A technical note COVID-19 and rising wage inequality: Trends and challenges in Thailand and Viet Nam highlights the magnitude of these trends. Based on analysis of quarterly data from national labour force surveys in Thailand and Viet Nam, the note quantifies the scale of inequality among wage earners, who in each country account for around half of total employment. It examines trends of various wage indicators in 2020 relative to the pre-crisis baseline in 2019 and helps identify segments of workers at the bottom of the wage ladder that have been particularly vulnerable to decreased pay during the crisis. The note concludes with several policy considerations critical to countering these rising inequality dynamics and fostering an even and balanced recovery.

Highlights include:

• In both Thailand and Viet Nam, average nominal monthly wage levels decreased in the second quarter 2020 before rebounding in the third quarter. The magnitude of the contraction, however, varied across different wage groups.
• Wage inequality, as measured by the ratio between those in the top and bottom 10 per cent of earners, trended upwards during the COVID-19 crisis in 2020.
• Heighted wage inequality is striking in critical sectors particularly vulnerable during the COVID-19 crisis.
• The COVID-19 crisis may be reversing progress in reducing low-paid work.

Conclusions and policy recommendations include:

• Wage subsidies targeting low-paid workers in vulnerable sectors would help to protect some of the most vulnerable workers.
• A renewed focus on minimum wage setting and ensuring compliance would help to offset the alarming expansion of low paid work particularly in Viet Nam and assist those at the bottom of the wage ladder.
• Efforts towards an even and balanced recovery could focus on youth and workers with lower educational qualifications.
• Active labour market policies such as skills training initiatives and job search assistance would help boost prospects of higher paid employment.

For more information:

Phu Huynh
Technical Specialist, Employment & Decent Work
huynh@ilo.org