Global Wage Growth Hits 15-Year High as Inflation Eases, Boosting Workers’ Buying Power
Global wage growth surged to its fastest pace in over 15 years in 2024, offering a welcome relief to workers worldwide as inflation eased. According to the International Labour Organisation’s (ILO) Global Wage Report 2024–25, real wages rose by an estimated 2.7 per cent last year, reversing the negative growth seen in 2022 when soaring prices cut workers’ purchasing power. This rebound marks a significant recovery from the pandemic-era cost-of-living shocks.
The improvement in wages follows a gradual easing of inflationary pressures. After a tentative increase of 1.8 per cent in 2023, real wages finally outpaced price growth, particularly in advanced economies where aggressive monetary policies and the decline of energy and food price shocks helped stabilize household incomes. Still, the report notes that the recovery has been uneven, with many workers—especially in lower-income regions—still struggling to regain ground lost during the peak inflation years.
Excluding China, where rapid wage growth skews global averages, real wage growth stood at an estimated 2.3 per cent. Among G20 nations, a clear divide remains: advanced economies returned to modest growth of 0.9 per cent in 2024 after consecutive years of decline, while emerging economies maintained strong increases, with gains of 5.9 per cent in 2024 following 6.0 per cent growth in 2023. Regionally, Asia, the Pacific, and Eastern Europe led the rebound, whereas Africa and Arab states lagged, highlighting the persistent challenges of high inflation and informal labour markets.
Despite the wage recovery, global inequality remains stark. The ILO found that the lowest-paid 10 per cent of workers earn just 0.5 per cent of total wages, while the top 10 per cent capture nearly 38 per cent. Minimum wage policies offered some protection, but in nearly half of countries, minimum pay failed to keep pace with inflation, leaving low-income households particularly vulnerable as rising food and housing costs outpaced overall price increases.
Looking ahead, the ILO warns that sustaining real wage growth and reducing inequality will require stronger wage-setting institutions, effective minimum wages, collective bargaining, and policies addressing informality, gender pay gaps, and productivity. Without these measures, the gains of 2024 could be fragile in the face of global economic uncertainties, climate risks, and geopolitical tensions, leaving many workers still on unstable footing.
source: Punch