Global Wage Report 2020/21

Asia Pacific wage growth slows on COVID-19 impact: ILO Report

Fallout from pandemic felt throughout the region, however pace of wage growth remains higher than global levels.

Press release | 02 December 2020
BANGKOK (ILO News) - A new report by the International Labour Organization (ILO) has found that monthly wages fell or grew more slowly in the first six months of 2020, as a result of the COVID-19 pandemic, in two-thirds of countries for which official data was available, and that the crisis is likely to inflict massive downward pressure on wages in the near future.

In 2018/19 the Asia and Pacific region witnessed a slightly slower pace in wages growth, down from 3.9 per cent to 3.4 percent, nevertheless, it remained higher than the global rate which declined from 2.2. per cent to 2.0 per cent over the same period.

“While wage growth has declined in the Asia Pacific region, it has fared better than the rest of the world. Until the COVID-19 crisis, domestic demand in most Asia Pacific countries helped offset the slowdown at global level due to trade tensions. A robust and rapid response by governments in the region helped soften the impact of COVID-19, while dynamic minimum wage policies have also played a major role in sustaining local markets,” says Daniel Kostzer, ILO Senior Wage Specialist in the Regional Office for Asia and the Pacific.

Figure 3.3 Annual average real wage growth by region, 2006–19 (percentage)

A closer look at Asia Pacific

In Asia and the Pacific, between 2010 and 2019, real minimum wages increased in 22 countries and decreased in eight countries. Among the countries that have experienced an increase in real minimum wages, the highest average annual increases were observed in Viet Nam (11.3 per cent), the Lao People’s Democratic Republic (10.1 per cent) and Cambodia (9.7 per cent). The largest decreases in real minimum wages were observed in Bangladesh and Sri Lanka. In 20 countries in the region the growth of real minimum wages kept pace with or exceeded labour productivity growth, whereas in 10 countries the growth of real minimum wages was lower than labour productivity growth.

Global trends

  • In the first half of 2020, as a result of the COVID-19 crisis, a downward pressure on the level or growth rate of average wages was observed in two thirds of the countries for which recent data are available such as Japan, the Republic of Korea and the United Kingdom.
  • In countries where strong job retention measures have been introduced or extended to preserve employment, surges in unemployment have been moderated, The effects of the crisis may have been more apparent through a downward pressure on wages than through massive job losses.
  • The impacts of the crisis on total wages have fallen differently on men and women, the latter being disproportionately affected.
  • The crisis disproportionately affected lower-paid workers, thereby increasing wage inequalities. Studies have shown that in many countries, reductions in hours worked have impacted lower-skilled occupations – in particular those in elementary work – more than higher-paying managerial and professional jobs.

Minimum wages

The Report includes an analysis of minimum wage systems, which could play an important role in building a recovery that is sustainable and equitable. Minimum wages are currently in place in some form in 90 per cent of ILO Member States. But even before the onset of the COVID-19 pandemic the report finds that, globally, 266 million people - 15 per cent of all wage earners worldwide – were earning less than the hourly minimum wage, either because of non-compliance or because they were legally excluded from such schemes. Women are over-represented among workers earning the minimum wage or less.
  • In Asia and the Pacific, only 0.4 percent of workers live in countries without a statutory minimum wage. Globally the figure is 3.1 percent.
  • In Asia and the Pacific 45 per cent of those earning below the minimum wage are women, 17 per cent under 25 years old and 71 per cent educated to less than secondary education level.
  • The groups most frequently excluded from legal coverage of minimum wage systems are agricultural workers and domestic workers.

Media contact

Steve Needham
Snr Communications Officer
ILO Regional Office for Asia and the Pacific
Tel.: +66 836066628