ILO Flagship Report

Global
X
Wage
Report
2022–23
The impact of
inflation and
COVID-19 on
wages and
purchasing power
� Global Wage Report 2022–23
The impact of inflation and COVID-19
on wages and purchasing power

International Labour Organization  •  Geneva

Copyright © International Labour Organization 2022
First published 2022

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Also available in French: Rapport mondial sur les salaires 2022-23: l’impact de l’inflation et du COVID-19 sur les salaires
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 Preface
3

X Preface

This year’s ILO Global Wage Report, the eighth in
the series, presents an in-depth empirical analysis
of how concurrent crises – the COVID-19 pandemic
followed by the cost-of-living crisis – have impacted
on wages and purchasing power across countries
and regions. The report shows that, for the first
time this century, global real wage growth has
become negative while real productivity has
continued to grow. Indeed, 2022 shows the largest
gap recorded since 1999 between real labour
productivity growth and real wage growth in high-
income countries. While the erosion of real wages
affects all wage earners, it is having a greater
impact on low-income households which spend a
higher proportion of their disposable incomes on
essential goods and services, the prices of which
are increasing faster than those for non-essential
items in most countries.
The decline in real wages has come on top of
significant wage losses incurred by workers and
their families during the COVID-19 crisis. Using
quarterly data, the report finds that the key factor
behind the decline in the total wage bill, particularly
during 2020 and the first quarter of 2021, was the
loss in employment. Low-wage earners, workers in
the informal economy and women wage earners
were the groups that suffered most. Furthermore,
during the harshest months of the pandemic, the
total wage bill declined most at the lower end
of the wage distribution. Households that were
forced to go into debt to make ends meet during
the COVID-19 crisis now face the double burden
of repaying their debts at higher interest rates
while earning lower incomes. Overall, the empirical
evidence in the report points to the likelihood of
increased income inequality both between and
within countries.
In the absence of countervailing policies, the
deterioration of workers’ real incomes can be
expected to continue and lead to a fall in aggregate
demand. This would increase the probability of a
deeper recession, a risk that is already worsening
due to the restrictive monetary policies adopted
by central banks in their efforts to bring down
inflation. This in turn would endanger the economic
and employment recovery, further increasing
inequalities and fuelling social unrest.
In this time of growing social and economic
uncertainties and insecurity, it is vital to rebuild
and strengthen people’s sense of social justice and
social cohesion. The ILO Constitution emphasizes
that “universal and lasting peace can be established
only if it is based upon social justice” and calls for
“equal remuneration for work of equal value” and
“policies in regard to wages and earnings (…) to
ensure a just share of the fruits of progress to all”.
The last chapter in this report suggests a series
of policy measures that could serve to shape
adequate wage policies and therefore contribute
to enhancing people’s sense of social justice while
reducing inequalities in the world of work.
But whereas adequate national wage policies can
strengthen labour market outcomes and economies,
no community or country can resolve alone the
multiple crises of a global nature. More than ever,
there is a need for a global response to humanity’s
common and pressing goals. As the United Nations
Secretary-General states in his report, Our Common
Agenda: “Humanity’s welfare – and indeed,
humanity’s very future – depend on solidarity and
working together as a global family to achieve
common goals.” Shaping coherent policy responses
within the multilateral system is indispensable to
making progress toward more inclusive, resilient
and equitable societies. In a globalized economy,
appropriate and timely wage policies that leave
no one behind are an intrinsic part of such
policy responses.

Gilbert F. Houngbo
Director-General
 Table of contents
5

X Table of contents

Preface3

Acknowledgements9

Abbreviations10

Executive summary 11

1. Introduction 19

2. The global economic and labour market context 23

2.1. Economic growth 25
2.2. The evolution of public debt 26
2.3. Inflation rates 27
2.4. The labour market context 30

3. Wage trends in the context of the COVID-19 crisis

and rising price inflation 33
3.1. Global wage trends 36
3.2. Regional wage trends 44
3.3. Wage indices in the G20 economies 51
3.4. Wages and productivity trends in high-income countries 53

Beyond averages: The greater impact of inflation

on the purchasing power of low-wage earners 54
3.5. The cost of inflation across the income distribution 54
3.6. Inflation rates biting into the purchasing power of minimum wages 64

How have the total wages earned by women and men been affected
by the COVID-19 crisis and inflation? 66
3.7. Evolution of the total wage bill before and during the COVID-19 crisis 66
3.8. Decomposing the change in the total wage bill over time,
and a comparison between women and men 74
3.9. Changes in employment and wages across the wage distribution
in the formal and informal economies 80
6 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

4. Wage inequality in the context of the COVID-19 crisis

and rising price inflation 91
4.1. The COVID-19 crisis and wage inequality 94
4.2. Uncovering the factors behind changes in wage inequality 98
4.3. The COVID-19 crisis and the gender pay gap 104

5. Policy options and responses to the cost-of-living crisis 111

5.1. Macroeconomic policies 114
5.2. The need to strengthen labour market institutions and wage policies 116
5.3. Policies to support households, particularly the most vulnerable, during high inflation 118
5.4. Tackling the gender pay gap 119
5.5. The role of multilateralism 120

Appendices123
I. Sources of quarterly survey data, spending patterns of households,
and processing of the data 123
II. Evolution of the total wage bill in 2020, 2021 and the first two quarters of 2022 127
III. Decomposing changes in the total wage bill and estimating changes
in employment and earnings across the wage distribution 130
IV. Decomposition of the change in the total wage bill for 2020 and 2021 132
V. Decomposing the change in wage inequality over time 140

References143

Databases used 145

 Table of contents
7

Boxes
3.1. The effect of employment composition on wages 39
3.2. How are inflation rates calculated? 57

4.1. Indicators of inequality 94

4.2. The factor-weighted gender pay gap: An illustrative example 108

Figures
2.1. Annual average economic growth, 2006–23 (GDP in constant 2015 prices, percentage) 26
2.2. Government gross debt, 2003–23 (share of GDP, percentage) 27
2.3. Inflation, 2006–23 (average consumer price index, percentage) 28
2.4. Monthly consumer price index, by item, country income level and geographical region,
January 2015–March 2022 29

3.1. Annual average global real monthly wage growth, 2006–22 (percentage)37
3.2. Annual average real monthly wage growth in the G20 countries, 2006–22 (percentage)38
3.B1. Panel A.  Examples of countries with an employment composition effect on wage
statistics, first quarter of 2019 to latest available quarter(s) 40
Panel B.  Examples of countries with no clear evidence of an employment composition
effect on wage statistics, first quarter of 2019 to latest available quarter(s) 42
3.3. Panel A.  Annual average real wage growth, by region, 2006–22 (percentage)45
Panel B.  Annual average real wage growth in the European Union,
excluding and including the United Kingdom, 2006–22 (percentage)47
3.4. Nominal and real wage growth in selected countries, January 2020–June 2022
(index: January 2020 = 100) 48
3.5. Average real wage index for the G20 countries, 2008–22 52
3.6. Trends in average real wages and labour productivity in 52 high-income countries, 1999–2022 53
3.7. General consumer price index (CPI) compared with item-specific CPI, by region, April 2022 56
3.B2. Weights used to estimate overall consumer price index, selected countries, February 2022 58
3.8. Percentage change in the cost of living for households in each decile of the income
distribution compared with the general price increase, selected countries, 2021–22 61
3.9. Evolution of nominal and real minimum wages, selected countries, 2015–22 (index:
year 2015 = 100) 65
3.10. Panel A.  Change in total wage bill between 2019 and 2020, selected countries (percentage)67
Panel B.  Change in total wage bill during 2020 and 2021 relative to 2019, selected
countries (percentage)68
Panel C.  Change in total wage bill during 2020, 2021 and 2022 relative to 2019,
selected countries (percentage)69
3.11. Change in total wage bill between 2020 and 2022 relative to 2019, by sex, selected
countries (percentage)71
3.12. Evolution of the total wage bill, by sex, selected countries, 2019–22 (percentage)72
8 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

3.13. Decomposition of the change in the total wage bill for 2020, 2021 and the first two quarters
of 2022, selected countries (percentage)75
3.14. Decomposition of the change in the total wage bill for 2020, 2021
and the first two quarters of 2022, by sex, selected countries (percentage)77
3.15. Changes in employment and in nominal and real wages, by position
on the wage distribution, selected countries, 2020–22 (percentage)81
3.16. Changes in employment and in nominal and real wages, by position on the wage
distribution and by formal vs informal status, selected countries, 2020–22 (percentage)86

4.1. Wage inequality in 2019 and 2021 (or 2022), selected countries 95
4.2. Decomposing the change in real hourly wage inequality between 2019 and 2021
(or 2022) to isolate the contributions due to composition and structural effects,
selected countries (percentage)100
4.3. Decomposing the change in real hourly wage inequality (D9/D1 ratio) between
2019 and 2021 (or 2022) to isolate the impact of changes in formal and informal
employment, selected countries (percentage)103
4.4. Changes in factor-weighted gender pay gaps between 2019 and 2021 (or 2022),
selected countries (percentage)105
4.5. Changes in raw gender pay gaps between 2019 and 2021 (or 2022), selected countries
(percentage)107
A2.1 Evolution of the total wage bill, by sex, selected countries, 2019–22 (percentage)127

A4.1. Panel A.  Decomposition of the change in the total wage bill for 2020 and 2021,
selected countries (percentage)132
Panel B.  Decomposition of the change in the total wage bill for 2020 and 2021,
by sex, selected countries (percentage)135

Tables
3.1. Spending patterns in the top and bottom deciles of the household income distribution
and changes in consumer price index (CPI), by item in CPI basket,
Mexico and Switzerland, 2021–22 59

4.1. Percentage change in wage inequality, selected countries, 2019–21 or 2019–22 97

4.2. Change in various measures of the factor-weighted gender pay gap
between 2019 and 2021 (or 2022), selected countries (percentage points) 106
4.B1. Details of the factor-weighted gender pay gap for Egypt 109
 Acknowledgements
9

X Acknowledgements

Main contributions Special thanks

This report was prepared by staff of the Inclusive
Labour Markets, Labour Relations and Working
Conditions Branch (INWORK) of the ILO under
the responsibility of Philippe Marcadent, Chief of
INWORK. Patrick Belser, Rosalia Vazquez-Alvarez
and Ding Xu were the main authors of the report.
Patrick Belser and Rosalia Vazquez-Alvarez provided
overall coordination and were the principal editors
of the report. Rosalia Vazquez-Alvarez coordinated
and produced the empirical evidence in the report.
Ding Xu produced estimates for regional and
global wage trends. Chris Edgar coordinated the
editing, publication and anonymous peer review
of the report. The ILO Publications Production Unit
(PRODOC) provided production project management,
graphic design, including cover design, typesetting,
copy-editing and proofreading. Luis Sundkvist
copy-edited the initial draft. Claire Piper provided
secretarial, editing, and p
­ roofreading support. Our
special thanks go to Manuela Tomei, Director of the
ILO Conditions of Work and Equality Department.
Our special thanks go to all the national statistical
offices which assisted us with our data collection
efforts. We would also like to thank the entire team
at ILO/SIALC (Labour Analysis and Information
System in Latin America and the Caribbean) in
Panama, in particular Horacio Barría, for providing
data on wages for Latin America and the Caribbean.
We also wish to thank the following people for
their comments on an initial draft of the report:
Maria Helena Andre, Maurizio Bussi, Umberto
Cattaneo, Rafael Diaz de Medina, Roger Gomis,
David Mosler, Yves Perardel, Shahrashoub Razavi,
Marie-Claire Sodergren, Maya Stern Plaza and
Michael Watt.
Our particular thanks go to two anonymous
referees who peer-reviewed the report. We are
also grateful to the ILO Publishing Committee for
coordinating the internal peer reviewers from the
various departments from headquarters and the
regional offices of the ILO.

Special contributions
Khalid Maman Waziri contributed to the preparation
of the quarterly survey data used in several parts
of the report. The technical peer review for the
empirical analysis in Chapters 3 and 4, carried out
in addition to the general review of the report, was
undertaken by Jostin Kitmang. Giulia de Lazzari
contributed to the revision of the final version of
the report. Tobias Haepp, Samuel Kembou and
Hugo Ñopo provided background research on wage
policies during the COVID-19 pandemic.
10 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Abbreviations

CPI consumer price index

ECB European Central Bank
EU European Union
GDP gross domestic product
IMF International Monetary Fund
INPC National Consumer Price Index [Brazil]
OECD Organisation for Economic Co-operation and Development
VAT value added tax
WHO World Health Organization

X Executive summary
Introduction
This edition of the Global Wage Report shows that
wages and the purchasing power of households
have been dented considerably during the past
three years, first by the COVID-19 pandemic and
then, as the world economy started to recover
from that crisis, by the global rise in inflation.
Available evidence for 2022 suggests that rising
inflation is causing real wage growth to dip into
negative figures in many countries, reducing the
purchasing power of the middle class and hitting
low-income groups particularly hard. This cost-of-
living crisis comes on top of significant losses in the
total wage bill for workers and their families during
the COVID-19 crisis, which in many countries had
the greatest impact on low-income groups. In the
absence of adequate policy responses, the near
future could see a sharp erosion of the real incomes
of workers and their families and an increase in
inequality, threatening the economic recovery and
possibly fuelling further social unrest.
The global economic
and labour market context
Since the previous edition of the Global Wage Report
was published two years ago, humanity has been
confronted with several overlapping crises: the
COVID-19 pandemic, the outbreak of war in Ukraine
in February 2022, and the rise in the cost of living
that began in 2021 and has intensified rapidly
during 2022 across countries and regions. It is not
surprising that, in this climate of uncertainty, the
International Monetary Fund lowered its projection
for global growth in 2022 from the 3.6 per cent
forecast in April 2022 to 3.2 per cent in July (IMF
2022a), while the October forecasts predict that
global growth will slow down by between 2 and
2.7 per cent in 2023: for many people 2023 will feel
like a recession (IMF 2022b). With regard to labour
markets, by the second quarter of 2022 employment
levels had bounced back (in some cases exceeded)
those observed before the pandemic in high-
income countries, while in middle- and low-income
countries employment levels remained at about
2 per cent below the pre-pandemic level and
employment in the informal economy was found
Executive summary
11
to be rising faster than in the formal economy (ILO
2022a). One major concern is currently the rapid
increase in inflation rates worldwide with price
pressures in the last two quarters of 2022 proving
quite stubborn despite a global response tightening
of monetary policy since mid-2022. Projections
suggest that inflation will reach 8.8 per cent globally
by the end of 2022, declining to 6.5 per cent in 2023
and 4.1 per cent in 2024 (IMF 2022b). Unless wages
and other types of labour income are adjusted to
inflation, the living standards of many workers and
their families are likely to decline.
Wage trends
Global wage trends
In this inflationary context, preliminary data for
the first half of 2022 reveal a striking fall in real
monthly wages. The report estimates that global
monthly wages fell in real terms to –0.9 per cent in
the first half of 2022 – the first negative global wage
growth recorded since the first edition of the Global
Wage Report in 2008. If China, where wage growth
is higher than in most other countries, is excluded
from the computations, the fall in real wages during
the same period is estimated at –1.4 per cent.
Among the G20 countries, which account for some
60 per cent of the world’s wage employees, real
wages in the first half of 2022 are estimated to have
declined to –2.2 per cent in advanced economies,
while wage growth in emerging economies slowed
but remained positive at 0.8 per cent. This clearly
indicates that nominal wages in many countries
have not been adjusted sufficiently in the first half
of 2022 to offset the rise in the cost of living.
This erosion of real wages comes on top of some
significant wage losses incurred by workers
and their families during the COVID-19 crisis.
Although average wages increased globally by
1.5 per cent in 2020 and by 1.8 per cent in 2021,
the increase in 2020 at the height of the pandemic
was largely due to job losses and the change in
the composition of employment in some large
countries, such as the United States of America.
In these countries, a majority of those who lost
their jobs and hence their earnings during the
pandemic were low-paid wage employees, while
12 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
their higher-paid counterparts remained employed,
thereby increasing the estimated average wage.
As a result of this “composition effect” in some
countries, average real wages in the advanced G20
economies jumped by 1.7 per cent in 2020, the
highest wage growth recorded in many years, but
then increased by a much lower rate of 0.4 per cent
in 2021. In the emerging G20 economies, where the
adverse impact of the COVID-19 crisis was reflected
more strongly in wages and hours worked than in
the number of workers employed, average real
wage growth slowed from 3.4 per cent in 2019
to 2.4 per cent in 2020 before rebounding to
4.5 per cent in 2021.
Regional wage trends
The following regional wage trends may
be discerned:
X In Northern America (Canada and the United
States), the composition effect was very
pronounced in 2020, with average real wages
suddenly jumping by 4.3 per cent. Wage growth
then slid down to 0 per cent in 2021 and dropped
to –3.2 per cent in the first half of 2022.
X In Latin America and the Caribbean, the
composition effect was also very visible, with
real wages increasing by 3.3 per cent in 2020.
Wage growth then decreased to –1.4 per cent in
2021 and –1.7 per cent in the first half of 2022.
X In the European Union, where job retention
schemes and wage subsidies largely protected
employment and wage levels during the
pandemic, real wage growth slowed down to
0.4 per cent in 2020, increased to 1.3 per cent
in 2021 and fell to –2.4 per cent in the first half
of 2022.
X In Eastern Europe, real wage growth slowed
down to 4.0 per cent in 2020 and 3.3 per cent
in 2021, and fell to –3.3 per cent in the first half
of 2022.
X In Asia and the Pacific, real wage growth slowed
down to 1.0 per cent in 2020, increased to
3.5 per cent in 2021 and slowed down again in
the first half of 2022 to 1.3 per cent.
X In Central and Western Asia, real wage growth
fell by –1.6 per cent in 2020, recovered strongly
in 2021 and slowed down to 2.5 per cent in the
first half of 2022.
X In Africa, evidence suggests a sharp fall in real
wage growth of –10.5 per cent in 2020 and
thereafter real wage growth of –1.4 per cent in
2021 and –0.5 per cent in the first half of 2022.
X In the Arab States wage trends are tentative,
but estimates point to low wage growth of
0.8 per cent in 2020, 0.5 per cent in 2021 and
1.2 per cent in 2022.
Wage indices in the G20 economies
Looking at a longer period, real wage growth
among all G20 countries between 2008 and 2022
was highest in China, where real monthly wages
in 2022 were equivalent to about 2.6 times their
real value in 2008. In four countries – Italy, Japan,
Mexico and the United Kingdom of Great Britain
and Northern Ireland – it appears that real wages
were lower in 2022 than in 2008. Conversion of all
the G20 countries’ average wages into US dollars
using purchasing power parity exchange rates
yields a simple average wage of about US$4,000
per month in the advanced G20 economies and of
approximately US$1,800 per month in the emerging
G20 economies.
Wages and productivity trends
in high-income countries
Productivity growth is a key factor in achieving real
wage growth. As pointed out in previous editions
of the Global Wage Report, average wage growth
has lagged behind average labour productivity
growth since the early 1980s in several large,
developed economies. This report shows that
in 52 high-income countries for which data are
available, real wage growth has been lower than
productivity growth since 2000. Whereas the
sharp decline in labour productivity growth during
2020 momentarily reduced the gap, the erosion
of real wages in the first half of 2022, combined
with positive productivity growth, has once more
increased the gap between productivity and
wage growth. In fact, in 2022 the gap between
productivity growth and wage growth reached
its widest point since the start of the twenty-first
century, with productivity growth 12.6 percentage
points above wage growth.

