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Coronavirus to put ‘massive’ pressure on wages, UN agency warns

Published: (Updated: ) in European News by .

In two-thirds of the countries surveyed, wages fell or wage growth slowed in the first six months of 2020.

The COVID-19 pandemic will likely exercise “massive downward pressure on wages in the near future,” the International Labor Organization said in a report released on Wednesday.

Some of the impacts are already being felt: wages fell or wage growth slowed in the first six months of 2020 in two-thirds of countries surveyed, ILO found. The effects were disproportionately felt by women and the lower-paid, albeit they were somewhat mitigated by social safety nets.

Based on estimates from a sample of 28 European countries, without wage subsidies women would have lost 8.1 percent of their wages in the second half of 2020, compared to a 5.4 percent drop for men.

Based on the same sample, the lowest paid — among which women are over-represented — would have lost 6.5 percent of their wages. Income support in the form of wage subsidies compensated 40 percent of this drop.

ILO Director General Guy Ryder argues that minimum wages and wage policy should have a key role in the recovery. “We fear COVID-19 could lead to a large increase in inequality and poverty … Minimum wages have significant potential to reduce both income inequality and poverty,” he said at an online press conference, adding these should be designed to reach enough people and be set at an adequate level.

The report also found that real wage growth fluctuated between 1.6 percent and 2.2 percent in 136 countries surveyed in the four years preceding the pandemic, with growth being most sluggish in North America and Northern, Southern and Western Europe. Conversely, productivity outpaced wage growth.

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The report found “growth of productivity consistently in excess than the growth of real wages. That says something important about the distribution of income between capital and labor. Not a new story, but it is continuing until the current moment,” said Ryder.

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Source: POLITICO https://www.politico.eu/article/coronavirus-to-put-massive-pressure-on-wages-un-agency-warns/?utm_source=RSS_Feed&utm_medium=RSS&utm_campaign=RSS_Syndication

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