Proposal preview

Wages and waves of globalisation since 1930/1950: convergence, inequalities, strategies

Wages are an essential element of economic and social life as today one in every two economically active persons in the world is an employee paid by wage and the global payroll represents around 40% of global GDP. Globalisation has effects on prices, costs and incomes and this aspect is less often discussed.

However, by taking only the average wage, the disparities in wage levels in the world are considerable. The gap (PPP) between developed countries and the major emerging countries is 1 to 3, with all developing countries 1 to 7.5, and with the LDCs 1 to 20. Within the continents, disparities are also very present : e.g. Europe is divided into four or five different development subgroups and the gap is currently rated 1 to 6 in nominal and 1 to 3 in PPP.

As preliminary remarks, is any statistical dispersion always disparity and any disparity a sign of inequality? In this case, it seems necessary to compare the nominal average deviation or PPP with other indicators such as: wages Gini index, gender wage gap, low wages rates, interdecile ratio D9 / D1 etc. Then, it seems pertinent to consider the contemporary paradox of the unity of commodity prices and the multiplicity of labour prices (according to the respective levels of qualifications). In fine, we have to raise the question of international competition on labour and goods markets, questionning the role of labour costs in exports and the attractiveness of wages in advanced countries for potential migrants.

The main question for the session will focus on the average wage convergence in time (or not) and wage equalization inside individual states (or not). According to the (HOS) Heckscher-Ohlin-Samuelson model of equalization of factor prices (and taking into account its limitations), the ILO noted in the Global Wage Report 2014-15, p. 20, a convergence between national average wages since 2000. But earlier? Avoiding going back to the 19th century or earlier, we propose to start from the years 1950-1960. At least two periods emerge after 1950: between 1950 and 1980, wages in advanced economies have grown faster than those of the emerging countries and the situation is clearly reversed from the 1980s.

This kind of analysis supposes some conditions for relevant comparison: in advanced countries, wages currently account for 40/50% of GDP, 50/70% of household incomes, while 90% of the workforce are wage earners. In emerging countries these figures are: 35/40% of GDP, 40/50% of household incomes and 50% of the workforce. Furthermore, there are some important labour differences in both types of economies: e.g. the existence of unorganised economic sectors, the relative importance of rural manpower, the average qualification level of manpower and the presence or absence of social insurance etc.

On the other hand, the wage problematic also questions the policies and strategies concerning them and the session does not exclude papers or texts such as: public policies of wages, wage strategy of companies, industrial relations and wages.

Organizer(s)

  • Leonid Borodkin Lomonossov State University Moscow lborodkin@mail.ru Russia
  • Michel-Pierre Chelini Université d'Artois, Arras chelinimp@noos.fr France

Session members

  • Maria Camou, University of Republic, Montevideo
  • Aomar Ibourk, University Cadi Ayyad of Marrakech
  • Hwok-Aun Lee, ISEAS, University of Singapore, Singapore
  • Humberto Morales, Benemérita Universidad Autónoma de Puebla
  • Rekha Pande, Central University of Hyderabad
  • Muriel Perisse, Université d'Artois
  • Silvana Maubrigades, University of Republic, Montevideo

Discussant(s)

  • Dominique Barjot University of Paris Sorbonne dom.barjot@orange.fr

Papers

Panel abstract

1. About global wages convergence in time. Between 1950 and 1980, wages in advanced economies have grown faster than those of the (future) emerging countries. The situation is reversed in the 1980s: wages in emerging countries are growing faster than those of developed countries. Is it simultaneity or causality? 2. About the issue of a decent wage and the several types of wage dispersion. Is this approximate convergence of wage average levels accompanied by a marginal internal equalization of wages? Or by worsening disparities due either to an expansion of qualifications or to a differential sectorial productivity growth? 3. Wage strategies and factors influencing wages: wage policy. Wages are also the subject of a strategy, conscious or implicit: on the part of the employees themselves, on the part of companies, trade unions, public authorities. Can we define explicit and constructed wage strategies, according to economic agent?

1st half

Wages problematics since the 1950s in Europe

Michel-Pierre Chelini

An evolution in two periods: rapid wage growth until 1980, slower from 1980 through today. This development is the opposite of that of unemployment: low unemployment, sharp rise in wages (and vice versa). On the other hand, it is parallel to GDP, which is logical: the company can not redistribute less than value added + profits, investments, etc. The price-wage link exists, but with a sharp decline in 1973-86. Europe is divided into four or five different development levels. In the early years of this decade around 2010- 12, the EU’s annual gross salary hovered around € 30,000. However it has since risen from € 40,000 to approximately € 50,000 in countries with higher living standards (i.e. Denmark, Finland, Luxembourg, Belgium), higher than the bigger economies like France, UK (€ 34,000) or Germany (€ 38,000) while Italy remains close to the mean. Countries with the lowest standard of wages hover around...

