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Philippine wages down due to global crisis – ILO

December 15, 2010 9:23pm
Wages in the Philippines suffered one of the steepest cuts in the last two years following the global economic crisis, the International Labour Organization said.

In its Global Wage Report issued Wednesday, the ILO said the Philippines was among the countries in Asia that registered one of the highest cuts in real wages, or as much as 4 percent in 2008.

The ILO said, however, that in general, Asia recorded the best performance in the world in terms of wage growth, although this was mainly due to China, which accounts for half of the total wage employment in Asia.

According to the report, while global financial turmoil has reduced the global wage growth by half between 2008 and 2009, Asia remained positive with a provisional estimate for wage growth at 8 percent in 2009.

In the Philippines and Malaysia, the report said real wages were cut by more than 4 percent in 2008, while that of Japan's fell nearly 2 percent in both 2008 and 2009, and Thailand’s, by almost 2 percent in 2009.

The overall short-term impact of the crisis on wages resulted in long-term decline in the share of wages in total income, according to the ILO. This also means increasing disparity between productivity growth and corresponding wages, as well as widespread and growing wage inequality.

"The largest part of this increase in inequality is due to top earners ‘flying away’, but another part was due to the ‘collapsing bottom’, where the gap between median and low-paid (defined as less than two-thirds of median wages) workers increased," the ILO report stated.

The organization likewise identified the Philippines as among the most vulnerable countries that experienced an increase in the share of low-wage employment in the last 15 years, with 15 percent of the country's employed people found in low-wage jobs.

Australia, China, Indonesia, Japan, Korea and New Zealand also recorded an increase in low-wage employment. In Korea, the ILO noted that 25 percent of full-time workers were also employed in low-paying jobs.

“There is a risk that a large number of people will feel left behind. This, in turn, may lead to increased social tensions, particularly if certain groups of people consider that they have paid a high price during the crisis while the benefits of the earlier expansionary period — and perhaps future recovery — have been unevenly shared," the ILO stated.

‘Another face of crisis’

"The recession has not only been dramatic for the millions who lost their jobs, but has also affected those who remained in employment by severely reducing their purchasing power and their general well-being," said ILO director general Juan Somavia.

This, he explained, shows “another face of the lingering employment crisis."

The ILO report said the global growth in average monthly wages slowed from 2.8 percent in 2007, the eve of the global financial crisis, to 1.5 percent in 2008 and 1.6 percent in 2009.

If China is excluded, the global average wage growth slowdown fared worse, dropping to 0.8 percent in 2008 and 0.7 percent in 2009.

The report used data from 115 countries and territories, which cover over 90 percent of the approximately 1.4 billion wage earners worldwide.

PHL workers: low-paid but highly educated

The report noted that while demographics of low-paid workers from Brazil and South Africa show a correlation between workers' low level of education and the increased probability of getting low-paying jobs, the Philippine case seemed to be the opposite.

"[S]urprisingly, the Philippines seems to represent an interesting exception to this common pattern, registering high incidence of low wage employment among those with a primary and secondary education," said the ILO report.

The incidence of low-wage employment is 46 per cent higher among women than among men, the report added.

The ILO particularly raised concern over the situation of domestic workers in the Philippines who are exposed to “extremely high risk of low pay" similar to those in Brazil and South Africa.

"In the Philippines, low pay among domestic workers is partly caused by the lack of proper wage protection, notably the common practice excluding such workers from the application of minimum wages," said the report.—With Jerrie M. Abella/VS/JV, GMANews.TV
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