Beyond averages: The greater
impact of inflation on the
purchasing power of low-wage
earners
The cost of inflation across
the income distribution
The rise in inflation is often discussed as part of a
narrative implying that the increase in the cost of
living is the same for all households. However, the
report shows that rising inflation can have a greater
cost-of-living impact on lower-income households.
This is because such households spend most of
their disposable income on essential goods and
services, which generally experience greater price
increases than non-essential items.
In Mexico, for example, households in the bot-
tom decile (the lowest 10 per cent) of the income
distribution spend 42 per cent of their income on
food, whereas those in the top decile spend only
14 per cent on food. A comparison of the evolution
of the prices of different groups of items with that
of the general consumer price index (CPI) for about
100 countries from all regional groups indicates
that the prices of food, housing and transport have
all increased more rapidly than the general CPI. By
estimating the change in the cost of living between
2021 and 2022 at each decile of the household in-
come distribution, the report finds that the increase
in the cost of living among low-income households
can be between 1 and 4 percentage points higher
than that faced by high-income ones.
This means that even if wages were adjusted to
compensate for the increase in the average cost of
living as measured by the CPI, low-income house-
holds would still suffer in many countries from an
erosion in the purchasing power of workers’ wages.
Inflation biting into the purchasing
power of minimum wages
Minimum wages are a widely used instrument
around the world to protect the incomes and the
purchasing power of low-paid workers and their
families. However, owing to the effect of accelerating
price inflation, minimum wages have decreased
in real terms in various countries – even when
Executive summary
13
measured against the average CPI. For example,
during 2020–22, the minimum wage decreased
in real terms owing to rising inflation in Bulgaria,
the Republic of Korea, Spain, Sri Lanka, the United
Kingdom and the United States. These trends reflect
the way in which the cost-of-living crisis has hit low-
paid workers particularly hard.
How have the total wages
earned by women and men
been affected by the COVID-19
crisis and inflation?
The evolution of the total
wage bill before and during
the COVID-19 crisis
The erosion of real wages due to inflation is in add-
ition to significant wage losses incurred by workers
and their families during the COVID-19 crisis, which
are not captured in the data on average wages. The
report thus also looks at changes in the total real
wage bill (the sum of all wages received by employ-
ees, adjusted for inflation) since 2019. This analysis
reveals how the combination of job losses, short-
er hours worked and adjustments in hourly wages
during the crisis resulted in an accumulation of lost
earnings for wage employees and their families in
many countries.
Drawing on data from 28 countries representing
different regions and income groups, the report
finds that in 20 of these countries the total wage
bill decreased by between 1 and 26 per cent during
2020. The average decline in the total wage bill for
the sample of 28 countries was 6.2 per cent, which
is equivalent to the loss of three weeks of wages, on
average, for each wage employee. Among the 21
countries with data available for both 2020 and 2021,
the decrease in the total wage bill is equivalent to
four weeks of wages in 2020 and two weeks in 2021,
implying a cumulative loss of six weeks of wages
over these two years. The decline in the total real
wage bill was more pronounced in low- and middle-
income countries than in high-income countries,
where job retention schemes and wage subsidies
sustained both wage employment and nominal
wage levels during lockdowns, even when there was
a decrease in the number of hours worked.
14 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
Decomposing the change in the
total wage bill for women and men
Analysis of the contributions of different compo-
nents – namely, employment changes (including
jobs and hours worked), changes in the nominal
wage and changes due to inflation – reveals that
employment losses were the main driver of the
change in the total wage bill during 2020. That be-
ing said, in many countries the percentage decrease
in the wage bill was smaller than the fall in employ-
ment because those who lost their jobs tended to
be lower-paid workers. In 2021, the second year
of the pandemic, employment outcomes began
to improve overall, but the decomposition reveals
the strong irruption of inflation as a factor impact-
ing negatively on the growth of the total wage bill.
Estimates from some 30 countries show that the
contribution of inflation to the decline in the total
wage bill ranged from 1 to 18 per cent. In 2022, in-
flation has become the dominant factor behind the
decline in the total wage bill. Thus, in all 12 coun-
tries with data up to the first quarters of 2022 in-
flation has eroded the total real wage bill, with its
contribution ranging from 2.2 to 18.2 per cent.
If the total wage bills for women and men are
considered separately, estimates indicate that
employment losses (including jobs and hours
worked) from 2020 to 2022 were greater among
women, particularly during 2020, even though
employment levels in the last two years recovered
for both women and men. At the same time, and
especially during 2020, increases in average wages
were greater for women. This suggests that the
employment losses of women were even more
concentrated among low-paid workers than those
of men, leading to a stronger composition effect
and hence a greater jump in average wages for
women. Thus, despite losing more employment
than men in almost all countries, particularly during
2020, women experienced a smaller decrease in
the total wage bill. The contribution of inflation to
the erosion of the total wage bill was found to be
similar for both women and men, particularly in
2021 and 2022.
Wages and employment across
the wage distribution in the
formal and informal economies
Analysis also shows how the employment and wages
of low-paid workers and workers in the informal
economy have been impacted disproportionately.
The report categorizes wage workers according
to their monthly earnings into five groups: one
representing the bottom 20 per cent of the wage
distribution, another the top 20 per cent, and
three intermediary groups of 20 per cent each. In
8 out of 11 countries, employment losses in 2020
were greater among the lowest-paid and second-
lowest-paid groups, while in 7 of the 11 countries
those in the lowest-paid group received lower
nominal and real wages relative to 2019. Similarly,
employment losses among wage employees in
informal employment were greater than among
formal employees.
Wage inequality
and the gender pay gap
Wage inequality
How has wage inequality evolved over the past few
years? A first glance at various inequality estimates
based on data from several countries across
regions and income groups suggests that there
is no general answer to this question. In 10 out
of 22 countries studied, monthly wage inequality
increased, while in the remaining 12 countries it
decreased. Although there are exceptions, in most
countries the direction of change in monthly wage
inequality (positive or negative) is consistent with
the direction of change in hourly wage inequality.
Reduced wage inequality in some countries may
at least partly be due to a composition effect. If
workers who lost their jobs during the COVID-19
crisis were mostly low-paid workers, it is possible
that measures of wage inequality may have
decreased as a result of a more compressed wage
distribution among the remaining employees. To
investigate this hypothesis, the report disaggregates
changes in wage inequality between those due to
composition effects and those due to a “structural”
component (wage compression resulting, for
example, from a higher minimum wage). The
findings are not conclusive, with about half of
the countries showing an increase in structural

inequality and the other half a decrease. However,
the decomposition exercise does point to structural
wage inequalities in some countries that may
become more noticeable over time, as employment
levels recover and the composition effect in the data
gradually vanishes. Unless these structural aspects
are addressed, there is a risk that the COVID‑19
crisis may leave a “scar” in their labour markets in
the form of higher wage inequality.
It should be noted here that a decrease in wage
inequality does not necessarily imply a decline in
overall income inequality. When a composition effect
compresses the wage distribution – for example,
when low-paid workers lose their jobs – this may
translate into greater unemployment among low-
income households, leading to an increase in
income inequality.
Gender pay gaps
The overall gender pay gap does not seem to have
changed significantly since the years immediately
before the outbreak of the pandemic. The estimates
presented in the Global Wage Report 2018/19
indicated a global average gender pay gap of
about 20 per cent, based on data from 80 countries
(ILO 2018). This edition examines the evolution
of gender pay gaps in a more limited sample of
countries, finding very little change between 2019
and 2021‌‌–‌22. Among 22 countries, the factor-
weighted gender pay gap increased in 9 countries
and decreased in 13 countries. On the whole,
gender pay gaps in these countries were not greatly
affected by the COVID-19 crisis. Whereas estimates
based on mean hourly wages show an average drop
of 0.6 percentage points among the 22 countries,
estimates based on mean monthly earnings show
an increase of less than 0.1 percentage points.
Given that the gender pay gap remains persistently
high across countries and regions, greater efforts
are required to tackle gender inequalities in the
labour market.
Policy discussion
Just as the recovery from the COVID-19 crisis was
getting under way, the growing impact of a wide-
spread and severe inflationary crisis, together with
a global slowdown in economic growth (driven in
part by the war in Ukraine and the global energy
crisis), is pushing real wage growth into negative
Executive summary
15
figures in many countries and regions. In this con-
text, it is more than ever necessary to adopt meas-
ures aimed at maintaining the living standards of
wage workers and their families. The final section
of the report provides an overview of policy options
and responses to the cost-of-living crisis.
From the second quarter of 2022 onwards, central
banks and monetary authorities across the globe
have responded to the current inflation crisis by,
in particular, raising interest rates to stop inflation
from soaring further. However, the tight monetary
policy could lead to adverse outcomes for certain
segments of the population and trigger a period of
recession. Although central banks are aware of this
risk, the alternative scenario of continued price in-
flation is considered even more undesirable. One
key question in this regard is whether a wage–price
spiral is likely to set in. Drawing on empirical evi-
dence, the report shows that nominal wages are not
catching up with inflation as measured by the CPI,
and that the gap between wage growth and labour
productivity growth in high-income countries is con-
tinuing to widen, with labour productivity increas-
ing in the first half of 2022 and wages falling in real
terms. Hence, there would appear to be scope in
many countries for increasing wages without fear
of generating a wage–price spiral.
Given that 327 million wage earners before the
pandemic, or 19 per cent of all wage employees
worldwide, earned at or below the applicable
hourly minimum wage (ILO 2020a), an adequate
adjustment of the minimum wage would in itself
help significantly to improve the living standards
of low-income households in the current cost-of-
living crisis. The importance of minimum wages
as a tool for social justice is highlighted by the
fact that 90 per cent of ILO Member States have
minimum wage systems in place. Minimum wages
can protect low-paid workers against hefty losses
of purchasing power at times of high inflation.
However, for this mechanism to be effective, it
is necessary that minimum wages be adjusted
regularly to take into account the needs of workers
and their families, along with economic factors. This
adjustment process should be undertaken with the
full participation of the social partners and involve
evidence-based social dialogue, in line with the
Minimum Wage Fixing Convention, 1970 (No. 131).
Strong social dialogue, including collective bar-
gaining, can be instrumental in achieving wage
adjustments during a crisis. The prerequisite for
16 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
this is adequate representation of employers’ and
workers’ voices. Furthermore, social dialogue can
benefit from the use of sound empirical evidence
to inform bipartite or tripartite negotiations. This
report has highlighted the importance of using rele-
vant data to examine the impact of the COVID-19
crisis on the labour market outcomes of wage em-
ployees. In particular, such data can be used to dis-
entangle the effects of employment composition
on wage outcomes, leading to a more accurate un-
derstanding of how the crisis affected employees
across the wage distribution.
Additional policies that can ease the impact of
the cost-of-living crisis on households range from
measures targeting specific groups, such as means-
tested vouchers provided to low-income households
to enable them to buy essential goods, to more
general interventions aimed at reducing the cost
of living for all households, such as the (often
temporary) reduction of indirect taxation on goods
and services for all. For example, many government
are providing low-income households with energy
vouchers to help them cope with the current energy
crisis. Cuts to value added tax can also mitigate the
burden of inflation among households while further
helping to reduce inflation. Some countries have
introduced windfall taxes on oil and gas companies
to help pay for these measures.
Significantly more needs to be done to further
reduce gender pay inequalities in the world of work.
This includes addressing the part of the gender pay
gap that can be explained in terms of the labour
market attributes of women, that is, by improving
the educational situation of women and striving
for a more equitable distribution of women and men
across occupations and industries. It also includes
addressing other factors underlying the gender
pay gap – notably by reducing the motherhood
pay gap, increasing pay in undervalued, highly
feminized sectors and industries, and implementing
legal frameworks and policies to increase pay
transparency at the enterprise level with a view to
eliminating pay discrimination. Countries across the
world should make use of platforms like the Equal
Pay International Coalition, launched jointly by the
ILO, UNWomen and the Organisation for Economic
Co-operation and Development in September 2017,
to learn from successful examples of how to
measure and monitor pay gaps at the national
level, and to familiarize themselves with the tools
that some major economies are applying and
understand which are most effective in reducing
pay discrimination between women and men.
Although the health crisis and, more recently, the
outbreak of war in Ukraine have created much
uncertainty, it is important to persevere with global
funding efforts and the mobilization of resources
to advance the United Nations 2030 Agenda for
Sustainable Development. The 17 Sustainable
Development Goals pursue a world without extreme
poverty and with equal opportunities for everyone
to realize their potential. Accordingly, in 2021, the
United Nations Secretary‑General presented an
agenda of key proposed actions grouped under
12 commitments, which together seek to reaffirm
global solidarity as a way of overcoming crises.
Our Common Agenda, as the document is entitled,
includes the strengthening of decent work as one of
these key actions (UN 2021). The creation of decent
wage employment, along with policies to ensure
adequate wages, which are relevant to several of
the Sustainable Development Goals, can make a
vital contribution to the pursuit of social justice.
istockphoto.com/Carlos Alvarez
Introduction
20 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

�
  1
Introduction
This new edition of the Global Wage Report is being issued in a context
marked by three important developments that are likely to shape social and
economic policies in the near to medium term: the gradual recovery from the
COVID-19 crisis; the global rise in inflation that began in 2021 and seems to be
accelerating rapidly in 2022; and, since February 2022, the war in Ukraine,
which has created additional economic uncertainty for many countries.

