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Global Wage dynamics

November 2017

Globally, labour costs have shown an upward trend as tightening labour market conditions compelled employers to offer better pay packages. Hourly manufacturing wages have increased in most key Asian countries, while key industrialised nations with the exception of Japan have seen a growth in unit labour cost.

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Hourly manufacturing wages up in Asia Pacific except India

Between 2011 and 2016, GVA from manufacturing in Asia Pacific increased 15.9%, exerting upward pressure on hourly wages in the manufacturing sector in addition to factors such as skills level and labour market conditions. Given the region is also the world’s largest manufacturing hub, there are key implications for businesses.

Gap between minimum and average wages narrows in developed countries

The narrowing gap in the ratio of minimum wage to average wage indicates that the minimum wage is closing in on the average wage in Western Europe. The ratio of minimum wage to average wage is an indicator that shows the wage floor in relation to the average wage. The income gap between the highest and lowest paid is growing in western countries and there are growing pressures from multilateral organisations such as the ILO and other pressure groups to address this in order to bring about a more equal society.

The USA bucks the minimum wage trends

The USA is bucking the global wage trend. While some Western European countries are aiming to increase minimum wages to help people afford a basic living standard, the USA’s minimum wage growth in real terms declined 6.3% between 2011 and 2016.

Unit labour costs up in developed countries except Japan

The unit labour cost index, which shows the ratio of labour costs to labour productivity, is increasing in the leading developed countries mostly due to inflationary pressure and tightening labour market conditions, but also on account of higher employee benefits.

Global Wage Dynamics

Key global wage highlights
Hourly manufacturing wages up in Asian countries except India
Gap between minimum and average wage narrows in WE
The USA bucks the minimum wage trends
Unit labour cost up in developed countries except Japan
Case study: Robots help to fill gap in Japanese nurseries
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