Seminar on wage inequality in the workplace

Haiyani Rumondang, Director General of Industrial Relations, Ministry of Manpower, officially opened the launch of the report in Jakarta. The main objective of the presentation is to raise awareness of the tripartite constituents, other stakeholders, and general public on the most recent global and regional wage trends.
More specifically, the presentation aims to:

• Disseminate the ILO Global Wage Report to the tripartite constituents and general public in Indonesia.
• Raise awareness of the tripartite constituents other stakeholders, and general public on possible policy measures to ensure sustainable wage and productivity growth.
• Initiate discussions among relevant tripartite constituents and stakeholders on effective wage policies.
• Leverage relevant tripartite institutions and other stakeholders in development and implementation of effective wage policies in Indonesia.

Background

As its subtitle suggests “Wage inequality in the workplace”, the ILO Global Wage Report 2016/17, report focuses more on inequality in the enterprises level, unlike the previous report, which looked into wage and income inequality in households. The report analyzes to what extent such inequality between enterprises and within enterprises has contributed to the overall wage inequality.

While findings of the report suggests a global trend of lower wage growth, it also looked into the extent to which effective minimum wage setting, as well as social dialogue and collective bargaining can contribute in reducing wage inequality and promote inclusive growth.

During the post financial crisis of 2008-2009, global real wage growth started to recover in 2010, but has decelerated from 2.5 percent in 2012 to 1.7 percent in 2015, the lowest level in last four years. If China is not included, the data will show a smaller numbers of 1.6 percent in 2012 to 0.9 percent in 2015. Such trend was due to lower wage growth in emerging and developing economies, particularly those in Central and Western Asia, the Arab states, and Africa, which could not be counterbalanced by higher wage growth in developing countries such as the United States, Germany, and some other EU countries.

Furthermore, the report shows that labour share of GDP of some small majority of countries has decline during the years of 2010-2015. This has not been the case in China, Germany, and the United States. Within the overall wage distribution, there also pay gaps between different groups of workers. The report shows that across most countries for which data are available, gender pay gaps has generally narrowed, but has not been closed.

In its conclusion, the report suggests the need for policy coordination at the global level, which avoid wage moderation policies or competitive wage cuts, and promote sustainable wage and productivity growth. At country level, the report identifies some possible policy measures to ensure sustainable wage growth and a just share of the fruits of progress to all. Such policy measures should be based on the patterns and drivers in each economy.

These possible measures include minimum wage and collective bargaining, salaries of top level management in enterprise, promotion of sustainable enterprise, fiscal policies, as well as policies on education and skills development programmes.

In this regard, the International Labour Office (ILO), through its project entitled “Labour standards in global supply chains: A programme of action for Asia and the garment sector”, in short “LSGSC Project” is conducting a launching of the Global Wage Report 2016/17.