An evolution in two periods: rapid wage growth until 1980, slower from 1980 through today. This development is the opposite of that of unemployment: low unemployment, sharp rise in wages (and vice versa). On the other hand, it is parallel to GDP, which is logical: the company can not redistribute less than value added + profits, investments, etc. The price-wage link exists, but with a sharp decline in 1973-86. Europe is divided into four or five different development levels. In the early years of this decade around 2010- 12, the EU’s annual gross salary hovered around € 30,000. However it has since risen from € 40,000 to approximately € 50,000 in countries with higher living standards (i.e. Denmark, Finland, Luxembourg, Belgium), higher than the bigger economies like France, UK (€ 34,000) or Germany (€ 38,000) while Italy remains close to the mean. Countries with the lowest standard of wages hover around € 5,000 to € 10,000 (i.e. Bulgaria, Romania, Lithuania, Slovakia, Hungary). When adjusted for PPP, expressed in US $, we still find a significant gap between 1 to 3 and 1 to 2.5 (OECD 2012) This paper examines the evolution of wages in Europe, the reasons of this dispersion and the wage strategies of the socioeconomic actors

Wages and Wage Policy in the USSR (1950S-1980S): Macro- and Microanalysis

Leonid Borodkin

•1. The CPSU-government policy in the field of industrial wages regulation from the mid-1950s to the mid-1980s combines the limitation of equalizing tendencies in the remuneration of labor force in industry with a tendency to converge the wages of workers and engineers. •2. Statistical analysis of the archival data on wage dynamics at the two large Moscow textile and metallurgical enterprises shows the convergence of the wages of workers and engineers since the 1950s and the excess of the workers' wages over the salary of engineering staff since the late 1960s and early 1970s. •3. The dominant tendency of the government policy in the field of labor remuneration in industry was the tendency to outstripping the growth of workers' wages in comparison with the remuneration of labor of engineers and other categories of employees. •4. The results raise new questions. •To what extent did the revealed tendencies in the dynamics...

•1. The CPSU-government policy in the field of industrial wages regulation from the mid-1950s to the mid-1980s combines the limitation of equalizing tendencies in the remuneration of labor force in industry with a tendency to converge the wages of workers and engineers. •2. Statistical analysis of the archival data on wage dynamics at the two large Moscow textile and metallurgical enterprises shows the convergence of the wages of workers and engineers since the 1950s and the excess of the workers' wages over the salary of engineering staff since the late 1960s and early 1970s. •3. The dominant tendency of the government policy in the field of labor remuneration in industry was the tendency to outstripping the growth of workers' wages in comparison with the remuneration of labor of engineers and other categories of employees. •4. The results raise new questions. •To what extent did the revealed tendencies in the dynamics of wages of different categories of industrial labor force were characteristic of various branches of industry, enterprises of different sizes (large, medium, small), different regions of the large country.

Skilled and unskilled Wages in Uruguay, 1915-2015

Maria Camou, Silvana Maubrigades

The main purpose of this paper is to analyze the evolution of the gap between skill and unskilled wages according to the changes in different economic productive models. On this line of research we need to construct a long run series of the evolution of the skilled and unskilled wages

The main purpose of this paper is to analyze the evolution of the gap between skill and unskilled wages according to the changes in different economic productive models. On this line of research we need to construct a long run series of the evolution of the skilled and unskilled wages

Labour share in Mexico: towards a deepening of inequality, 1930-2016

Miguel Reyes, Humberto Morales and Miguel López

In developed countries, labour share in the national income has been in between 55 and 60%, while in Latin America its ratio goes on 35% (Alarcón, 2014; Observatorio de Salarios/Ibero, 2016). Mexico, whose participation in different periods of its contemporary history was above the Latin American average, although it is currently below. The average labour share for 2016 was 26%, while its highest point was the year 1976 with 50% (Observatorio de Salarios, 2016, Reyes et al., 2017).

In developed countries, labour share in the national income has been in between 55 and 60%, while in Latin America its ratio goes on 35% (Alarcón, 2014; Observatorio de Salarios/Ibero, 2016). Mexico, whose participation in different periods of its contemporary history was above the Latin American average, although it is currently below. The average labour share for 2016 was 26%, while its highest point was the year 1976 with 50% (Observatorio de Salarios, 2016, Reyes et al., 2017).

