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Today one in every two economically active persons in the world is an employee paid by wage. The global payroll represents perhaps 40% of global GDP.

♦ In advanced countries, wages currently account for 40 to 50% of GDP, 50 to 70% of household incomes and 90% of the workforce. In emerging countries, these figures are: 35 to 40% of GDP, 40 to 50% of household incomes and 50% of the workforce. However, there are some important differences on the labour market in both types of economies: the existence of organised or unorganised sectors, the importance or not of rural manpower, and the presence of social insurance or not.

♦ Main income for employees (or wage workers) and a significant cost for employers, wage and salaries are generally adjusted to the overall growth of the economy (added value).

♦ No salary is isolated, it is part of a very differentiated system formed of thousands of levels of compensation related to the qualification of the individual, his/her responsibilities and place in the economic circuit.

 

Wages and globalisation

Globalisation is not the only factor in the evolution of contemporary economies but it brings in its motion other economic components such as innovation, capital formation or qualification of the workforce. It has effects on production, trade flows and market structure but also on prices, costs and incomes. If the first set of dimensions was studied in part, through a literature that already has hundreds of references, the second component is present, but less often discussed[1]. The dimension “price / income” of globalisation is itself extremely broad (purchasing power, inflation, relative prices, terms of trade), the WAGE-network will intend to focus the analysis on wages that measure both price and income of the wage labour. This price of labor itself has two sides, one statistical and quantifiable, the average annual salary, the other one more psychological, the socio-cultural perception of salaries[2].

 

Main question of the WAGE network: international wage convergence in time from the 1950s or not?

 

The questioning can be broken down into three components:

♦ About the global wages convergence (possible or not)

♦ About the issue of a decent wage and the several types of wage dispersion. [Wage dispersion and inequalities: increasing or decreasing?]

♦ Wage strategies and influencing wages: wage policy

 

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? Does the rapid growth of some emerging countries cause the slowdown of the others?

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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? Examples of disparities could be put forward to answer the question: interstate inequality, inter-decile differences, gender wage gap etc.

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3. Wage strategies and wage policies

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. Employees anticipate (or not) training that will lead to a certain salary, trade unions defend certain positions on employment, work organization and remuneration, public authorities (State or local authorities) ensure the remuneration of civil servants, the wage grids of which often represent the central part of a country's pay scales, define social laws, sometimes fix a minimum wage.

Can we define explicit and constructed wage strategies, according to economic agent? Are they not the result of habits and compromises between agents? In industrial relations, there has been talk of a preponderance of employers over employee unions since the 1980s: can we compare this with the period before 1980 and is this true for all continents, with what consequences?


[1]From a bibliography whose first titles were published in the 1990s, some references: Epifani, P, Gancia, G, “The Skill Bias of World Trade”, The Economic Journal, July 2008, vol. 118, p 927-960, Gindling, T. H, Terrell, K, “Minimum Wages, Inequality and Globalization“, Bonn, Forschungsinstitut zur Zukunft der Arbeit, Discussion Paper n°1160, mai 2004, 24 p, Holz C. A, Mehrotra, A, “Wage and price dynamics in a large emerging economy: The case of China“, BRI, Working papers n°409, Avril 2013, 18 p. Huwart, J-Y, Verdier, L, “Does globalisation promote employment?”, Economic Globalisation: Origins and consequences, OECD, 2013, p 88-107, Slaughter, M, Swagel, P, “The Effect of Globalisation on Wages in the Advanced Economies“, IMF Working Papers 97/43, 1997, 33 p

[2]Public opinion sensibility, influenced by the interplay of economic analysis (OECD, IMF, ILO) and media resonance, must be considered besides the deployment of concrete economic processes. The two dimensions evolve together and alongside socio-cultural perception, as representing the expectations and strategies of agents, contribute to the income evolution.

Last Workshop

International Symposium

30-31 October 2017

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