Explainer: India records highest wage growth in South Asia, but what about the gender pay gap?

By Prarthana Mitra

India recorded the fastest real wage growth in South Asia during 2008–17, according to a report by the International Labour Organisation (ILO). According to the Global Wage Report 2018/19, India led the average real wage growth with 5.5% against a regional median of 3.7% in the last decade. The findings are based on data from 136 countries.

Noting that stagnating wages are an obstacle to economic growth and rising living standards, the report also noted the lowest global growth in wages since 2008. Wages in developing countries are also increasing more quickly than those in higher-income countries, noted the report. Income, however, remains abysmally low, and the gap “very big”.

India’s growth in real wages, however, flags two important flaws in the centre’s vision for economic growth. First, the growth in wages occurs simultaneously with the increasing wage gap between rural and urban employees, organised and unorganised sectors, agricultural and industrial workers, menial and managerial levels. Secondly, India is also leading the table with the highest gender wage gap in the world.

Across Asia

Workers in the Asia-Pacific have registered a swifter economic growth compared to those in other regions, with China, Thailand and Vietnam following India, and immediate neighbours Nepal at 4.7%, Sri Lanka at 4%, Bangladesh at 3.4%, and Pakistan at 1.8%.

“Wage growth continues in Saudi Arabia, India and Indonesia, whereas in Turkey it declined to around 1% in 2017,” said the report.

Other trends

Wages have been growing at its lowest rate in a decade, falling from 2.4% to 1.8%, with richer economies not making a significant wage growth this year despite a recovery in global output. Interestingly, wages were found to grow higher and faster in developing countries last year (at 4%) than in richer nations (0.4%).

ILO Director-General Guy Ryder called it a moment of “convergence” while adding that salaries are still far too low in the developing world. Very often the level of wages is still not high enough for people to meet their basic needs,” he added. It also noted that a number of countries have recently undertaken measures to raise their minimum wage and strengthen state-sponsored labour protection.

Among western nations, South Africa and Brazil reportedly experience positive wage growth from 2016, after a lengthy phase of little to no growth (and even negative growth in case of Brazil). Russia suffered a significant drop in wage growth in 2015, due to a decline in crude oil prices, but has since then bounced back with a moderately positive wage growth.

While all emerging G20 countries except Mexico experienced significant positive growth in average real wages (with the UK registering the weakest), the global wage growth has been worryingly weak.

Mind the gender gap

The gender pay gap remains at an unacceptably high 20%. This means women get paid 20% less than men on an average around the world. This is the first time the ILO report tabulated the gender-based difference in wages, with Ryder calling it “the biggest single injustice in the world of work.”

In advanced economies, the gender gap was found to widen in top-salaried positions, while in emerging low and middle-income countries, the gap is widest among low-income workers. The report also dismissed traditional explanations like illiteracy to justify the disbalance, asking employers to address the devaluation of women’s work and ensure that women are paid equally for putting in the same work as men.

India and Pakistan registered the highest gap between what men and women earn, with 34.5% and 34% respectively.

Prarthana Mitra is a staff writer at Qrius

economyGenderIndiaInternational Labour OrganisationPay gapWage gapWages