Transitions des jeunes diplômés sur le marché du travail et déclassement salarial :analyse micro économétrique

Aomar Ibourk

Decommissioning in its usual form stems from a quantitative and qualitative mismatch between the level of diplomas and jobs in the labor market. There are several approaches that can be used to explain and measure decommissioning. The first is a so-called normative "adequationist" approach put forward by Affichard (1981). The second is based on a statistical standard of correspondence between the degree and socio-professional category proposed in France by Forgeot and Gautié (1997), based on the 1996 employment survey. The third is based on the respondent's feeling of being or not (Dolton and Vignoles, 2000) and finally, the salary approach, which is based on the relative valuation of people, in terms of wages, compared to those with less qualifications.

Decommissioning in its usual form stems from a quantitative and qualitative mismatch between the level of diplomas and jobs in the labor market. There are several approaches that can be used to explain and measure decommissioning. The first is a so-called normative "adequationist" approach put forward by Affichard (1981). The second is based on a statistical standard of correspondence between the degree and socio-professional category proposed in France by Forgeot and Gautié (1997), based on the 1996 employment survey. The third is based on the respondent's feeling of being or not (Dolton and Vignoles, 2000) and finally, the salary approach, which is based on the relative valuation of people, in terms of wages, compared to those with less qualifications.

2nd half

Inequality in Southeast Asia: Empirical trends, structural factors and policy responses

Hwok-Aun Lee

Inequality endures in Southeast Asia, with varying experience across the region. Notable trends in income, earnings or consumption distribution in recent years range from Indonesia and Singapore, which have experienced increasing inequality, to the Philippines, Vietnam and Cambodia where the scenario has been stable, to Thailand and Malaysia, which have experienced declining inequality. The overall levels of inequality remain high, and governments have stepped up efforts to reduce disparities, to provide transfers and social protection to the poor, and to equitably distribute the gains of economic and employment growth. Structural change poses another set of problems. Middle-income economies face diminishing competitive advantages in labour intensive, low-value added production, but shifting to a higher gear risks widening wage gaps between high-skilled workers and the rest, and automation may hollow out medium-skilled jobs, and continually excluding low-skilled workers. This paper will provide a survey of inequality trends in Southeast Asian countries, and...

Inequality endures in Southeast Asia, with varying experience across the region. Notable trends in income, earnings or consumption distribution in recent years range from Indonesia and Singapore, which have experienced increasing inequality, to the Philippines, Vietnam and Cambodia where the scenario has been stable, to Thailand and Malaysia, which have experienced declining inequality. The overall levels of inequality remain high, and governments have stepped up efforts to reduce disparities, to provide transfers and social protection to the poor, and to equitably distribute the gains of economic and employment growth. Structural change poses another set of problems. Middle-income economies face diminishing competitive advantages in labour intensive, low-value added production, but shifting to a higher gear risks widening wage gaps between high-skilled workers and the rest, and automation may hollow out medium-skilled jobs, and continually excluding low-skilled workers. This paper will provide a survey of inequality trends in Southeast Asian countries, and an analysis of underlying structural factors, contemporary developments, and policy responses

Chinese wage evolution since the 1980’s: why workers took the smallest part of economic growth?

Muriel Perisse, Clement Sehier

The evolution of wages in China would seem to indicate that the Lewis turning point has been reached. A more refined approach reveals, however, that the reason the situation of Chinese workers has not really improved is due to China's position at the base of Global Value Chains, where the employment relationship is not solely governed by the employer-employee power relationship, but by market relations established between leading firms and subcontractors. In spite of the government's desire for industrial upgrading and its intention to develop its internal market, Chinese labor institutions have shown significant resilience, making it hard to envision any shift towards a Fordist regime of capital accumulation. We therefore demonstrate that China has been able to carry out its economic upgrading without an accompanying social upgrading, which would nonetheless be best for social stability

The evolution of wages in China would seem to indicate that the Lewis turning point has been reached. A more refined approach reveals, however, that the reason the situation of Chinese workers has not really improved is due to China's position at the base of Global Value Chains, where the employment relationship is not solely governed by the employer-employee power relationship, but by market relations established between leading firms and subcontractors. In spite of the government's desire for industrial upgrading and its intention to develop its internal market, Chinese labor institutions have shown significant resilience, making it hard to envision any shift towards a Fordist regime of capital accumulation. We therefore demonstrate that China has been able to carry out its economic upgrading without an accompanying social upgrading, which would nonetheless be best for social stability

Globalization, and its impact on women’s work in the Informal sector in India

Rekha Pande

India is second highly populated country of world and has consequently big labour force in the world, which is divided into two parts, Formal (organized) and Informal (unorganized) sector. Women constitute nearly a third of the workforce in India. In 2011, out of a total workforce of 481.7 million, 149.9 million or 31 per cent were women. Of these 118 million women workers are engaged in the informal sector in India, constituting 97% of the total women workers in India. The informal sector in the non-agriculture segment alone engaged 27 million women workers in India. Women account for 32% of the workforce in the informal economy, including agriculture and 20% of the nonagricultural workforce. India like any other nation of the world could not afford itself to remain outside the clutches of impact of globalization on its economy and labour. The present paper looks into the impact of globalization on...