After the second quarter of 2022, the health cri-
sis began to show signs of abating worldwide.
According to the World Health Organization
(WHO), global estimates indicate that the numbers
of COVID-19 cases confirmed per week and new
weekly deaths have each fallen steadily since then
at the rate of about 10 per cent and 15 per cent, re-
spectively, on a week-to-week basis. It is therefore
reasonable to conclude that, despite the profound
socio‑economic consequences of the pandemic in
the past three calendar years, the direct impact of
COVID-19 on the economy is diminishing in most
countries. As the measures taken by governments
to curb transmission of the coronavirus were re-
laxed, the devastating economic effect of the pan-
demic subsided to some extent during 2021. Global
growth bounced back to 6 per cent in 2021, hav-
ing dropped to a negative rate of –3.0 per cent in
2020; total government debt across the world as
a share of gross domestic product (GDP) stabilized
at around 76 per cent, having jumped from 63 to
76 per cent during 2020 as a result of the fiscal
measures implemented during the pandemic; and
trade volumes returned to positive values in 2021.
Labour markets also bounced back during 2021,
though the recovery has not been the same for
all groups of workers or all regions. Thus, by the
end of 2021, high-income countries had returned
to the employment levels observed in the fourth
quarter of 2019, whereas in low- and middle‑income
countries they remained about 2 per cent below
pre-pandemic levels, with employment deficits
concentrated among low-paid workers, the group
that suffered the greatest job losses during the
pandemic (ILO 2022b). However, concerns about
rapidly rising inflation have clouded the economic
horizon for countries worldwide. The outbreak of
the war in Ukraine has contributed to increasing
rates of inflation, which was already on the rise
during 2021. After a period of relatively low
Chapter 1. Introduction
21
inflation rates from 2008 to 2020, global inflation
increased sharply to 4.7 per cent in 2021 and is
expected to reach 8.8 per cent by the end of 2022
(IMF 2022b). In particular, food and energy are the
items most susceptible to price inflation, with the
rise in food prices hitting the purchasing power
of vulnerable populations in low-income countries
hardest. In view of higher-than-expected inflation
worldwide, the negative spillover effects of the
war in Ukraine, continued supply bottlenecks and
tightening financial conditions, the International
Monetary Fund (IMF) has revised downward the
expected global growth rates for 2022, from an
initial projection of 3.6 per cent in April 2022 (IMF
2022c) to a new f­ orecast of 3.2 per cent in July 2022
(IMF 2022a), a forecast that has remained identical
in October 2022 (IMF 2022b).
This report explores how wages and their
purchasing power have evolved in the
circumstances described above, presenting the
latest global, regional and country-specific wage
trends. It focuses, in particular, on the effect of
accelerating price inflation on the real value of
wages, and discusses how and why inflation has
a greater impact on households at the bottom
of the income distribution, which spend most of
their income on essential items, such as food and
energy. The report also offers an empirical analysis
of inflation expected in the near future, highlighting
its possible effects on wages. This is complemented
by quarterly estimates of the total wage bill from
2019 to 2022, which reveal the extent of the impact
of job losses on total wages, and by a detailed
analysis of how wage inequality, including gender
pay gaps, may have changed in recent years. The
report’s ultimate aim is to provide sound empirical
evidence that can be used by policymakers as they
search for strategies to enable their countries to
weather the multiple ongoing crises. A discussion
of policy options therefore rounds off the report.
ILO/Kıvanç Özvardar
The global
economic and
labour market
context
�
  2
The global economic
and labour market context
X 2.1. Economic growth
After the collapse of global economic growth in
2020 owing to the measures taken worldwide to
control the spread of COVID-19, global output rose
strongly during 2021 in both advanced and emer-
ging economies (figure 2.1). This was the strong-
est post‑recession jump in growth in 80 years and
may be explained by a rapid rebound in aggre-
gate demand as many countries started to grad-
ually relax the pandemic-related measures in the
course of 2021 (World Bank 2021). Thus, by the end
of 2021, global economic growth had increased by
6.1 per cent, with economic growth increasing
by 5.2 per cent among advanced economies and by
6.6 per cent among emerging market and develop-
ing economies (IMF 2022b).
One critical factor behind this remarkable growth
recovery has been the progress in vaccination
against COVID-19. By early October 2021, the share
of fully vaccinated people worldwide had reached
about 35 per cent, and as vaccination rates started
to increase in countries where vaccines were swiftly
rolled out there followed a gradual relaxation of
lockdown measures and a decline in workplace
closures. Vaccine access and coverage remain
unevenly distributed across the world. According to
the latest WHO estimates, more than 74 per cent
of people were fully vaccinated in high- and
upper‑middle‑income countries, compared with
57 and 19 per cent in lower-middle- and low-
income countries, respectively. Unfortunately, most
emerging economies and almost all low-income
countries did not have the fiscal capacity to launch
the stimulus packages required to mitigate the
socio‑economic effects of the COVID-19 crisis and
kickstart their economic recovery. The IMF estimates
that, out of the US$17 trillion spent globally on
such packages up to the end of 2021, only about
0.4 per cent can be attributed to developing
countries, while advanced and emerging market
economies accounted for, respectively, 86 per cent
and 14 per cent of the total (IMF 2021). This clearly
points to a “fiscal stimulus gap” that is likely to
cause advanced and emerging economies to follow
diverging paths in the recovery process (ILO 2021a).
The war in Ukraine since February 2022 and other
growing crises of a regional nature or with a
global dimension (such as the cost-of-living crisis
to be discussed further down) have dampened
expectations of progress in the post-COVID-19
recovery. Accordingly, IMF projections suggest that
the global economy will grow by 3.2 per cent in
2022, down from the 3.6 per cent forecast in April
2022, and by between 2 and 2.7 per cent in 2023
(IMF 2022b). One of the regions that may be worst
affected by the war in Ukraine is Europe and Central
Asia – in part owing to its geographical location,
26 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 2.1.  Annual average economic growth, 2006–23

(GDP in constant 2015 prices, percentage)

12

10
8.4
7.9
8 7.4
6.4 6.6
5.7
6 5.4
5.0
Real GDP growth (%)

4.7 4.8 4.6

4.3 4.4
5.2 3.7 3.7
4 3.6
3.2
2.7
3.1 2.8
2 2.3 2.5 2.3
2.0 1.8 2.4
0.3 1.8 1.4 1.7
1.2 1.1
0

–1.9
–2

–4 –3.3
–4.4
–6
6

9
07

23
22
20

21
10

18
14

16
15
13

19
17
12
11
0

0
20

20

20

20
20

20

20

20

20

20

20

20

20

20

20

20

20

20
World Advanced economies Emerging economies

Source: IMF (2022d).

which implies close trade, financial and migratory
ties with Ukraine and the Russian Federation, and in
part because most countries in the region depend
on the Russian Federation for their energy supplies.
Economic growth in the European Union (EU) is thus
expected to be no more than 2.6 per cent in 2022
and to decrease to 1.2 per cent in 2023, while in
European emerging and developing economies
growth is projected to be –1.4 per cent in 2022 and
is expected to recover only slightly to 0.9 per cent
in 2023 (IMF 2022b).

X 2.2. The evolution of public debt

In advanced economies, the unprecedentedly mas-
sive public spending during the COVID-19 crisis has
led to a significant increase in government debt.
Figure 2.2 below shows debt among these coun-
tries increasing from 103 per cent of real GDP be-
fore the pandemic (2019) to 121 per cent in 2020,
a ratio that seems to have stabilized at around
119 per cent after 2021. In contrast, debt in emer-
ging market and developing economies increased
less steeply, from 57.6 to 67.4 per cent of real GDP
over the same period.
Following the outbreak of war in Ukraine, the fis-
cal outlook is increasingly uncertain, particularly for
countries in Europe. According to the IMF, in a posi-
tive geopolitical scenario involving a quick end to the
war, debt in advanced economies would fall to about
113 per cent of GDP by 2024. It is worth noting that
advanced economies have far more fiscal leeway
than emerging market and developing economies,
where debt is also expected to decline but there
is greater uncertainty owing to a weak recovery,
limited fiscal space, and volatile commodity prices.
 Chapter 2. The global economic and labour market context
27

X Figure 2.2.  Government gross debt, 2003–23 (share of GDP, percentage)

130
121 122
119 119
120

110
104 105 104 105 103 103
102
103
100 98
93
Share of GDP (%)

90 87

80 75
72 72 71 70
69
70
67 67 67 67
60
58
56 55
50 53 53
51
50 48
45 45 44 45
40 43 42 42 43 43

30
4

08

09
5
3

07

23
22
20

21
10

18
14

16
15

19
13

17
12
11
0

0
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
20

20

20

20

20

20
World Advanced economies Emerging and low-income economies

Source: IMF (2022d).

X 2.3. Inflation rates

Across all regions of the world, the war in Ukraine
has accelerated the increase in prices, which were
already rising markedly in the course of 2021, as
can be seen in figure 2.3. This has alarming impli-
cations for wages, since rising inflation is likely to
erode their real value unless nominal wages keep
up with price levels. Significantly, the October IMF
projections for 2022 shown in the figure are 0.8 per-
centage points and 0.9 percentage points higher for
advanced and developing economies, respectively,
than the projections originally published in April
2022 (IMF 2022c).
Inflation is currently one of the major concerns of
policymakers at the national and multilateral levels.
A quick glance at the news in most countries shows
that more headlines are now devoted to soaring in-
flation and its impact on the purchasing power of
households than to the effects of the COVID-19 cri-
sis. As suggested by the available data, consumer
prices had been on the rise throughout 2021 and
have continued to increase even faster since the
start of 2022. Figure 2.3 shows that inflation among
advanced economies rose by 2.4 percentage points
year on year over the period 2020–21, whereas over
the period 2021–22 it is expected to increase by a
further 4.1 percentage points. Among emerging
market and developing economies, the increase
over the period 2021–22 is expected to be 4.0 per-
centage points, with inflation reaching 9.9 per cent
by the end of 2022. During 2023, it is expected that
inflation will drop considerably in both groups, as
shown in figure 2.3.
The recent surge in inflation is often ascribed to the
supply bottlenecks resulting from COVID‑19‑related
restrictions, but analysts are also citing additional
factors. In particular, it has been suggested that
inflation was inevitable because of the stimulus
packages adopted to overcome the COVID-19
28 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 2.3.  Inflation, 2006–23 (average consumer price index, percentage)

9.9
10
9.3

8.1
8
7.1 7.2
6.5
5.9 5.8
6 5.9
Change (%)

5.2 5.5
5.0 5.1 5.1
5.7 4.7 4.7 4.5
4.4
4 3.4 4.4

3.1
2 2.4 2.7
2.2
2.0 2.0
0.2 1.7 1.4
1.5 1.4 1.4 0.3
0.8 0.7
0
6

9
07

23
22
20

21
10

14

16

18
15
13

19
17
12
11
0

0
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
World Advanced economies Emerging economies

Source: IMF (2022d).

crisis coupled with the loose monetary policy of
central banks over the past few years. The war in
Ukraine has compounded the influence of these
earlier developments to push inflation even higher.
It has also been pointed out that some large
corporations may have taken advantage of the
inflationary environment to raise their prices and
profits (Zahn 2022).
The items in the basket of goods and services
that are most likely to experience large price
increases are those with an inelastic demand,
such as food, housing, transport and energy. For
example, annual inflation in the eurozone was
expected to reach 8.1 per cent by May 2022, driven
largely by a 39 per cent increase in energy and food
prices (see Eurostat 2022). Covering the period from
January 2015 to March 2022, figure 2.4 shows how
the latest inflation trends stand out from those of
previous years across regions and income groups,
and how the items with the greatest price increases
are food, housing, energy and transport. As will be
discussed in Chapter 3, these basic goods have
a greater weight in the basket of lower-income
households than in that of households at the top
of the income distribution.
 CPI value CPI value CPI value CPI value

100
110
120
130
140
150
160
170
180
190
200

70
75
80
85
90
95
0

100
105
110
115
120
125
100
120
140
160
180
200
220
240
260
280

500
1000
1500
2000
2500
3000
3500
4000
2015M01 2015M01 2015M01
2015M01
2015M05 2015M05 2015M05
2015M05
2015M09 2015M09 2015M09 2015M09
2016M01 2016M01 2016M01 2016M01
2016M05 2016M05 2016M05 2016M05
2016M09 2016M09 2016M09 2016M09
2017M01 2017M01 2017M01 2017M01
2017M05 2017M05 2017M05 2017M05

General CPI
2017M09 2017M09 2017M09 2017M09
2018M01 2018M01 2018M01 2018M01
2018M05 2018M05 2018M05 2018M05
2018M09 2018M09 2018M09 2018M09
2019M01 2019M01 2019M01 2019M01

Food
2019M05 2019M05 2019M05 2019M05
2019M09 2019M09 2019M09 2019M09
2020M01 2020M01 2020M01 2020M01
2020M05 2020M05 2020M05 2020M05
Africa: Low-income group

2020M09 2020M09 2020M09 2020M09

2021M01 2021M01

Americas: Middle-income group

2021M01 2021M01

Arab States: Middle-income group

2021M05 2021M05 2021M05 2021M05

Housing
2021M09 2021M09 2021M09 2021M09

Asia and the Pacific: Middle-income group

2022M01 2022M01 2022M01 2022M01
2022M05 2022M05 2022M05 2022M05
and geographical region, January 2015–March 2022

CPI value CPI value CPI value CPI value

Transport

95
95

100
105
110
115
120
125
130
135
100
105
110
115
120
125
130
135
140

95
100
150
200
250
300
350
400
450
500
550
600

100
105
110
115
120
125
130
2015M01 2015M01 2015M01 2016M01
2015M05 2015M05 2015M05 2016M05
2015M09 2015M09 2015M09 2016M09
2016M01 2016M01 2016M01 2017M01
2016M05 2016M05

Health
2016M05 2017M05
2016M09 2016M09 2016M09 2017M09
2017M01 2017M01 2017M01 2018M01
2017M05 2017M05 2017M05 2018M05
2017M09 2017M09 2017M09 2018M09
X Figure 2.4.  Monthly consumer price index, by item, country income level

2018M01 2018M01 2018M01 2019M01

2018M05 2018M05 2018M05 2019M05
2018M09 2018M09 2018M09 2019M09
Education
2019M01 2019M01 2019M01 2020M01
2019M05 2019M05 2019M05 2020M05
2019M09 2019M09 2019M09 2020M09
2020M01 2020M01 2020M01 2021M01
2020M05 2020M05 2020M05 2021M05
2020M09 2020M09 2021M09
Africa: Middle-income group

2020M09
Others
Americas: High-income group

Arab States: High-income group

2021M01 2021M01 2021M01 2022M01

Chapter 2. The global economic and labour market context

2021M05 2021M05 2021M05 2022M05

Asia and the Pacific: High-income group

2021M09 2021M09 2021M09 2022M01
2022M01 2022M01 2022M01 2022M05
2022M05 2022M05 2022M05 2022M09
29
30 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 2.4.  (concl.)

Europe and Central Asia: Middle-income group Europe and Central Asia: High-income group
400 130

350 125
120
300
CPI value

CPI value
115
250
110
200
105
150 100
100 95
2015M01
2015M05
2015M09
2016M01
2016M05
2016M09
2017M01
2017M05
2017M09
2018M01
2018M05
2018M09
2019M01
2019M05
2019M09
2020M01
2020M05
2020M09
2021M01
2021M05
2021M09
2022M01
2022M05

2015M01
2015M05
2015M09
2016M01
2016M05
2016M09
2017M01
2017M05
2017M09
2018M01
2018M05
2018M09
2019M01
2019M05
2019M09
2020M01
2020M05
2020M09
2021M01
2021M05
2021M09
2022M01
2022M05
General CPI Food Housing Transport Health Education Others

CPI = consumer price index

Note: The group of middle-income Arab States comprises only Lebanon, while the high-income Arab States group consists of all
member countries of the Gulf Cooperation Council. The charts show weighted estimates, with weights based on the population
size of all countries for which data are available. Three large countries for which itemized monthly data are not available have
been excluded: China, India and the Russian Federation.
Sources: ILO estimates; IMF (2022d).

