KUALA LUMPUR (Dec 1): Rising inflation has caused a striking decline in real monthly wages in many countries, highlighting the urgent need for policies to prevent further poverty, inequality and social unrest. 

In a statement on Wednesday (Nov 30), the International Labour Organization (ILO) in its Global Wage Report 2022-2023 said global monthly wages fell in real terms by 0.9% in the first half of the year, marking the first instance of negative growth this century. 

The agency said that as a result, the purchasing power of middle-class families has been reduced, while low-income households have been hit particularly hard.

ILO director general Gilbert F Houngbo said the multiple global crises have led to a decline in real wages.

“It has placed tens of millions of workers in a dire situation, as they face increasing uncertainties.

“Income inequality and poverty will rise if the purchasing power of the lowest paid is not maintained.

“In addition, a much-needed post-pandemic recovery could be put at risk. This could fuel further social unrest across the world and undermine the goal of achieving prosperity and peace for all,” he said.

The ILO said that in Asia and the Pacific, real wage growth increased to 3.5% in 2021, and slowed down in the first half of 2022 to 1.3%.

When China is excluded from the calculations — considering the large weight the country has in the region — real wage growth increased by much less at 0.3% in 2021, and 0.7% in the first half of 2022.

The ILO said inflation rose proportionately faster in high-income countries, according to the report, which also included regional and country data. 

For example, in Canada and the US, average real wage growth dropped to zero in 2021, and then fell by 3.2% in the first half of this year.  

Rising inflation has had a greater impact on poorer families, as most of their disposable income is spent on essential goods and services, which generally experience greater price increases compared to non-essential items. 

In many countries, inflation is also eroding the real value of minimum wages, the global report further noted.