BANGKOK (ILO News) – Wage growth in Asia and the Pacific is outperforming most of the world, although this dynamic progress is unevenly spread across the region, according to a new research note from the International Labour Organization’s (ILO) Regional Office for Asia and the Pacific.

“Wages in Asia and the Pacific: Dynamic but uneven progress”, has been published alongside the ILO’s Global Wage Report 2014/15. While the Global Wage Report reviews the main trends in wages world-wide, the Asia and Pacific Supplement looks at the region in more detail, including how its impressive record of economic growth has impacted on incomes and living standards.

According to the Supplement, real wages in the region grew by 6.0 per cent in 2013, significantly above the global average of 2.0 per cent. “These substantial wage gains have helped to translate economic dynamism into higher incomes and living standards,” the authors say.

However the picture is uneven, with significant differences between the three sub-regions – East Asia, South-East Asia and the Pacific, and South Asia. While real wages have tripled in East Asia since the start of the century (mainly thanks to China’s rapid growth), in the other sub-regions growth has been more modest and wages have risen by little more than 50 per cent in the same period.

In addition, a third of Asia Pacific’s workers and their families remain below the international poverty threshold of US$2 per day (expressed in Purchasing Power Parity). Inequality is also increasing and the weakness of wage-setting institutions in many countries means that the benefits of growth have not been spread as widely as would have been feasible.

Wage growth has been strongest in East Asia, with average real wage growth of 7.1 per cent in 2013. In China, the main driving force of the sub-region, the rapid growth of wages has led some observers to declare that country’s competitive edge is being undermined. However, the Supplement finds that “despite rising wages China remains highly competitive”, because it now competes on productivity rather than low wages, and its comparative advantage is gradually shifting away from labour-intensive sectors such as garments towards higher-value added activities such as electronics.

In South-East Asia and the Pacific minimum wages have played a major role in reviving wage growth; average real wages grew by 5.3 per cent in 2013. In past years, wage growth had been significantly lower – despite robust economic performance, leading to a disconnect between productivity gains and wages. For instance, in Thailand’s manufacturing sector, real wages remained virtually flat between 2000 and 2011, while labour productivity rose almost 50 per cent. The 2012/13 minimum wage increase was therefore a ‘catch-up’ with prior productivity gains.

In South Asia, wage data are less comprehensive than in other parts of Asia Pacific, meaning that the estimate of slowing real wage growth (from 6.4 per cent in 2008 to 2.4 per cent in 2013) needs to be treated with caution. However, there is points to a slow growth in wages, which is a cause for concern.

Progress towards gender parity across the region has been slow; since 2000 there has been only a slight improvement in women’s share of waged employment, rising from 34.5 per cent then to 37.0 per cent in 2013. This is because women are less likely to enter the labour market, and when they do, they are more likely to be self-employed. For those women who do find waged employment, a “major concern” is that are often paid less than their male counterparts, because of a combination of differences in wage rates and the number of hours worked.

The Supplement also includes special sections on Asia’s garment sector, China’s private enterprises, Thailand’s manufacturing sector, India’s rural workers and the Pacific Island countries.

The Supplement recommends three areas for policy action; a strengthening of minimum wage-setting institutions, a strengthening of collective bargaining, and the collection and disseminaton of more comprehensive, timely data on wages to form a sound basis for policy-making. 

For media inquiries and to arrange interviews please contact:

Sophy Fisher
Senior Communication Officer
ILO Regional Office for Asia and the Pacific, Bangkok
Email
Tel.: +66 (0) 2 288 2482

Jiraporn Wongpaithoon
Information Officer
ILO Regional Office for Asia and the Pacific, Bangkok
Email
Tel.: +66 (0) 2 288 1664

Malte Luebker,
Senior Regional Wage Specialist
ILO Regional Office for Asia and the Pacific, Bangkok
Email
Tel.: +66 (0) 2 288 1215