X 2.4. The labour market context

The lockdown measures imposed during 2020
and 2021 to contain the spread of the coronavirus
plunged labour markets around the world
into an unprecedented crisis. From the second
quarter of 2020, there was massive destruction of
employment and economic activity, which affected
both women and men but reduced the global
employment of women by 1.2 percentage points
more than for men. The crisis also resulted in a
significantly smaller share of lower-paid workers in
the labour force in 2020 than in 2019, as low-wage
earners suffered disproportionately in terms of
employment and working-hour losses (ILO 2021a).
This contributed to an increase in income inequality
(World Bank 2022), possibly reversing the decline
in inequality observed in some emerging and low-
income countries in the years before the COVID-19
pandemic (ILO 2021b).
At the same time, the crisis has expedited the
adoption of novel modalities of work, including
telework, that would otherwise have taken much
longer to gain traction. While the extent of the
use of telework at the global level has yet to
be properly assessed, some estimates give an
idea of the massive growth of telework in some
regions and countries. For example, approximately
34 per cent of all employees in the EU countries
started teleworking during 2020 (Ahrendt et al.
2020). In Latin America and the Caribbean, it is
estimated that around 23 million workers embraced
teleworking during 2020–21, which is approximately
23 per cent of the 98 million wage employees in the
region (Maurizio 2021). The full impact of COVID-19
on the use of telework in the future remains to be
seen. However, it is likely that teleworking rates
will remain significantly higher than they were
previously. Post-pandemic telework is expected to
follow a hybrid pattern, with people working part
of the time in an employer-provided workplace and
part of the time remotely.
Another important policy measure adopted to
counteract the economic and labour market effects
of the crisis was the use of public funds to support
the wages of workers in enterprises directly affected

by the pandemic so that they could continue in
employment. The arrangements for the provision of
wage support varied between countries depending
on their regulations, institutions (including social
protection systems) and, above all, the capacity of
their governments to undertake such interventions
at short notice (ILO 2020b). Although several
emerging and low‑income countries adopted such
measures, this happened much more frequently
among advanced economies. By the end of 2021,
as lockdown measures were lifted, employment had
returned to pre-crisis levels or even surpassed them
in most high-income countries, but employment
deficits persisted in some middle-income countries.
Moreover, employment recovery has been slower for
women than for men, which has led to a widening
gender employment gap worldwide (ILO 2022b).
Although data for all of 2022 are not yet available,
estimates for the first quarter suggest that global
working hours remain about 3.8 per cent below
the level of the last quarter of 2019. Across country
income groups, low-income countries are lagging
behind in the first quarter of 2022, with 5.7 per cent
fewer hours worked compared with the last
quarter of 2019, while high‑income countries have
recovered the most, with 2.1 per cent fewer hours
worked in the first quarter of 2022 compared with
the last quarter of 2019 (ILO 2022b). The recovery
of working hours has been slower for women than
for men in low- and middle-income countries,
in contrast to high‑income countries, where the
number of hours worked by women has recovered
faster (ILO 2022c). Overall, the gender gap in hours
worked has been widening globally.
Estimates also show that certain groups in the
labour market suffered more severely than others,
particularly during the period leading up to the
end of 2020. These include low-wage workers,
workers in the informal economy, wage workers
in temporary employment, women and young
workers (ILO 2021b). Wage employees in the infor-
mal economy were hit particularly hard. Informal
wage employment dropped by 12.3 per cent glo-
bally in the fourth quarter of 2020 relative to the
same quarter in 2019, while formal wage employ-
ment decreased by just 1.6 per cent over the same
period (ILO 2022c). After the big losses in the sec-
ond quarter of 2020, informal employment began
to increase faster than formal employment, and by
the last quarter of 2021, the recovery in informal
employment had overtaken that of formal employ-
ment. Three factors were behind this development:
Chapter 2. The global economic and labour market context
31
(a) the return of many informal workers to their
economic activities; (b) the taking up of informal
employment by people who were previously out-
side the labour force to compensate for losses in
household income; and (c) the informalization of
previously formal jobs. This third trend has yet to
be confirmed empirically, but such informalization
already seems to be significant in some sectors, in-
cluding construction and wholesale and retail trade
(ILO, forthcoming).
Workers in temporary employment were strong-
ly impacted by the crisis. For example, in Mexico,
Poland and Portugal, 33 per cent, 9 per cent and
17 per cent, respectively, of those who were in
temporary employment in the first quarter of 2020
were out of work in the second quarter of 2020,
compared with just 12 per cent of non-temporary
workers in Mexico and 3 per cent in both Poland and
Portugal (ILO 2022c). Young workers seem also to
have been worse affected by the crisis. While young
people made up just 13 per cent of total employ-
ment in 2019, they accounted for 34.2 per cent of
the decline in employment in 2020. The change in
the employment-to-population ratio between the
second quarter of 2020 and the second quarter of
2021 suggests that, despite some improvements,
young people, especially young women, still faced
the biggest deficit relative to the pre-crisis situation
in 2019 (ILO 2021a).
The further recovery of global, regional and national
labour markets depends very much on the socio-
economic impact of the ongoing crises – particularly
the cost-of-living crisis, but also geopolitical turmoil,
driven mainly by the war in Ukraine. Current
geopolitical tensions, together with the rising
cost of living, could in fact cause the recovery in
employment levels to deviate from the trajectory
that had been projected for the end of 2022. This
will certainly be the case if the war in Ukraine
does not end before long. In such circumstances,
the war’s impact on energy prices and further
bottlenecks in the supply of goods needed for
production will continue to slow down global growth
during 2022. With only a few exceptions (such as
oil- and gas‑exporting countries), employment and
economic output in most countries are likely to
remain below pre‑pandemic levels till the end of
2026 (IMF 2022c).
istockphoto.com/graemenicholson
Wage trends in
the context of
the COVID-19
crisis and rising
price inflation
�
  3
Wage trends in the context
of the COVID-19 crisis
and rising price inflation
While previous editions of the Global Wage Report focused on presenting
annual wage trends, this year’s edition provides, in addition, an analysis of
wage and employment trends based on quarterly survey data that cover
a period from before the COVID-19 pandemic up to the most recent dates
available. In a context of rapid change, quarterly data can offer a more
detailed picture of the evolution of wages and employment, also revealing
how the current inflation crisis has impacted on wage growth in the first half
of 2022. The use of quarterly survey data, moreover, helps in identifying
the factors behind the wage trends observed for women and men and for
different groups of wage employees.
36 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X 3.1. Global wage trends

This report’s detailed analysis of wage trends inequality. It is for this reason that the regular and
begins with gross monthly average wages, which rigorous analysis of global and regional wage
consider the monthly average earnings obtained by trends should be considered a key empirical tool
a wage employee from his or her main job over a by policymakers around the world.
given calendar year.1 According to ILO estimates,
Figure 3.1 below displays annual average global real
although the COVID-19 crisis destroyed many
wage growth from 2006 to mid-2022. The striking
wage and salaried jobs during the first full year
fall in real wages in the last year of the series (2022)
of the pandemic, with global wage employment
is mainly due to the increase in inflation that start-
dropping from 1.75 billion in 2019 to 1.69 billion
ed in 2021 and has continued during 2022. The re-
in 2020, the number of wage and salaried workers
port estimates that global monthly wages fell in real
had almost recovered to pre-pandemic levels by the
terms to –0.9 per cent in the first half of 2022 – the
end of 2021, reaching 1.74 billion, or 53 per cent
first negative global wage growth recorded since
of global employment. The remaining 47 per cent
the first edition of the Global Wage Report in 2008.
are employers, own-account workers (that is,
If China, where wage growth is typically higher than
independent workers without employees) and
the global average, is excluded from the computa-
contributing family workers, many of whom operate
tions, global real wage growth during the first half
in the informal economy.2 Applying a longer-term
of 2022 is estimated to fall to –1.4 per cent. In view
perspective, ILO estimates indicate that wage and
of these developments, a cost-of-living crisis could
salaried employment rose by 36 per cent between
well dominate wage trends until the end of 2023, as
2005 and 2021, compared with a 16 per cent
will be examined in detail in subsequent sections.
increase in total global employment over the
same period (ILO 2022b). The increase in wage
employment, which was especially pronounced in
low- and middle-income countries, shows that this
form of employment continues to gain ground and
A cost-of-living crisis could
 
is becoming an increasingly important factor in
shaping households’ income and, therefore, income
well dominate wage trends
until the end of 2023.

Global monthly wages fell in real

  Another significant finding shown in figure 3.1 is that
global wage growth slowed down from 2.0 per cent
terms to –0.9 per cent in the first in 2019 to 1.5 per cent in 2020, the first year of the
pandemic. This decrease, which seems surprisingly
half of 2022 – the first negative modest, may be explained by the restrictions

global wage growth recorded implemented in 2020 to contain the coronavirus,

which led to a reduction in the number of hours
since the first edition of the worked and to frozen or reduced nominal wages
in many places. However, the pandemic’s relatively
Global Wage Report in 2008. limited impact on average wages – and indeed

1 Annual data to estimate global wage trends are provided by the national statistical offices of each country. Estimates for the
year 2021 shown in any of the figures in this chapter may be revised in future editions of the Global Wage Report. Whereas
annual outcomes before 2022 take all months into account, data referring to 2022 are limited to the few months for which
data were available at the time of writing. In future editions the estimates for 2022 may also change. The methodology for
calculating global and regional estimates is available on the ILO’s thematic webpage (https://www.ilo.org/wages). See also
ILO (2018, Appendix I). Country-specific data and wage trends are available from the ILO Global Wage Database and can be
downloaded free of charge (see www.ilo.org/ilostat).

2 By definition, all contributing family workers are in informal employment, while more than 80 per cent of own-account
workers operate in the informal economy (ILO, forthcoming).
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
37

the fact that global wage growth was positive at

all in 2020 – may largely be ascribed to a change
in the composition of employment, particularly in
The pandemic’s relatively
 
some big countries. As already pointed out in the limited impact on average
last edition of the Global Wage Report (ILO 2020a),
in many countries a large proportion of wage wages was largely a result
employees who lost their jobs (and hence their
earnings), particularly at the onset of the crisis, were of changes in the composition
low-paid wage employees, whereas their higher-
paid counterparts remained employed. This change
of employment.
in the composition of employment increased the
estimated average wage through a “composition
2021 was estimated at 0.9 per cent, that is, 0.5 per-
effect”. Box 3.1 provides a detailed explanation
centage points less than in 2019. This comparative-
of this effect, illustrating the phenomenon with
ly lower growth rate may to some extent reflect the
quarterly data from a variety of countries.
fact that during 2021 the average number of hours
In 2021, global wage growth rebounded and was worked by employees had not yet fully recovered
estimated at 1.8 per cent, which is quite close to to pre-pandemic levels (ILO 2022a).3 In addition,
the estimate for 2019, the year immediately before though, the lower rate in 2021 is also likely to be a
the pandemic. However, when China is excluded consequence of inflation having already started to
from the global computation, real wage growth in erode real wage growth during that year. This trend

X Figure 3.1.  Annual average global real monthly wage growth, 2006–22 (percentage)

Global Global (without China)

4.0

3.1
3.0
2.6 2.5
2.4 2.4
2.1 2.2
1.9 1.9 2.0 1.9 2.0
2.0 1.8 1.7 1.7 1.8
1.5 1.5 1.6
% 1.4 1.3 1.4 1.4 1.5
1.2 1.2
1.0 0.9 0.9 0.9
1.0 0.7
0.6
2022

0.0
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

–1.0 –0.9
–1.4
–2.0

Note: Wage growth for 2022 was estimated by comparing the first two quarters of 2022 with the corresponding
period in 2021.
Source: ILO estimates based on official national sources as recorded in ILOSTAT and the ILO Global Wage Database.

3 As in previous editions of the Global Wage Report, it is important to emphasize that the global figures are estimated on the
basis of real monthly average wages, where real values are obtained using nominal monthly wages and taking into account
changes in the cost of living as measured by the relevant national price index, usually the consumer price index. Thus, fluc-
tuations from year to year reflect changes in price inflation, changes in hourly wages and changes in the average number
of hours worked per month.
38 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 3.2.  Annual average real monthly wage growth in the G20 countries, 2006–22
(percentage)

G20 advanced G20 emerging G20

10.0
8.6
8.0
8.0
6.4
5.9 5.6 5.9
6.0 5.1
% 4.5
4.0 4.1
4.0 3.2 3.2 3.4
3.1 3.2
2.7 2.6 2.5 2.6 2.2 2.4
2.2 2.1 2.0 2.2
1.8 1.7 2.0 1.7 2.0
2.0 1.3 1.6 1.6 1.5
1.0 1.0 1.0 0.8
0.6 0.7 0.7 0.5 0.7
0.2 0.4 0.4 0.4
0.0
–0.3
–1.1 –0.9
–2.0
–2.2

–4.0
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022
Note: The G20 comprises Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan,
Mexico, the Republic of Korea, the Russian Federation, Saudi Arabia, South Africa, Türkiye, the United Kingdom, the
United States and the EU.
Source: ILO estimates based on official national sources as recorded in ILOSTAT and the ILO Global Wage Database.

has gained momentum since then, causing global first half of 2022 was rising proportionately faster
real wage growth to plummet into negative num- in high-income countries than in low- and middle-
bers in 2022, as previously discussed. income countries (see figure 2.3 in Chapter 2).
Figure 3.2 presents estimates similar to those in The year 2020 stands out as anomalous in figure 3.2.
figure 3.1 but for the G20 economies, distinguishing In the advanced G20 economies, wage growth
between advanced and emerging economies in that reached 1.7 per cent in 2020, which represents
group. For the years before the COVID-19 pandemic, an increase of 0.7 percentage points from the last
estimates of wage growth in the G20 countries are pre-pandemic year (2019) and the highest wage
very similar to the global estimates in figure 3.1, growth recorded in several years. This increase
which is not surprising since, taken together, these in average wages points to the interaction of the
countries account for some 60 per cent of the employment composition effect (explained and
world’s wage employees and produce about three illustrated in box 3.1) in some of the large advanced
quarters of global GDP. Likewise, for 2021 and 2022, G20 economies with the way in which fiscal stimulus
the global estimates in figure 3.1 and those for the policies helped to preserve employment and wages
G20 countries in figure 3.2 display strong similarities. in some of the other advanced G20 economies. As
However, it is worth noting that although inflation discussed in more detail later on, while a strong
impacted on real wage growth in both advanced composition effect was noticeable in countries
and emerging economies, the growth rate in the such as the United States and Canada (where
first half of 2022 remained positive in emerging employment fell dramatically in 2020 and average
economies but became negative in advanced ones. wages jumped by about 4 per cent and 6 per cent,
This is consistent with the fact that inflation in the respectively), wages in certain other countries
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
X Box 3.1. The effect of employment
composition on wages
Wage statistics, such as the mean or median
wage reported by national statistical offices,
provide a summary measure of the wage
distribution. These summary measures “hide”
information that underlies and determines
wages at different points of the distribution,
such as the number of hours worked per wage
employee, wage differentials between employees
due to differences in their characteristics and
those of their workplace (for example, regional
differences), and the wage differential between
top and bottom wage earners in the population.
As long as the underlying characteristics of
wage employees remain stable over time, wage
statistics will also remain stable, changing
smoothly at regular intervals to reflect nominal
increases (or real ones if a nominal increase is
greater than an increase in the general price level).
In the long run, changes in the relative value
of wages across the wage distribution can also
shape trends in wage statistics to reveal structural
changes. For example, a gradual but permanent
decline in union membership in the United States
in the 1980s seems to be behind the increase
in the spread of the wage distribution and the
consequent increase in wage inequality in the
early 1990s (DiNardo, Fortin and Lemieux 1996).
During labour market shocks, the rapid
destruction of employment, together with a
reduction of hours worked, can distort the
composition of wage employees in that such
shocks have a greater effect on specific sectors
or occupations and among wage employees with
specific characteristics. This was the case in the
COVID-19 crisis, where low-paid jobs, especially
those requiring physical presence in a workplace,
were the first to be destroyed, especially in
countries where job retention schemes were
not implemented to any significant extent.
When labour market shocks destroy low-paid
jobs on a massive scale, estimates of the mean
and median wage can increase significantly
compared with earlier periods. This is because
such estimates take into account only those
higher-paid employees who remain in paid wage
employment during the crisis. This skewing of
wage statistics owing to the selective nature of
39
job destruction during a crisis is what is referred
to as a “composition effect”.
The charts in figure 3.B1 show examples of
wage and employment trends, before and
during the COVID-19 crisis, to illustrate the
composition effect in relation to wage statistics
for both women and men. The examples in
panel A correspond to countries with a distinct
composition effect (average wages go up as
employment goes down), while the examples
in panel B are of countries with no obvious
composition effect. All the charts present separate
estimates for women and men. In all countries in
figure 3.B1, panel A, the second quarter of 2020,
that is, the onset of the COVID-19 crisis, coincides
with a sudden dip in wage employment together
with an increase in real and nominal wages.
Except for Costa Rica, this is observed in all
countries for both women and men. In general,
women, who are more likely to be clustered at
the bottom of the wage distribution, lost more
employment than men (see also section 3.8).
Figure 3.B1, panel B, shows countries where
there was no very obvious composition effect on
average wages. Most of them are countries in
Europe where stimulus packages, wage subsidies
and job retention schemes kept wage employees
in employment. Greece and Italy display a slight
decline in wage employment near the second
quarter of 2020, although there is no impact
on average wages. Colombia is an interesting
case: wage employment declines together with
wages for both women and men. It is likely that
wage employment in that country was destroyed
across the wage distribution, and that those who
remained in wage employment reduced their
number of hours worked. This translated into a
reduction in average wages at around the second
quarter of 2020.
For all countries in figure 3.B1, panels A and B,
as wage employment gradually returns to its
pre-pandemic level, especially after the second
quarter of 2021, wage statistics exhibit a tendency
to return to the trend that they had displayed
in 2019. For countries with data up to the first
quarter of 2022, these trends show how inflation
started to take a hefty bite out of real wages at the
end of 2021 and during 2022. The cost-of-living
crisis is discussed in detail throughout this report.
40 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 3.B1, panel A.  Examples of countries with an employment composition effect

on wage statistics, first quarter of 2019 to latest available quarter(s)

