, the recovery remains uneven across regions and income groups, leaving low-income households particularly vulnerable.
The Numbers Behind the Recovery
The wage growth seen in 2023 and 2024 contrasts sharply with the 0.9% decline in global wages in 2022, when inflation outpaced earnings. The resurgence of wages is tied to the global post-COVID economic recovery. Emerging economies led the charge with a near-6% wage increase in 2023, compared to a modest 0.9% rise in industrialized economies. (Figure 1)
ILO Director-General Gilbert Houngbo highlighted the significance of this turnaround. “If this trend is confirmed, it will be the largest gain in more than 15 years,” he said, adding that this progress is not evenly distributed globally. For instance, wages in Africa, Northern America, and Europe showed little to no growth in 2023, while emerging economies in Asia and Central and Western Asia recorded impressive gains.
Regional Disparities in Wage Growth
The global wage recovery has underscored stark regional differences:
- Asia and the Pacific, Central and Western Asia, and Eastern Europe have seen faster wage growth than other regions. Central and Western Asia, in particular, recorded an extraordinary 17.9% growth in 2024, a stark contrast to 0.3% in Northern America. (Figure 2)
- In 2022, wage increases were confined to Africa, Asia, and Central and Western Asia, while real wages declined in other regions, with Europe facing the sharpest drop of 3.7% in Northern, Southern, and Western Europe. (Figure 2)
- By 2024, wage growth had become more widespread, with only African and Arab States seeing stability instead of growth.
Despite these advances, inflation continues to erode purchasing power, especially in low-income households. “Inflation – albeit reduced – remains a harsh reality in many emerging and developing countries,” Houngbo noted, signaling that the wage gains may not translate into improved living standards for everyone.
The Productivity-Wage Gap
One critical issue raised in the ILO report is the growing disparity between productivity and wage growth in high-income countries. Between 1999 and 2024, productivity in these nations rose by 29%, while wages only increased by 15%. This divergence was most pronounced during periods of global crises, including the financial crisis of 2008 and the COVID-19 pandemic. The result is a widening gap that undermines workers’ share of economic gains.
The productivity-wage gap has been a persistent problem, particularly in wealthier countries. While productivity gains typically lead to higher wages, this has not been the case for many workers, reflecting systemic challenges in how economic growth is distributed.
Wage Inequality: A Mixed Picture
The report also sheds light on wage inequality trends over the past two decades. According to ILO data from 150 countries as shown in figure 3:
- Wage inequality has decreased in two-thirds of countries since the early 2000s, with annual reductions ranging from 0.5% to 1.7%.
- Low-income countries saw the most significant decreases, with wage inequality dropping by 3.2% to 9.6% annually over the past 20 years.
- However, in high-income and upper-middle-income countries, wage inequality has been far more resistant to change, shrinking by only 0.3% to 1.3% annually.
Interestingly, the largest decreases in wage inequality have occurred among workers at the higher end of the pay scale, particularly in wealthier nations. Despite this progress, low-income households in these regions continue to face challenges, as their earnings struggle to keep pace with inflation and rising costs.
A Fragile Recovery
While the wage growth figures are encouraging, they highlight the fragility of the global economic recovery. Rising wages alone are not enough to offset the ongoing pressures of inflation, particularly for the world’s most vulnerable populations. For many, wage increases are quickly absorbed by higher living costs, leaving little room for improved quality of life.
The ILO’s findings also emphasize the need for policy interventions to address the productivity-wage gap, which remains a persistent issue in wealthier economies. As Houngbo pointed out, “A sustainable recovery requires more than just wage growth—it needs equitable distribution and policies that ensure the benefits of productivity gains reach all workers.”
Looking Ahead
The global wage recovery is a welcome development, signaling resilience in the face of economic challenges. However, its uneven nature calls for targeted policies to support regions and income groups that have been left behind. Policymakers must address inflationary pressures, ensure fair compensation for productivity gains, and reduce wage inequality to build a more equitable and sustainable economic future.
The ILO report serves as a reminder that while progress is being made, much work remains to ensure that the benefits of recovery are shared widely. As the global economy continues to navigate post-pandemic challenges, the focus must shift from short-term gains to long-term solutions that prioritize economic justice and stability for all.