India is second highly populated country of world and has consequently big labour force in the world, which is divided into two parts, Formal (organized) and Informal (unorganized) sector. Women constitute nearly a third of the workforce in India. In 2011, out of a total workforce of 481.7 million, 149.9 million or 31 per cent were women. Of these 118 million women workers are engaged in the informal sector in India, constituting 97% of the total women workers in India. The informal sector in the non-agriculture segment alone engaged 27 million women workers in India. Women account for 32% of the workforce in the informal economy, including agriculture and 20% of the nonagricultural workforce. India like any other nation of the world could not afford itself to remain outside the clutches of impact of globalization on its economy and labour. The present paper looks into the impact of globalization on women’s work, employment and wage structure in the Informal sector, by focusing on four sectors namely, Agriculture, Dairy, Textile and Garment making and Beedi industry (indigenous Cigarette). We analyze women’s work and employment and wages in these sectors. The rhetoric of globalization promises to remove backwardness through a worldwide exchange of information and skills in order to establish a truly cosmopolitan culture. There is an underlying belief that mutual cooperation and concern for social justice is automatically cared for under this system. In actual practice since the global order is based on unequal power relations these concerns are put in hold. Globalization creates ghettoization of the weaker nations and the weak among them. The worst hit in this transformation is the informal sector women, marked with income disparity and dominated by the poor and under privileged. They suffer from lack of opportunity to work, low and discriminatory wages and exploitative conditions resulting in casualization. They lack social security, face occupational health hazards, and do not have access to new technologies, skills and knowledge. The employers enjoy tremendous advantages because there are no overhead costs or need to invest in tools or machinery, no Trade Unions to contend with and partially no legislation defining workers’ rights or requiring welfare measures, minimum wages or social security benefits. The wages here are so low that every family member is called upon to assist in some aspect of production, resulting in large-scale child labor in many home based industry. We argue that an unfair deal to women labour need not be a part of neo-liberal economic reforms and that providing a just share to them can contribute towards promoting labour-intensive and equitable growth in the state. In the shift from welfare development to economic development the worst hit has been women, because a large number of them are in the informal sector

Global Wage Report 2016-2017

OIT

There is growing recognition that wage trends have been problematic in many countries. Global wage growth has decelerated since 2012. Wage growth has increased in developed countries; but declined most in emerging economies. In the last 10 years, real wage gaps have opened up. Labour productivity & wage growth gap widened. Declining trend in labour income shares results from productivity outpacing wages. In conclusion, wage growth has been below potential in many instances

There is growing recognition that wage trends have been problematic in many countries. Global wage growth has decelerated since 2012. Wage growth has increased in developed countries; but declined most in emerging economies. In the last 10 years, real wage gaps have opened up. Labour productivity & wage growth gap widened. Declining trend in labour income shares results from productivity outpacing wages. In conclusion, wage growth has been below potential in many instances

Global Wage Report 2016-2017 Part II

OIT

Global wage report 2016-2017 What is the current debate on wage inequality? Leaving aside the macro economic debate that aims at explaining inequality with indicators that are difficult to explain (e.g., globalization), the reality is that ‘inequality’ is a debate that falls in full in the micro-sphere. And at this micro-level we have always had the tendency of thinking that inequality is by default defined by ‘difference’ between individuals – and almost exclusively, as result of their difference in characteristics (e.g., education). But a new window has opened recently which suggest that inequality results because there is wage dispersion BETWEEN enterprises, and not just between individuals in different enterprises. This report aims at providing sound empirical evidence to better understand the within-between debate in the area of wage inequality.

Global wage report 2016-2017 What is the current debate on wage inequality? Leaving aside the macro economic debate that aims at explaining inequality with indicators that are difficult to explain (e.g., globalization), the reality is that ‘inequality’ is a debate that falls in full in the micro-sphere. And at this micro-level we have always had the tendency of thinking that inequality is by default defined by ‘difference’ between individuals – and almost exclusively, as result of their difference in characteristics (e.g., education). But a new window has opened recently which suggest that inequality results because there is wage dispersion BETWEEN enterprises, and not just between individuals in different enterprises. This report aims at providing sound empirical evidence to better understand the within-between debate in the area of wage inequality.

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