WOMEN

Costa Rica
110 140
130
Index Employment

100

Index Earnings
120
(base: 2019)

(base: 2019)
90 110
100
80 90
70 80
70
60 60
50 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1

Indonesia
140
110 130
120
Index Employment

100

Index Earnings
110

(base: 2019)
(base: 2019)

90 100
90
80 80
70
70
60
60 50
2019Q1 2019Q3 2020Q1 2020Q3 2021Q1 2021Q3 2022Q1

Peru
120 150
140
110
130
Index Employment

100

Index Earnings
(base: 2019)
120
90
(base: 2019)

110
80 100
70 90
60 80
50 70
40 60
30 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1

Philippines
200
110 190
180
170
Index Employment

100 160
Index Earnings

150
(base: 2019)
(base: 2019)

140
90 130
120
110
80 100
90
70 80
70
60
60 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4

United States
110 130
Index Employment

120
100 110
(base: 2019)

Index Earnings
(base: 2019)

100
90
90
80 80
70
70
60
60 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 2022Q2
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
41

X Figure 3.B1, panel A.  (concl.)

MEN

Costa Rica
110 110
Index Employment

100 100

Index Earnings
(base: 2019)

(base: 2019)
90 90
80 80
70 70

60 60

50 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1

Indonesia
120
110
110
Index Employment

100

Index Earnings
100

(base: 2019)
(base: 2019)

90 90
80
80
70
70 60
60 50
2019Q1 2019Q3 2020Q1 2020Q3 2021Q1 2021Q3 2022Q1

Peru
120
140
110
130
Index Employment

100

Index Earnings
120

(base: 2019)
90
(base: 2019)

110
80 100
70 90
60 80
50 70
40 60
30 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1

Philippines
200
190
110 180
170
Index Employment

160
Index Earnings

100 150
(base: 2019)
(base: 2019)

140
90 130
120
110
80 100
90
70 80
70
60
60 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4

United States
130
110
Index Employment

120
110
(base: 2019)

100
Index Earnings
(base: 2019)

100
90 90

80 80
70
70 60
60 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 2022Q2
42 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 3.B1, panel B.  Examples of countries with no clear evidence of an employment

composition effect on wage statistics, first quarter of 2019 to latest available quarter(s)

WOMEN

Colombia
120 140
130
Index Employment

110
120
100
(base: 2019)

Index Earnings
90 110

(base: 2019)
80 100
70 90
60 80
50 70
40 60
30 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 2022Q2

France
110
110
100
Index Employment

100

Index Earnings
(base: 2019)
90
(base: 2019)

90
80
80 70

70 60

60 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4

Greece
120 110

110 100
Index Employment

Index Earnings
100

(base: 2019)
90
(base: 2019)

90 80

80 70

70 60

60 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4

Italy
110 110
Index Employment

100
100
Index Earnings
(base: 2019)
(base: 2019)

90
90
80
80
70
70 60

60 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4

Portugal
130
110 120
Index Employment

Index Earnings

100 110
(base: 2019)
(base: 2019)

90 100
90
80
80
70
70
60 60
50 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
43

X Figure 3.B1, panel B.  (concl.)

MEN

Colombia
110
140
100 130
Index Employment

90 120
(base: 2019)

Index Earnings
80 110

(base: 2019)
100
70
90
60
80
50 70
40 60
30 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 2022Q2

France
110
110
Index Employment

100

Index Earnings
100

(base: 2019)
(base: 2019)

90 90
80
80
70
70 60
60 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4

Greece
110
120
100
110
Index Employment

Index Earnings
90
100

(base: 2019)
(base: 2019)

80
90
80 70

70 60

60 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4

Italy
110 110
Index Employment

100
100
Index Earnings
(base: 2019)
(base: 2019)

90
90
80
80 70
70 60

60 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4

Portugal
130
110
120
Index Employment

Index Earnings

100
(base: 2019)

110
(base: 2019)

90 100
90
80
80
70
70
60 60
50 50
2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1

Source: ILO estimates. See Appendix I for the sources of survey data used in this report.
44 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

declined but not by very much, partly owing to the
massive use of temporary wage subsidies, which
are generally included in wage statistics,4 and job
retention schemes to save jobs and mitigate the
adverse impact of the crisis on wages. In Germany
and the United Kingdom, for example, real average
wages declined by less than 1 per cent in 2020.
In some countries, particularly European ones,
collective bargaining played an important role
in saving jobs, ensuring business continuity and
protecting earnings.
In the emerging G20 economies, real wage growth
declined from 3.4 per cent in 2019 to 2.4 per cent
in 2020. This overall trend masks some very heter-
ogeneous situations, including falling real wages
in some countries, such as Indonesia, South Africa
and Türkiye; slower but still positive wage growth
in China (+4.6 per cent in 2020); and a large jump
in average wages in Brazil and Mexico, which prob-
ably reflects, at least in part, a strong composition
effect, and which in both countries was followed by
falling real wages in 2021.

X 3.2. Regional wage trends

Figure 3.3 presents regional data to complement
the global analysis presented in section 3.1, while
figure 3.4 displays some country-specific data, in
both cases based on official wage statistics. The
charts in figure 3.3 show the extent to which the
global wage trends are replicated or not at the
regional level.5 The regional picture is marked
by considerable heterogeneity in the impact of
the COVID-19 crisis in 2020, with higher-than-
usual average wages in Northern America and
Latin America and the Caribbean due to strong
employment composition effects, since many low-
paid workers lost their jobs during the pandemic;
frozen wage growth in the EU, reflecting to a great
extent the widespread use of wage subsidies; and
declining wage growth in other regions. Consistently
across regions, though, one can observe a decline
in estimated real wage growth during the first half
of 2022 due to the acceleration of price inflation.6
In Northern America (Canada and the United
States), real wage growth fluctuated between
0 and 1 per cent in most years between 2006 and
2019, including the years immediately before the
outbreak of the pandemic. In 2020, as the pandemic
destroyed the jobs of millions of low-wage workers,
the composition effect manifested itself clearly,
with average real wage growth suddenly rising to
4.3 per cent. The subsequent decline in real wage
growth, first to 0 per cent in 2021 and then to
–3.2 per cent in the first half of 2022, is due to the
composition effect fading away after 2020 (that is,
from the moment that low-paid workers returned
to the labour market) and the rise in inflation which
eroded real wages in 2021 and especially in the first
months of 2022. Figure 3.4 displays monthly trends
in average nominal and real wages in both Canada
and the United States, where one can again see
an initial jump in average real wages in the early
months of 2020 and a progressive decline since late
2020 and early 2021.
In Latin America and the Caribbean, the composition
effect – reflecting the fall in low-wage employment
during the pandemic – was clearly observable, with
real wage growth jumping to 3.3 per cent in 2020,

4 Individuals are asked in surveys to declare “total earnings” as long as they are active at the time of the survey. In most sur-
veys, when people are momentarily out of work (for example, if the survey coincides with their annual leave) they are asked
to explain why they are not working or working fewer hours. During 2020, many respondents answered that they were out
of work owing to “unexpected events”. When people are out of work (because of annual leave or for whatever other reason),
they are directed to another question that asks them: “Do you get paid while/despite being absent from work?” If the answer
is “yes”, they are included in the group of wage employees and what they declare to be their earnings is recorded as such.

5 Country groupings according to ILO regions and subregions can be found on this ILOSTAT web page: https://ilostat.ilo.org/
resources/concepts-and-definitions/classification-country-groupings/.

6 While global estimates of wage growth for the first half of 2022 are relatively robust, some regional estimates should be
seen as more tentative, since wage data were still missing for several countries and/or periods at the time of writing. It
should also be noted that the monthly wage data presented in figure 3.4 may come from official sources that are different
from those of the annual wage data used for the regional estimates.
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
45

X Figure 3.3, panel A.  Annual average real wage growth, by region, 2006–22 (percentage)

Africa
5.0
4.4
3.3 3.6 3.8 3.6

0.5 0.2 0.3

−0.5
−1.0 −1.3 −1.2 −1.4
−3.4 −3.4

−10.5
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Arab States
8.0

3.9 3.5
3.3 3.0
2.0
1.1 0.8 1.2
0.4 0.5

−0.5 −0.4
−1.2
−2.4 −2.3
−3.9
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Central and Western Asia

12.0 12.4

8.2 8.4
6.1 6.5 6.2
5.8 5.2
4.4 3.9
2.5
0.7 1.1 1.0

−1.6
−3.6
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Eastern Europe
13.3
11.2
9.4
8.1
6.7
5.3 5.6
4.2 4.5 4.0
3.0 3.3
2.2
1.4

−2.5 −3.3
−5.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
46 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 3.3, panel A.  (concl.)

Northern America
4.3

1.8 2.0
0.9 1.1 1.0 0.8 0.8 1.0
0.5 0.6 0.7
0.3 0.0

−0.4
−1.0

−3.2
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Asia and the Pacific

Asia and the Pacific Asia and the Pacific (without China)

4.5 4.7 4.4

4.0 3.9 4.2
3.6 3.6 3.4 3.5
3.3 3.2 3.3 3.0
2.7 2.9
1.8 1.8 2.0 1.9
1.5 1.2 1.5 1.3 1.3
0.7 0.7 1.0 0.8 1.0 0.7
0.3

−1.3
−1.7

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Latin America and the Caribbean

3.3
3.0
2.3 2.1
1.4 1.6
1.2
0.7 0.5
0.3 0.2 0.3
0.0

−0.1 −0.3

−1.4
−1.7
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Northern, Southern and Western Europe

1.6 1.5
1.2
0.8 0.8 0.9
0.7
0.5 0.5
0.2 0.2
0.0 0.0

−0.1

−0.7 −0.8

−1.9
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Note: Wage growth for 2022 is estimated by comparing the first two quarters of 2022 with the corresponding period
in 2021.
Source: ILO estimates.
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
47

X Figure 3.3, panel B.  Annual average real wage growth in the European Union,
excluding and including the United Kingdom, 2006–22 (percentage)

European Union (excluding United Kingdom)

European Union (including United Kingdom)

2.3 2.1
1.92.0 1.8 1.7
1.5 1.3 1.2
1.2 1.2 1.1 1.3 1.2
0.7 0.8 0.70.7 0.8 0.6 0.9 0.8
0.5 0.3 0.4 0.3
0.1
–0.2
–0.3
–0.8 –0.7–0.9

–2.2
–2.4
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022
Note: Wage growth for 2022 is estimated by comparing the first two quarters of 2022 with the corresponding period
in 2021.
Source: ILO estimates.

a much higher increase than in any of the pre-
pandemic years, when real wage growth fluctuated
at very low rates. In 2021, the collapse in real wage
growth to –1.4 per cent was driven largely by a
sharp decline in real wages in Brazil, estimated at
–7.0 per cent in 2021. Figure 3.4 displays monthly
wage data for Brazil, showing the fall in average
real wages between the third quarter of 2020 and
the last quarter of 2021. Although real wages in
Brazil increased somewhat during the first half of
2022, they declined on average across the region
as inflation started to make itself felt. The data for
Chile, for example, show that real wages have been
trending modestly downwards since January 2022.
In the European Union, real wage growth fluctuated
between approximately 1 and 2 per cent before
the outbreak of the pandemic (figure 3.3, panel B).
In 2020, real wages froze – but did not decline on
aggregate – most likely as a result of a combination
of forces pulling in different directions, including:
(a) declining wages for some workers; (b) the massive
use of temporary wage subsidies to maintain the
wages of millions of workers, even though their
hours of work declined; and (c) composition effects
pushing average wages up, since even moderate
employment losses disproportionately affected low-
paid workers. After a temporary recovery of wage
growth in 2021, real wages fell to –2.4 per cent in
the first half of 2022 (to –2.2 per cent if the United
Kingdom is included) as inflation cut into the value
of wages. In the somewhat broader but overlapping
region of Northern, Southern and Western Europe
(figure 3.3, panel A), trends are similar to those in
the EU.7 In figure 3.4, wage trends are illustrated
by monthly wage data from Sweden and the
United Kingdom, both of which display relatively
stable average real wages in 2020 and declining
real wage trends since late 2021 and early 2022.
The two countries also reflect the heterogeneity of
situations in 2020, since a composition effect (and
hence increasing wages due to falling employment
among low-paid workers) is discernible in the
United Kingdom but no such effect manifests itself
in the data from Sweden.
In Eastern Europe, real wages increased relatively
fast before the pandemic, growing at rates above
5 per cent between 2017 and 2019, and even
above 8 per cent during 2018. The outbreak of

7 The overlap is important, since the EU plus the United Kingdom account for 84 per cent of the population of Northern,
Southern and Western Europe.
48 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 3.4.  Nominal and real wage growth in selected countries,

January 2020–June 2022 (index: January 2020 = 100)

Brazil
120
Average wage index,

110
2019Q1=100

100

90

80
Q1 Q2 Q3 Q4 Q1 Q2 Qv3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021 2022

Bulgaria
140
Average wage index,

130
2020M1=100

120

110

100

90
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr
2020 2021 2022

Nominal wage trends Real wage trends

Canada
112
Average wage index,

108
2020M1=100

104

100

96

92
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr
2020 2021 2022

Chile
120
Average wage index,

115
2020M1=100

110
105
100
95
90
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr
2020 2021 2022

Malaysia
110
ge wage index,

105
020M1=100

100

95
 Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr
2020 2021 2022

Chile
120 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
49

Average wage index,

115

2020M1=100
110
105
100
95
90
X Figure 3.4. 
Jan (cont’d)
Apr Jul Oct Jan Apr Jul Oct Jan Apr
2020 2021 2022

Malaysia
110
Average wage index,

105
2020M1=100

100

95

90

85
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr
2020 2021 2022

South Africa
115
Average wage index,

110
2019Q1=100

105
100
95
90
85
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2019 2020 2021 2022

Nominal wage trends Real wage trends

Spain
110
Average wage index,

105
2019Q1=100

100
95
90
85
80
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2019 2020 2021 2022

Sweden
106
Average wage index,

102
2020M1=100

98

94

90
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr
2020 2021 2022

United Kingdom
115
ge wage index,

110
020M1=100

105
100
95
 2019 2020 2021 2022

Sweden
106
50 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

Average wage index,

102

2020M1=100
98

94

90
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr
2020 2021 2022
X Figure 3.4.  (concl.)

