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'Smaller piece of the pie' for workers worldwide, report says

December 07, 2012|By Emily Alpert

Workers are getting a smaller piece of the pie in booming China and economically stressed Europe alike, the United Nations labor agency said Friday, chalking up the trend to technological strides, globalization and the weakening muscle of labor unions.

Worldwide, average wages grew 1.2% last year, the International Labor Organization said in a newly released report based on available data. But the bulk of that growth was powered by China. If the Asian powerhouse is counted out, wages barely budged last year, damped by the economic crisis.

In developed countries such as Britain and the United States, wages in 2011 suffered their second dip in four years. The disappointing picture for workers in developed countries seems to be persisting, as “wages are growing marginally, if at all, in 2012,” the U.N. agency report says.

Worker pay also appeared to have dropped in the Middle East, but the organization cautioned that some estimates from the region were still tentative. Nearby Iran, which faces international sanctions over its nuclear program, suffered the biggest estimated drop, with wages plunging 12.5% last year, according to the Statistical Center of Iran.

While wages have stagnated or lagged, worker productivity has surged in wealthy countries, the U.N. agency found. Over the last two decades in Germany, for instance, productivity jumped almost a quarter while monthly wages stayed flat.

The result is “a smaller piece of the pie for workers,” the labor agency said. The same trend occurred in China despite its boom. While wages have roughly tripled in the last decade, they did not keep pace with the rising value of the goods and services that China produced.

As workers are getting a smaller share, the gap between the highest and lowest earners has grown in 23 of 31 countries studied, the ILO found. The chasm between rich and poor has fueled protests and strikes and soured voters on austere budgets intended to slash deficits, the report said.

Beyond the frustrations of workers who feel that their paychecks are unfairly low, the shrinking share for workers hurts household consumption, which “could endanger the pace and sustainability of future economic growth,” agency director Guy Ryder warned.

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