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Pay rises in Asia outside China 'disappointing'

Dec 07. 2012
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Wage increases in Asia have outperformed those in most other parts of the world, including the Western economies, but still have a long way to go, according to a new report from the International Labour Organisation.

One key mechanism for improving the situation is government-mandated minimum-wage rises, the ILO said, noting Thailand’s and Malaysia’s progress in this area.

Between 2000 and 2011, wages in Asia almost doubled. Globally, real average monthly wages grew by just under a quarter in the same period, while in the developed world the increase was only around 5 per cent over the entire period.

The “Global Wage Report 2012/13: Wage and Equitable Growth”, was released yesterday by the ILO, a United Nations agency that deals with work and work-related issues.

Asia’s good performance is mainly due to China, where wages in urban units have grown at an annual rate of 10 per cent or more over the past decade. When China is excluded from the analysis, wages in the rest of Asia have stagnated in recent years and were lower in real terms in 2011 than in 2007.

“Given the solid economic performance of many countries in the region, this is a disappointing outcome,” said Yoshiteru Uramoto, ILO regional director for Asia and the Pacific.

Wage levels in developing Asia remain far lower than in Western countries, with average manufacturing wages in India, China and the Philippines well under US$2 (Bt30) per hour, compared with US$12.68 in Singapore and $18.32 in Japan.

“The emerging economies of Asia have traditionally relied on exports and cheap labour as a source of economic growth,” said Sukti Dasgupta, the ILO’s head of regional economic and social analysis for Asia. “The global economic crisis has shown the limitations of this approach. Giving workers greater purchasing power can help to strengthen domestic consumption as a stable source of demand and reduce the reliance on exports.”

The report calls on countries to reconnect wages and productivity, and to strengthen wage-setting institutions such as collective bargaining between trade unions and employers and minimum-wage legislation.

“Across the Asian region, we see a renewed interest in minimum wages in countries such as Thailand and Malaysia,” said Malte Luebker, the ILO’s senior regional wage specialist. “If properly designed, minimum wages have proved an effective policy tool which can provide a decent wage floor and protect low-paid workers against unduly low wages.”

The report says minimum wages should be set after consultation with unions and employers, and should strike a balance between the needs of workers and their families and economic factors, including productivity.

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