United Kingdom
115
Average wage index,

110
2020M1=100

105
100
95
90
85
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr
2020 2021 2022

United States
120
Average wage index,

115
2020M1=100

110
105
100
95
90
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr
2020 2021 2022
Nominal wage trends Real wage trends

Note: Brazil, South Africa and Spain use a quarterly index, and for these countries Q1 2019 = 100; (a) Brazil: average
real and nominal income from all jobs, usually received per month, of people aged 14 years or over with income
from work who were employed in the reference week; (b) Bulgaria: average gross monthly wages and salaries of
employees under labour contracts; (c) Canada: average weekly earnings, including overtime, for all employees
(industrial aggregate excluding unclassified businesses); (d) Chile: real and nominal remuneration indices for people
aged 15 years and over; (e) Malaysia: average salaries and wages per employee in manufacturing sector; (f) South
Africa: total remuneration per worker in non-agricultural sectors; (g) Spain: total wage cost per worker, seasonally
and calendar-adjusted; (h) Sweden: average monthly salary of non-manual workers in the private sector, excluding
variable supplements; (i) United Kingdom: average weekly earnings, seasonally adjusted, whole economy; (j) United
States: average weekly earnings of all employees in the private sector, seasonally adjusted.
Sources: (a) Brazilian Institute of Geography and Statistics; (b) National Statistical Institute of Bulgaria; (c) Statistics
Canada; (d) National Institute of Statistics of Chile; (e) Department of Statistics Malaysia; (f) Statistics South Africa;
(g) National Institute of Statistics of Spain; (h) Statistics Sweden; (i) UK Office for National Statistics; (j) US Bureau of
Labor Statistics.

the pandemic slowed down real wage growth to
to 4.0 per cent in 2020 and 3.3 per cent in 2021,
whereas in the first six months of 2022 accelerating
price inflation caused real wage growth to decline
to –3.3 per cent. Significantly, the composition effect
was not a dominant factor in wage statistics in this
region in 2020. Furthermore, the moderate increase
in wage growth in 2021 could to some extent be ex-
plained by inflation rates remaining rather low dur-
ing 2021, especially in comparison with the rest of
the world. The data from Bulgaria in figure 3.4 are
representative of the region as a whole, with mod-
erate wage growth across both 2020 and 2021 and
declining real wages since December 2021.
In Asia and the Pacific, the impact of high wage
growth in China before the pandemic is significant,
with real wage growth in the three years before the
pandemic ranging from 3.0 to 3.3 per cent in the
region when China is included, and reaching even
higher rates in some of the earlier years. However,
when China is excluded, regional wage growth
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
in the three years before the pandemic drops to
1.5 per cent or less. In 2020, wage growth in the
region falls to 1 per cent, and even turns negative
when China is excluded. After a recovery in 2021,
wage growth declined again but remained positive
at 1.3 per cent as inflation began to rise in 2022. The
monthly data for Malaysia shown in figure 3.4 illus-
trate not only the seasonality of wage growth in that
country (with typically higher pay in December than
in other months) but also the slow wage growth
since early 2020.
In Central and Western Asia, real wages grew at
a relatively fast pace in the two years before the
pandemic, as well as more generally between 2006
and 2019. In 2020, the first year of the pandemic,
real wages fell to –1.6 per cent before rebounding
very strongly in 2021. Estimates for 2022 show that
in this region, too, real wage growth is being eroded
by rising inflation.
In Africa, wage statistics remain patchy in many
countries and sometimes display surprisingly
X 3.3. Wage indices in the G20 economies
Figure 3.5 shows the evolution of real wage indices
since 2008 in some advanced and emerging G20
economies. Among the former, a combination of,
on the one hand, composition effects during 2020,
which faded away in 2021, and, on the other, a
rapid rise in inflation (2021–22) has resulted in
sharp jumps in the index value for several of these
countries. Together, Australia and the Republic
of Korea exhibit strongly rising real wage growth
during 2008–22, whereas Italy, Japan and the United
Kingdom are the only countries in the sample of
advanced G20 economies where wages in 2022 are
below their real value in 2008. Real wages in 2022
were worth 12 per cent, 2 per cent and 4 per cent
less than in 2008 in Italy, Japan and the United
Kingdom, respectively.
51
large fluctuations. Regional estimates are there-
fore merely tentative. The available data suggest
slow real wage growth (if any) in the years before
the pandemic, a sharp fall in real wage growth of
–10.5 per cent in 2020 and thereafter real wage
growth of –1.4 per cent in 2021 and –0.5 per cent
in the first half of 2022. The quarterly wage data for
South Africa presented in figure 3.4 show a decline
in average real wages at the height of the pandemic
in the second quarter of 2020, followed by a recov-
ery in the last two quarters of 2020, flat real wages
during 2021 and a tendency to decline in the first
quarters of 2022.
In the Arab States, wage statistics likewise remain
patchy and their coverage is limited. Regional wage
growth estimates are thus tentative at best. The
scanty available data suggest low positive wage
growth of 0.8 per cent in 2020, 0.5 per cent in 2021
and 1.2 per cent in 2022.
Among the emerging G20 economies, China con-
tinues to dominate the ranking in real wage growth,
with estimates showing that monthly wages there
in 2022 were about 2.6 times their real value in
2008. Except for Mexico, in 2022 all emerging G20
economies exhibit average monthly wages that are
higher in real terms than the baseline (2008). In
Mexico, real wages continue to trend at 7 per cent
below their real value in 2008.
Despite more rapid wage growth among emer-
ging G20 economies, there is still a significant gap
between their average level of real wages and that
of advanced G20 economies. Conversion of all the
G20 countries’ average wages into US dollars using
exchange rates based on purchasing power parity
yields a simple average wage of about US$4,000 per
month in the advanced economies and about
US$1,800 per month in the emerging economies.
52 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 3.5.  Average real wage index for the G20 countries, 2008–22

(a) Advanced G20 economies

125

120

115
Index (base year=2008)

110

105

100

95

90

85
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Republic of Korea United States Japan
Australia Canada United Kingdom
Germany France Italy

(b) Emerging G20 economies

260

240

220
Index (base year=2008)

200

180

160

140

120

100

80
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
China Russian Federation Saudi Arabia
Türkiye Indonesia Brazil
India South Africa Mexico

Note: Data for 2022 are based on the first and second quarters of the year.
Source: ILO estimates.
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
53

X 3.4. Wages and productivity trends

in high-income countries

Productivity growth, and particularly real labour
productivity growth, is a key factor in achieving real
wage growth. As pointed out in previous editions of
the Global Wage Report, average wage growth has
lagged behind average labour productivity growth
since the early 1980s in several large developed
economies. Figure 3.6 shows that this continues to
be true, on aggregate, in 52 high-income countries,
where the gap between real productivity and real
wage growth between 1999 and 2022 reached
12.6 percentage points in 2022, reflecting a further
increase in the gap between the two series since
2019. Overall, figure 3.6 shows that, in real terms,
labour productivity has increased more rapidly
Wage growth has lagged behind
 
than wages over the past 22 years, with the
former growing by 1.2 per cent annually and the
latter by around 0.6 per cent annually. Moreover,
the figure indicates that despite the shrinking of
labour productivity during the global financial
crisis of 2008–09 and during the pandemic (2020)
the gap between the two series has continued to
increase. Just before the onset of the COVID-19
pandemic, the gap showed signs of widening
further. Although the decline in labour productivity
growth during 2020 momentarily stopped the two
series from growing farther apart, the sharp decline
in real wage growth in the first two quarters of
2022 combined with positive productivity growth
has, once more, increased the gap. In fact, the gap
in 2022 is at its widest since the beginning of the
twenty-first century.

labour productivity growth Figure 3.6 shows labour productivity bouncing back

strongly in 2021 and 2022, while wage growth rose
in several large developed by about 1 per cent between 2020 and 2021 and
declined in the first half of 2022. One possible rea-
economies in recent decades. son for the increase in labour productivity could be

X Figure 3.6.  Trends in average real wages and labour productivity

in 52 high-income countries, 1999–2022

130
125
120
115
110
105
100
95
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Labour productivity Wages

Note: Labour productivity is measured as GDP per worker. Both the real wage and productivity indices are calculated
as weighted averages using countries’ populations as weights so that larger countries have a greater impact at each
point estimate. The estimates were obtained using 1999 as the base year. Data for 2022 are based on the first and
second quarters of the year.
Sources: The GDP data come from IMF (2022c), whereas wage employment data are taken from the Global
Employment Trends data set in ILOSTAT. Wage data are based on ILO estimates.
54 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
The sharp decline in real wage
 
growth in the first two quarters
of 2022 combined with
positive productivity growth
has, once more, increased the
gap between real productivity
and real wage growth.
that the crisis has destroyed less productive enter-
prises. Surviving enterprises are likely to have of-
fered services and products at a higher added value
Beyond averages: The greater impact of
inflation on the purchasing power
of low-wage earners
X 3.5. The cost of inflation across the income distribution
In the previous sections of this report, the rise in
inflation was discussed under the premise that the
increase in the cost of living has been the same for
all households. This section shows that such an as-
sumption is incorrect and that households at the
bottom of the income distribution face a greater
cost-of-living burden when prices are high and ris-
ing. Hence, even if nominal wages are adjusted for
price inflation as measured by the consumer price
index (CPI), the wages of earners in low-income
households will suffer a greater loss in purchasing
power than those of their counterparts in higher-in-
come households.
Within countries, the spending pattern of
households varies according to their location on
the household income distribution. Low-income
households – as measured on a per capita
basis – have less leeway, since they spend a greater
proportion of their smaller incomes on basic items
such as food, housing and utilities. At the upper end
per worker to costumers left behind by disappear-
ing enterprises. According to a recent study by the
US Bureau of Labor Statistics, this effect could ac-
count for about two thirds of the observed product-
ivity surge between 2020 and 2021 (Stewart 2022).
Lopez-Garcia and Szörfi (2022) argue that the con-
tainment measures imposed during the pandem-
ic accelerated the digitalization of enterprises,
thereby increasing the value added per worker in
already high value-added sectors. They point out
further that the speeding up of digitalization could
explain why average growth in annual real GDP per
hour worked rose to 1.7 per cent in the eurozone
between the last quarter of 2019 and the first quar-
ter of 2021 – an increase that is more than twice the
average rate over the period 2014–19. It has also
been observed that in the United States corporate
profits soared in 2022 (Pickert 2022).
of the income distribution, a larger income allows
these households to cover their basic needs while
at the same time leaving them with ample margin
to spend on other items (such as health, education
or culture) or to build up their savings with a view to
protecting themselves against future uncertainties,
including those arising from potential new crises.
There are many studies that examine how the share
of household expenditure on basic needs varies
across income groups. For example, Whitmore-
Schanzenbach et al. (2016) found that in the
United States, low-income households, defined as
Households at the bottom of
 
the income distribution face
a greater cost-of-living burden
when prices are high and rising.
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
the bottom 20 per cent of the income distribution,
spend 82 per cent of their income on basic needs,
including 41 per cent on housing and about
15 per cent on food. In contrast, middle-income
households spend 78 per cent of their income
on basic needs, including about 33 per cent on
housing and 13 per cent on food. When households
are fractioned grouped into smaller quantiles,
the difference in spending patterns between
households at the bottom lower and upper ends
of the income distribution top households increases
further. Similar observations seem to apply to all
regions and countries in the world. Cross-country
studies provide evidence suggesting that the ratio
of spending on basic goods between high- and low-
income households is higher in low- and middle-
income countries than in high-income countries
(see, for example, Clements and Theil 1996).
Different spending patterns have implications for
the cost of living as measured by the CPI. Typically,
the CPI is constructed using a basket of goods and
services (including food, housing and transport) that
reflects the average spending patterns of a large
proportion of households in the population (see
box 3.2). These patterns are captured by allocating
weights to each item in the basket. For example,
in 2022, the construction of the CPI in the United
States gives a 13.4 per cent weight to the category
“food” and a 32.4 per cent weight to the category
“housing” (United States of America, BLS 2022). In
France, the category “food” receives a weight simi-
lar to that in the United States (14.7 per cent) but
“housing” is assigned a much lower weight, name-
ly 15.5 per cent (France, INSEE 2022). Changes in
weights and in the prices of each of the items in-
cluded in the basket ultimately determine how the
CPI evolves. Like other indices, the CPI is expressed
with a specific period as the reference base. For
example, if the CPI is 110 in 2022 based on 2019
(with the index in that year equalling 100), this
means that prices have increased, in general, by
10 per cent between 2019 and 2022.
The construction or adjustment of the CPI does not
take into account differences in consumption pat-
terns between households across the income dis-
tribution. Weights and prices may reflect regional
variations, but it is the average spending patterns
at the population level that drive the construction
8 In fact, when calculating “core inflation”, which measures the underlying or long-term inflation rate, food and energy price
inflation are usually excluded.
55
of weights, while the change in prices between
periods is what drives the changing values of each
item in the CPI basket. Since food, housing, energy
and transport are essential items, demand for these
goods and services does not diminish very much
even when their prices increase: they are what is re-
ferred to as “price-inelastic”. Likewise, many essen-
tial items are susceptible to greater price volatility
than other items in the CPI basket of goods and ser-
vices.8 With the prices of these items rising faster,
the CPI for them also rises faster and is often high-
er than the CPI summarizing the general price level.
Figure 3.7 compares the main groups of item-specif-
ic CPI – food, housing, transport, education, health
and miscellaneous – with the general CPI for about
100 countries drawn from all geographical regions.
As can be seen there, food, housing and transport
CPIs are all higher than the composite general CPI,
which is generally used in discussions about wages.
What is the implication of this for low-income
households, in which low-wage earners are like-
ly to be concentrated? When low-income house-
holds spend a greater share of their income on
items that exhibit a higher CPI, the composite gen-
eral CPI underestimates the true increase in the
cost of living faced by these households. Table 3.1
illustrates this for Mexico, where households
in the bottom decile of the income distribution
spend 42 per cent of their income on food, while
top-income households spend only 14 per cent.
Moreover, whereas the general price index in
Mexico in June 2022 had experienced a year-on-
year increase of 8.2 per cent, the price index for
food had increased by 14.1 per cent. Taking these
When low-income households
 
spend a greater share of their
income on items that exhibit
a higher CPI, the composite
general CPI underestimates
the cost-of-living increases
they face.
56 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 3.7.  General consumer price index (CPI) compared with item-specific CPI,
by region, April 2022

Food CPI versus general CPI Housing & utilities CPI versus general CPI

170 170

160 160

CPI housing & utilities

150 150

140 140
CPI food

130 130

120 120

110 110

100 100

90 90

90 100 110 120 130 140 150 160 170 90 100 110 120 130 140 150 160 170

CPI general CPI general

Transport CPI versus general CPI Health CPI versus general CPI
170 170

160 160

150 150
CPI health
CPI transport

140 140

130 130

120 120

110 110

100 100

90 90

90 100 110 120 130 140 150 160 170 90 100 110 120 130 140 150 160 170
CPI general CPI general

Education CPI versus general CPI Miscellaneous CPI versus general CPI
170 170
160
160
150
CPI education

CPI miscellaneous

140 150
130 140
120
130
110
100 120
90
110

100

90
90 100 110 120 130 140 150 160 170 90 100 110 120 130 140 150 160 170
CPI general CPI general

Africa Asia & the Pacific Americas Arab States Europe & Central Asia 45–degree line

