China and Russia lead wage recovery while rich economies lag behind, UN says

In its annual survey of wage developments, the U.N.’s International Labour Organization said wage inequality within countries has fallen since the start of this century, with the decline being most pronounced in poorer countries.

In many countries around the world, pay failed to keep pace with a surge in prices of energy, food and other goods and services during 2022, resulting in a sharp decline in real wages as pay. In some countries, that decline continued through 2023, but there have been clear signs of a broad rebound in 2024.

The ILO said that global wages in the first half of 2024 were 2.7% higher than in the same period a year earlier, having risen by 1.3% in 2023 following a 1.5% decline in the previous year. That was the fastest growth in 15 years.

However, the recovery in wages has been led by Asia, with Europe and North America lagging. In most rich members of the Group of 20 largest economies and many poor countries, real wages remain below the levels seen before the Covid-19 pandemic.

“The return to positive real wage growth is a welcome development," said ILO Director-General, Gilbert F. Houngbo. “However, we must not forget that millions of workers and their families continue to suffer from the cost-of-living crisis that has eroded their living standards."

In the first half of this year, real wages remained lower than in 2019 in Germany, France, Italy and the U.K., as well as in Japan and South Korea. The decline in earnings has helped feed a wave of defeats for ruling parties in recent elections.

Real wages were higher in the U.S., but only by 1.4%, while Canada recorded a larger increase.

By contrast, Chinese real wages were up 27% from 2019, while Brazil also recorded a big rise. In Russia, real wages have risen sharply since the start of 2023 as potential workers fight the war in Ukraine while weapons manufacturers strain to increase their output.

The ILO said real wages in some countries—the U.K., Japan and Italy—remain below levels recorded in 2008, the year in which a financial crisis pushed many rich economies into a deep recession.

The recovery in real wages is expected to support global economic growth as households spend more freely, but in some parts of the world that has yet to happen. Consumer spending has remained weak in Europe, with many households choosing to increase their savings in anticipation of fresh economic shocks, including the possibility of a transatlantic trade conflict following the election of Donald Trump as U.S. president.

Consumer spending has also been subdued in China, where a slump in the property market has prompted an increase in savings by households to compensate for their losses.

The ILO expects the global economy to slow this year, with output expanding by 3.2%, down from 3.3% in 2023.

The ILO’s analysis of trends in inequality in this century stops short of the inflation surge, with comparable data only available through 2021. By that time, two-thirds of the countries it sampled—which account for 73% of all wage earners—had seen a fall in wage inequality since 2000.

“While predominant across all country income groups, declines in wage inequality have been more pronounced among low-income and lower-middle-income countries," it said.

However, the gaps in earnings between the world’s best and worst paid workers remains wide. The ILO calculated that in 2021, and adjusted for purchasing power, the bottom 10% of workers earned $250 per month, while the top 10% earned $4,199 per month for full-time work.

“This means that the purchasing power of the median wage earner in low-income countries is about 6 per cent of the purchasing power of the median wage earner in high-income countries," the ILO said.

Globally, the lowest-paid 10% of workers earned just 0.5% of total wages, while the highest-paid 10% received 38% of the global wage bill.

Write to Paul Hannon at paul.hannon@wsj.com