Note: The outlier in the “education CPI versus general CPI” chart is the Netherlands.
Source: ILO estimates based on item-specific CPI data published by the IMF, https://data.imf.org/regular.
aspx?key=61015892.
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
X Box 3.2.  How are inflation rates calculated?
Inflation is probably one of the economic terms
with which individuals and households are most
familiar because it captures the cost of living and
is often mentioned in the news. In its basic form,
inflation is defined as the measure, specific to a
country,1 of how much more expensive a set of
goods and services has become over a certain
period. For example, if inflation has increased by
2 per cent between two consecutive years, this
means that 2 per cent more nominal income
will be needed in the second year to maintain
the same consumption of goods and services
as in the first year. To estimate the increase
in the cost of living between two consecutive
periods, national institutions in charge of
producing inflation estimates2 construct a basket
of goods and services that reflect the average
consumption of households in the country.
The institutions in question then monitor the
evolution of the prices of the goods and services
included in the basket.
Household surveys are used to determine the
composition of the basket of goods and services,
together with the weight that each item in the
basket should be assigned. These surveys are
commonly structured into nine parts: food and
other perishables; clothes and footwear; furniture
and household goods; housing costs, including
utilities and energy; health; education; food
consumption outside the house; culture and
recreation; and other services purchased by the
household, including the hiring of gardeners,
domestic workers or secretaries. The weights
assigned to each item in the basket reflect the
average (or typical) spending patterns among
the households surveyed. Thus, changes
in the spending patterns of households across
the income distribution are not necessarily
taken into account when constructing such
weights.3 Because these surveys are not
repeated annually – there is usually a five- to
ten-year interval between them – the items
in the basket remain relatively constant over
time. Since consumption patterns vary between
countries, the weight assigned to each good and
service that enters a basket also varies between
countries, in many cases reflecting spending
patterns at the country level (see figure 3.B2).
57
The prices of the goods and services included
in the basket are updated much more frequently.
This is done by means of standardized surveys
that track the price of items at regular time
intervals. Price surveys vary from country to
country as well as in their frequency; they can
be spot surveys conducted at retail outlets and
markets or they can be based on “big data”.4
The change in the price of goods and services
included in the basket, over some fixed period
of time, is what determines the change in the
consumer price index (CPI), thereby reflecting
changes in the cost of living. For example,
if the year 2020 is taken as the base year in
a country (2020 = 100), and consumer price
inflation between January and December 2021
is estimated at 2 per cent, the CPI would equal
102 for 2021. “Core inflation” is an alternative
estimate that is often used to better understand
underlying and persistent inflation in a given
country. When calculating core inflation, items
with volatile prices (such as food and energy) are
excluded, as are those with prices regulated by
the government.5
Measuring inflation allows for the adjustment
of nominal incomes (such as wages) so that
earners and their households can maintain
a similar purchasing power over time. When
nominal incomes are not adjusted upwards for
inflation, real income falls and, with it, people’s
living standards. Inflation is often used as a key
indicator to adjust wages through pre-established
contracts, collective bargaining agreements
and tripartite negotiations (for example, on the
minimum wage). While the prices of many goods
and services can adjust quite quickly to changing
circumstances, contractual arrangements take
longer to adjust. That is why it is often said that
“wages are sticky”. In fact, wage adjustment is
often done on the basis of inflation expectations
rather than actual inflation rates – that is, by
considering expectations of future inflation
(rather than current outcomes) when drafting
contractual agreements.
1
Within a country, inflation may be calculated for specific
regions, including urban and rural areas.
2
These are usually the national statistical offices, but in
some countries the central bank is responsible (for example,
in Mexico, Peru and several other mainly Latin American
countries).
58 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Box 3.2.  (concl.)

3
For example, in the United States, the Bureau of Labor
Statistics considers the spending patterns of households
in cities and towns with at least 10,000 inhabitants,
thereby covering the spending patterns of 93 per cent of
the US population. As a complement, the Bureau collects
information on the spending patterns of urban wage earners
and clerical workers to construct an estimate of the cost of
living that can be used to adjust certain categories of federal
spending, such as social security benefits and food stamps.
4
Big data requires automated processing, which comes with
its own challenges, particularly when price inflation is based
on a basket of goods and services that changes rapidly
(Leclair 2019).
5
There are other weighted baskets used to measure price
changes. For example, in the United States there are two
different indices of inflation – the CPI and the personal
consumption expenditure price index – which vary mainly
in how they measure price changes and the basket of
goods. Other indices used to measure price changes include
broader categories of expenditure that are less closely linked
to the consumption patterns of households, such as the
GDP deflator, which includes military expenditure and other
government consumption expenditures. For a discussion of
different price indices see ILO (2014, box 4).

X Figure 3.B2.  Weights used to estimate overall consumer price index, selected countries,
February 2022

Colombia Finland Italy

15.1 13.3 18.4
1.7 5.1 3.4
33.1 26.3 11.0
4.2 5.5 8.0
4.0 3.8 6.4
12.9 13.0 14.5
4.3 2.7 2.6
1.7 5.3 8.9
4.4 0.4 1.1
3.8 10.2 7.1
9.4 6.0 9.4
5.4 8.3 9.4

Mongolia Namibia United States

26.1 16.4 7.6
4.4 12.6 1.2 36.1
9.3 28.4
4.9 5.5 4.0
16.6 3.0 2.7
14.4 14.3 14.5
4.4 3.8 3.3
3.6 2.0 7.4
4.8 3.6 2.7
3.1 3.6 6.7
3.0 1.4 7.8
5.4 5.4 6.1

Food Alcohol, tobacco & narcotics Housing & utilities

Furniture Clothes & footwear Transport

Communications Health Education

Culture Restaurants & hotel Others

Source: Item-specific CPI weights published by the IMF.

 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
59

X Table 3.1.  Spending patterns in the top and bottom deciles of the household income distribution
and changes in consumer price index (CPI), by item in CPI basket, Mexico and Switzerland, 2021–22

  Mexico Switzerland
  Spending Spending % change Spending Spending % change
share of share of in prices share of share of in prices
bottom top decile (June bottom top decile (June
decile (%) (%) 2021–June decile (%) (%) 2021–June
2022) 2022)

Food and non-alcoholic 42.2 13.9 14.1 14.5 10.2 1.9

beverages

Alcoholic beverages, 3.8 1.6 8.2 2.3 1.7 1.6

tobacco and narcotics

Clothing and footwear 3.8 4.9 5.6 2.8 4.6 2.0

Housing, water, electricity, 21.0 17.2 2.7 37.4 20.9 4.6

gas and other fuels

Furnishings, household 1.0 1.8 8.6 3.3 5.4 5.0

equipment and routine
household maintenance

Health 3.3 3.3 5.7 6.0 3.4 –0.4

Transport 9.8 16.8 7.4 9.7 14.0 12.4

Communication 2.1 4.6 –2.7 4.0 2.6 0.5

Recreation and culture n/a n/a 6.1 8.0 13.7 1.5

Education 5.6 14.9 3.3 n/a n/a 0.7

Restaurants and hotels 4.8 11.7 10.2 7.7 13.0 3.4

Miscellaneous goods and 2.6 9.2 9.1 4.3 10.5 0.7

services

% change in the cost of 8.2 3.4

living in each country
according to the general
CPI (June 2021–June 2022)

% change in the cost of 8.9 6.8 3.9 4.0

living taking into account
item-specific CPIs (June
2021–June 2022)

n/a = data not available

Source: ILO estimates. See Appendix I for the sources of data on spending patterns by household income deciles. Increases in
item-specific CPIs were estimated using the IMF monthly CPI series.
60 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
For low-income households,
 
even if wages were to be
adjusted to reflect the general
CPI, the real wage adjustment
would fall short of the cost-of-
living increases that they face.
differences into account, and using the increase
in the price of each category of goods and ser-
vices, table 3.1 shows the difference in the cost
of living faced by bottom- and top-income house-
holds during the period June 2021–June 2022. In
Mexico, bottom-income households would have
faced, on average, an 8.9 per cent increase in the
cost of living between 2021 and 2022, whereas
among top-income households the increase would
have been, on average, 6.8 per cent. Thus, for low-
income households, even if wages were to be ad-
justed to reflect the general CPI, the real wage
adjustment would fall short of the cost-of-living
increases that they face.
Of course, the extent of the variations in cost-of-
living increases across the income distribution
differs between countries. Table 3.1 also provides
data for Switzerland, where the shares of household
income spent on essential goods by bottom- and
top-income households are more similar, reflecting
the fact that there is less income inequality than in
Mexico. In Switzerland, the increase in the cost of
living is approximately the same for the two deciles,
at 3.9 per cent and 4.0 per cent for bottom- and top-
income households, respectively.
Applying a calculation similar to that in table 3.1, but
this time to each decile of the household income
distribution, figure 3.8 shows by how much the cost
of living increased between 2021 and 2022 at each
decile for countries with available data on spending
across the income distribution. For a majority of
countries, it can be seen that the increase in prices
between 2021 and 2022 implied greater increases in
the cost of living at the lower deciles of the income
distribution, while the increase in the cost of living
declines steadily at higher deciles. For example,
in Spain, price changes in 2021–22 increased the
cost of living by 15 per cent for households in the
bottom decile, while the increase was 2 percentage
points lower (at 13 per cent) among households in
the top decile. In France, the difference is smaller
across deciles (6.7 per cent at the bottom versus
6.4 per cent at the top), but price changes between
2021 and 2022 still meant that the increase in the
cost of living for households at the bottom of the
income distribution was 0.3 percentage points
higher than the increase for the highest-earning
households. Switzerland has more variation in
spending patterns among households in the
intermediate deciles of the income distribution,
which explains the inverse U-shape in figure 3.8.
In South Africa, the increase in the cost of living
is higher for high-income households – a finding
that can be explained by the rise in the cost of
transport. While transport accounts for less than
1 per cent of expenditure among bottom-income
households in South Africa, this share increases to
about 22 per cent among households in the top
decile. Significantly, transport is the CPI basket
item with the greatest price increases during 2021
and 2022 (19.2 per cent). It is followed by food,
the prices of which increased by 8.9 per cent over
the same period, and which accounts for about
50 per cent of all spending among households in
the bottom decile. If food, housing and transport
were the only items considered in the computation,
bottom-income households would exhibit the
greatest increase in the cost of living, even though
the highest-earning households spend a significant
proportion of their income on transport.
The increase in prices between
 
2021 and 2022 resulted in
greater increases in the cost
of living at the lower deciles of
the income distribution than
at higher deciles.
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
61

X Figure 3.8.  Percentage change in the cost of living for households in each

decile of the income distribution compared with the average price increase,
selected countries, 2021–22
Argentina
63
Increase in cost of living (%)

61

59

57

55
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10

Increase at decile Average increase

Canada
5.5
Increase in cost of living (%)

5.3

5.1

4.9
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10

Increase at decile Average increase

France
7.0
Increase in cost of living (%)

6.8

6.6

6.4

6.2

6.0
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10

Increase at decile Average increase

Mexico
10.0
Increase in cost of living (%)

9.5
9.0
8.5
8.0
7.5
7.0
6.5
6.0
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10

Increase at decile Average increase

Mongolia
17.0
se in cost of living (%)

16.5

16.0

15.5

15.0
 Increase at decile Average increase

Mexico

62
10.0
Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

Increase in cost of living (%)

9.5
9.0
8.5
8.0
7.5
7.0
6.5
6.0
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10
X Figure 3.8.  (cont’d)
Increase at decile Average increase

Mongolia
17.0
Increase in cost of living (%)

16.5

16.0

15.5

15.0

14.5

14.0
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10

Increase at decile Average increase

South Africa
8.5
Increase in cost of living (%)

8.0

7.5

7.0

6.5

6.0
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10

Increase at decile Average increase

Spain
15.5
Increase in cost of living (%)

15.0

14.5

14.0

13.5

13.0
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10

Increase at decile Average increase

Switzerland
4.6
Increase in cost of living (%)

4.4

4.2

4.0

3.8

3.6
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10

Increase at decile Average increase

United Kingdom
8.40
e in cost of living (%)

8.35
8.30
8.25
8.20
8.15
 Increase at decile Average increase

Switzerland
4.6

Increase in cost of living (%)

4.4
Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
63
4.2

4.0

3.8

3.6
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10

X Figure 3.8.  (concl.)
Increase at decile Average increase

United Kingdom
8.40
Increase in cost of living (%)

8.35
8.30
8.25
8.20
8.15
8.10
8.05
8.00
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10

Increase at decile Average increase

United States
9.6
Increase in cost of living (%)

9.4

9.2

9.0

8.8

8.6
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10

Increase at decile Average increase

Note: Spending patterns are based on the latest available years and it is expected that such patterns would have
remained constant over time. Estimates of the change in the cost of living (overall and by item) are based on the latest
available month of information in the IMF CPI database. For all the countries in the above figure, these estimates are
based on the change in the general CPI (or item-specific CPI) between comparable months in the second quarter of
2021 and the second quarter of 2022.
Source: ILO estimates. See Appendix I for the sources of data on spending patterns by household income deciles.
Increases in item-specific CPI growth were estimated using the IMF monthly CPI series.
64 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
X 3.6. Inflation rates biting into the purchasing power
of minimum wages
Minimum wages are widely used around the world
to protect the incomes and purchasing power of
low-paid workers and their families. As discussed
in the Global Wage Report 2020–21 (ILO 2020a), the
adequacy of minimum wage levels depends crucially
on the ability to review and adjust rates regularly.
This requires a flexible adjustment mechanism that
considers prevailing circumstances, the needs of
workers and their families, and economic factors.
In times of price inflation, if minimum wages are
In times of price inflation,
 
the real value of minimum wages
diminishes if they are not adjusted
to keep up with rising prices.
not adjusted – or if they are not adjusted sufficiently
to keep up with rising prices – their real value
diminishes. Furthermore, as pointed out in section
3.5, even where the minimum wage is adjusted
for CPI increases, this may be insufficient to fully
compensate for the rise in the cost of living faced
by low-income households.
Figure 3.9 shows the relative evolution of nominal
and real minimum wages (as measured by the CPI
for the sake of simplicity) for seven G20 economies,
two additional countries in Europe (Bulgaria and
Spain) and one additional country in Asia (Sri Lanka).
Among these ten countries, between 2015 and
2022, the nominal minimum wage increased in all
but two countries (Sri Lanka and the United States).
During 2020–22, the real minimum wage increased
in four of the ten countries (Australia, China,
Germany and South Africa), thus decreased owing
to rising inflation in the remaining six countries
displayed in the figure.
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
65

X Figure 3.9.  Evolution of nominal and real minimum wages, selected countries, 2015–22
(index: year 2015 = 100)

Germany: Total ▲ 20.4% China: Total ▲ 10.0%

2015–2020 ▲ 3.8% 2015–2020 ▲ 6.4%
2020–2022 ▲ 16.0% 2020–2022 ▲ 3.4%
140

120

100
2015

2016

2017

2018

2019

2020

2021

2022

2015

2016

2017

2018

2019

2020

2021

2022
Australia: Total ▲ 6.8% South Africa: Total ▲ 7.3%
2015–2020 ▲ 6.1% 2015–2020 ▲ 6.9%
2020–2022 ▲ 0.6% 2020–2022 ▲ 0.4%
140

120

100
2015

2016

2017

2018

2019

2020

2021

2022

2015

2016

2017

2018

2019

2020

2021

2022
Republic of Korea: Total ▲ 44.7% United Kingdom: Total ▲ 18.8%
2015–2020 ▲ 45.9% 2015–2020 ▲ 23.7%
2020–2022 ▼ 0.8% 2020–2022 ▼ 3.9%
160
140
120
100
2015

2016

2017

2018

2019

2020

2021

2022

2015

2016

2017

2018

2019

2020

2021

2022
Spain: Total ▲ 30.5% Bulgaria: Total ▲ 35.3%
2015–2020 ▲ 40.6% 2015–2020 ▲ 50.2%
2020–2022 ▼ 7.2% 2020–2022 ▼ 9.9%
160
140
120
100
2015

2016

2017

2018

2019

2020

2021

2022

2015

2016

2017

2018

2019

2020

2021

2022

United States: Total ▲ 19.9% Sri Lanka: Total ▲ 36.8%

2015–2020 ▲ 9.3% 2015–2020 ▲ 16.9%
2020–2022 ▼ 11.6% 2020–2022 ▼ 23.9%

90
80
70
2015

2016

2017

2018

2019

2020

2021

2022

2015

2016

2017

2018

2019

2020

2021

2022

Note: light blue = nominal; dark blue = real. Countries are arranged by descending order of the real minimum wage
growth between 2020 and 2022. Minimum wage rates are the latest available as of 1 October 2022.
Source: ILO estimates based on the ILO minimum wage database for the minimum wage level and IMF (2022c) for
inflation (end-of-period consumer prices).
66 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
How have the total wages earned
by women and men been affected by
the COVID-19 crisis and inflation?
X 3.7. Evolution of the total wage bill before
and during the COVID-19 crisis
The recent erosion of real wages due to inflation
comes on top of significant wage losses incurred
by workers and their families during the COVID-19
crisis, which are not fully captured in the data
on average wages presented in the previous
sections of the report. This section therefore
seeks to complement the earlier analysis by
looking at changes in the total real wage bill. An
analysis of total wage bills reveals how, during
the lockdown months, the combination of job
losses, shorter hours worked and adjustments to
hourly wages resulted in an accumulation of lost
earnings for wage employees and their families in
many countries.
Drawing on quarterly survey data, figure 3.10 shows,
for each country that provides such data, the change
in the annual total real wage bill between 2019 (the
base year) and each of the years up to the latest
year, that is, 2020, 2021 and, for some countries, the
first or second quarter of 2022. The annual total real
wage bill equals the sum of real monthly earnings
received by all wage employees in one year.
At the end of 2020, as may be seen in figure 3.10,
panel A, 20 of the 28 countries shown in the chart
had experienced a decline in the total real wage bill
relative to 2019. The loss in total real wages ranged
from about 1 per cent in Canada, Italy and Mexico
to above 20 per cent in Colombia (23 per cent) and
Peru (26 per cent). Considering all 28 countries in
the chart, the average decline in the total wage bill
was 6.2 per cent per country, which is equivalent
to the loss of three weeks of earnings, on average,
for each wage employee represented in these
28 countries. Out of the eight countries in which
the total real wage bill increased, six are in Europe
and two in Asia. In the European countries this
9 Seven countries shown in figure 3.10, panel A, had still not released their quarterly surveys for 2021 or 2022 at the time of
writing. These countries – Botswana, France, Greece, Italy, Mali, Mongolia and Serbia – were therefore dropped from the
analysis undertaken for the subsequent charts (panels B and C).
was probably driven by stimulus packages (wage
subsidies and job retention schemes) that helped to
keep wage employees in the labour market during
2020. Wage subsidies are included in the sum of
the total wage bill.
Panel B in figure 3.10 adds information from 2021:
that is, it shows the change in the total real wage
bill in 2020 relative to 2019, the change in 2021
relative to 2019 and the (cumulative) overall change
between 2019 and 2021.9 As can be seen, out of
the 21 countries with data up to 2021, 15 continued
to experience a lower total real wage bill in 2021
relative to 2019. However, the upswing in the
labour market compared to 2020 is clearly visible:
except in 3 of these 15 countries, namely Brazil,
the Dominican Republic and Indonesia, the loss in
the total real wage bill is considerably smaller in
2021 than in 2020. For example, in Peru, Colombia
and the Plurinational State of Bolivia, the three
countries with the greatest losses in panel B, the
total real wage bill losses in 2021 relative to 2019
were 12.6 per cent, 9.4 per cent and 12.4 per cent,
respectively, whereas in 2020 they exhibited,
respectively, losses of 26.3 per cent, 23.4 per cent
and 19.8 per cent. Moreover, during 2021, two
countries – Canada and Mexico – reported increases
in the total real wage bill relative to 2019, after
having experienced losses in 2020. The average loss
in the total real wage bill among all 21 countries
in the chart was 8.6 per cent in 2020, whereas in
2021 this loss was reduced to 6.3 per cent, which
remains considerable. In other words, among the
21 countries with data available for both 2020
and 2021, the decrease in the total wage bill is
equivalent to four weeks of wages in 2020 and two
weeks in 2021, implying a cumulative loss of six
weeks of wages over these two years.
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
67

X Figure 3.10, panel A.  Change in total wage bill between 2019 and 2020,
selected countries (percentage)

Peru –26.3

Colombia –23.4

Bolivia (Plurinational State of) –19.8

Panama –18.0

Viet Nam –17.5

Ecuador –15.0

Costa Rica –13.9

Dominican Republic –12.3

Argentina –10.7

Mali –9.0

Philippines –8.4

Uruguay –7.2

Paraguay –6.5

Indonesia –5.5

Brazil –4.9

Botswana –2.8

United States –2.5

Mexico –1.1

Canada –0.7

Italy –0.5

Thailand 0.9

France 1.0

Switzerland 2.7

Portugal 4.3

Greece 4.5

Mongolia 6.1

Serbia 6.3

United Kingdom 7.0

–40 –30 –20 –10 0 10 20 30 40

Per cent
Change in 2020 relative to 2019

Note: The chart shows countries with data up to the end of 2020.
Source: ILO estimates. See Appendix I for the sources of survey data used in this report.
68 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 3.10, panel B.  Change in total wage bill during 2020 and 2021 relative to 2019,
selected countries (percentage)

–26.3
Peru –12.6
–38.8
–23.4
Colombia –9.4
–32.8
–19.8
Bolivia (Plurinational State of) –12.4
–32.2
–12.3
Dominican Republic –15.2
–27.5
–15.0
Ecuador –11.3
–26.3
–18.0
Panama –8.1
–26.2
–17.5
Viet Nam –8.3
–25.8
–13.9
Costa Rica –9.4
–23.3
–5.5
Indonesia –9.4
–14.9
–10.7
Argentina –3.3
–14.0
–7.2
Uruguay –6.3
–13.5
–8.4
Philippines –4.9
–13.4
–4.9
Brazil –7.0
–11.9
–6.5
Paraguay –3.3
–9.9
–2.5
United States –1.0
–3.5
2.7
Switzerland 1.2
3.9
–0.7
Canada 4.8
4.1
–1.1
Mexico 5.3
4.2
0.9
Thailand 3.5
4.4
4.3
Portugal 9.9
14.2
7.0
United Kingdom 8.5
15.6

–40 –30 –20 –10 0 10 20

Per cent

Change in 2020 relative to 2019 Change in 2021 relative to 2019 Sum of changes: 2020 & 2021

Note: The chart shows countries with data up to the end of 2021. Countries are arranged by descending order of the
sum of total wage bill changes in 2020 and 2021.
Source: ILO estimates. See Appendix I for the sources of survey data used in this report.
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
69

X Figure 3.10, panel C.  Change in total wage bill during 2020, 2021 and 2022
relative to 2019, selected countries (percentage)

–26.3
–12.6
Peru
–6.0
–44.8
–15.0
–11.3
Ecuador
–1.9
–28.2
–13.9
–9.4
Costa Rica
–2.1
–25.3
–23.4
Colombia –9.4
11.1
–21.7
–17.5
–8.3
Viet Nam
6.0
–19.8
–5.5
–9.4
Indonesia
–3.8
–18.7
–4.9
–7.0
Brazil
–4.1
–16.0
–6.5
Paraguay –3.3
–0.6
–10.5

–2.5
–1.0
United States
1.4
–2.1
–0.7
4.8
Canada
7.5
11.7
–1.1
5.3
Mexico
12.0
16.3
4.3
Portugal 9.9
11.3
25.4

–50 –40 –30 –20 –10 0 10 20 30 40

Per cent

Change in 2020 relative to 2019 Change in 2021 relative to 2019

Change in 2022 relative to 2019 Sum of changes: 2020 to 2022

Note: The chart shows countries with data up to the first (in some cases, up to the second) quarter of 2022. See
Appendix I for details on data sets. Countries are arranged by descending order of the sum of total wage bill changes
in 2020, 2021 and 2022.
Source: ILO estimates. See Appendix I for the sources of survey data used in this report.
70 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

Finally, panel C in figure 3.10 adds information on
the total wage bill loss in the first quarters of 2022
compared with (the first two quarters of 2019, and
the cumulative loss between 2020 and 2022
in relation to the same period in 2019.10 Only
12 countries out of the original 28 in panel A have
data covering the period 2020–2022. Considering
estimates for 2022 only, panel C attests to the
gradual recovery of labour markets across regions:
in only 6 of the 12 countries is the total real wage
bill in the first two quarters of 2022 lower than
that estimated for 2019. However, despite the
improvement in the most recent quarters (2022),
the cumulative change (2020–22) is negative in 9 of
the 12 countries, which means that the losses
caused by the COVID-19 crisis had not been fully
recouped yet by mid-2022. Except in the United
States, the cumulative losses over a period covering
approximately 30 months since 2020 amount to the
equivalent of 11 to 45 per cent of the total wages
paid out in 2019. This earnings loss is likely to have
translated into a decline in living standards or
increasing debts, or both, for households in these
countries and the corresponding regions of the
world. In section 3.9 it will be shown that wage bill
losses have a more negative impact among low-
wage earners (and their families) than among their
higher-paid counterparts.
Figure 3.11 offers a similar analysis to that
underlying figure 3.10, but distinguishing between
women and men and showing only the cumulative
losses, rather than annual changes, in the total real
wage bill up to the first quarters of 2022 relative to
2019. As can be seen, in 8 of the 12 countries there
is a cumulative loss in the total real wage bill for
both women and men, while in 3 countries the total
real wage bill increased for both women and men.
Among countries with a cumulative loss, in all but
two – Brazil and Indonesia – the loss was greater
among men, while in countries with a cumulative
gain, the increase was higher among women.
Figure 3.12 complements figures 3.10 and 3.11 by
tracing the evolution of the total wage bill – for all
wage employees, as well as for women and men
separately – from the first quarter of 2019 up to the
last available quarter in the data, which may be the
last quarter of 2020, the last quarter of 2021 or the
first or second quarter of 2022.11 This figure, too,
reveals considerable heterogeneity in the evolution
of the total wage bills of women and men since
the onset of the pandemic, with men incurring
greater losses than women in several countries.
However, these estimates should not be taken to
imply that the concurrent labour market crises have
hit men harder than women. The next section will
discuss some of the complex ways in which these
crises are impacting differently on women and men.

10 Data are available up to the second quarter for Canada, the United States, Colombia and Ecuador. For all other countries
shown in figure 3.10, Panel C, data are available only up to the first quarter of 2022. The same applies to figure 3.11.

11 See Appendix I for more details of the survey data used in this report. Appendix II complements figure 3.12 by presenting
estimates of the evolution of the total wage bill for countries with available quarterly data.
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
71

X Figure 3.11.  Change in total wage bill between 2020 and 2022 relative to 2019, by sex,
selected countries (percentage)

−46.3
Peru −42.0

−38.9
Costa Rica −3.6

−28.5
Ecuador −27.7

−23.9
Colombia −18.6

−20.5
Viet Nam −18.7

−18.2
Indonesia −19.9

−15.4
Brazil −16.8

−14.0
Paraguay −4.3

−5.1
United States 2.2

9.7
Mexico 28.1

11.5
Canada 11.9

22.3
Portugal 28.9

−50 −40 −30 −20 −10 0 10 20 30 40 50

(%)

Change among men Change among women

Note: The chart shows countries with data up to the first (in some cases, up to the second) quarter of 2022. See
Appendix I for details on data sets. Countries are arranged by descending order of the total wage bill change for men.
Source: ILO estimates. See Appendix I for the sources of survey data used in this report.
72 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 3.12.  Evolution of the total wage bill, by sex, selected countries, 2019–22 (percentage)

Brazil Canada
123 118
119 114
115
Index (base=2019Q1)

Index (base=2019Q1)
111 110
107 106
103
99 102
95 98
91
94
87
83 90
79
86
75
71 82
1

2
Q

Q
19

19

19

19

20

20

20

20

21

21

21

21

22

19

19

19

19

20

20

20

20

21

21

21

21

22

22
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
All wage employees Men Women All wage employees Men Women

Colombia Costa Rica

131
127 128
123 124
119 120
115
111 116
Index (base=2019Q1)

Index (base=2019Q1)

107 112
103 108
99
95 104
91 100
87 96
83
79 92
75 88
71 84
67
63 80
59 76
55 72
51
47 68
43 64
1

1
Q

Q
19

19

19

19

20

20

20

20

21

21

21

21

22

22

19

19

19

19

20

20

20

20

21

21

21

21

22
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
All wage employees Men Women All wage employees Men Women

Ecuador Indonesia
124 118
120
116 114
112 110
Index (base=2019Q1)

Index (base=2019Q1)

108
106
104
100 102
96 98
92
94
88
84 90
80 86
76
72 82
68 78
1

1
Q

Q
19

19

19

19

20

20

20

20

21

21

21

21

22

22

19

19

20

20

21

21

22
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

All wage employees Men Women All wage employees Men Women
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
73

X Figure 3.12.  (concl.)

Mexico Paraguay
145 136
141 132
137 128
133 124
Index (base=2019Q1)

Index (base=2019Q1)
129 120
125 116
121 112
117 108
113 104
109 100
105 96
101 92
97 88
93 84
89 80
85 76
81 72
77 68
1

1
Q

Q
19

19

19

19

20

20

20

20

21

21

21

21

22

19

19

19

19

20

20

20

20

21

21

21

21

22
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
All wage employees Men Women All wage employees Men Women

Peru Portugal
122 129
118
114 125
110
106 121
102
Index (base=2019Q1)

Index (base=2019Q1)

98 117
94
90 113
86
82 109
78
74
70 105
66
62 101
58
54 97
50
46 93
42
38 89
1

1
Q

Q
19

19

19

19

20

20

20

20

21

21

21

21

22

19

19

19

19

20

20

20

20

21

21

21

21

22
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
All wage employees Men Women All wage employees Men Women

United States Viet Nam

116 126
122
118
112 114
110
106
Index (base=2019Q1)

Index (base=2019Q1)

108 102
98
94
104 90
86
82
100 78
74
70
96 66
62
58
92 54
50
46
42
88 38
34
30
84 26
1

2
Q

Q
19

19

19

19

20

20

20

20

21

21

21

21

22

22

19

19

19

19

20

20

20

20

21

21

21

21

22

22
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

All wage employees Men Women All wage employees Men Women

Source: ILO estimates. See Appendix I for the sources of survey data used in this report.
74 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
X 3.8. Decomposing the change in the total wage
bill over time, and a comparison between women
and men
The change in the total real wage bill over a given
period – say, between 2019 and 2020 – is the result
of changes in total employment (including changes
in the number of jobs and in the number of hours
worked) and both real and nominal changes in
hourly wages. This section analyses the contribution
of each of these components to the change in the
total real wage bill between 2020 and up to the first
or second quarter of 2022. In so doing, it sheds light
both on how the COVID-19 crisis has contributed to
the reduction in the total real wage bill documented
in the previous section and on how the ongoing cost-
of-living crisis is also eroding wages. Appendix III
describes the methodology used to decompose the
change in the total wage bill.
Figure 3.13 shows the decomposition of the
change in the total wage bill for 2020, 2021 and
2022, for each of the 12 countries that provided
data up to the first or second quarter of 2022.12
In 10 of the 11 countries where the wage bill
decreased in 2020 relative to 2019, the decline in
employment was the dominant negative factor.
In some of these countries – Brazil, Canada and
the United States – disentanglement of the
factors behind the change in the total real wage
bill in 2020 provides clear evidence of the effect
of employment composition on wages that was
described in box 3.1. The jobs lost during 2020 in
these countries reduced the total real wage bill,
but average nominal earnings increased as higher
earners remained in wage employment, thereby
mitigating the impact of employment losses on the
decline of the total wage bill. Costa Rica, Mexico
and Paraguay also exhibit some, albeit weaker,
signs of a composition effect on wages when the
changes in the total real wage bill are decomposed.
Viet Nam is the only country in the small sample
covered by figure 3.13 where falling nominal wages
were the main factor behind the decline in the
wage bill in 2020, but it may be representative of
other countries in Asia and other regions in which
the COVID-19 crisis translated into wage cuts
12 Charts providing a similar decomposition for countries with quarterly data up to 2020 or 2021 are given in Appendix IV.
rather than job losses. In Ecuador, Indonesia and
Peru, wages also declined in nominal terms and
contributed to a reduced wage bill, but this effect
was smaller than the employment effect. Portugal
is the only country in the sample where the total
wage bill increased in 2020. As in other European
countries, wage subsidies and job retention
schemes probably played their part in alleviating
the impact of the crisis on wage employment there.
However, even with the help of stimulus packages,
there was a 1.6 per cent decrease in the total
wage bill of Portugal due to employment losses.
On the other hand, nominal wage increases were
sufficiently large to increase the total real wage bill
in 2020 by 4.3 per cent relative to 2019.
The decomposition in figure 3.13 shows that in
2021, the second year of the pandemic, employment
outcomes – and the total real wage bills – were
on the whole starting to improve. A few countries
recovered from their total wage bill losses in
2020 and reported increases in 2021 relative to
2019 (for example, Canada and Mexico). In most
other countries, although the total real wage bill
in 2021 continued to be lower than in 2019, the
loss in 2021 was smaller than that registered in
2020. However, the most striking finding from the
decomposition in figure 3.13 is the strong irruption
of inflation as the main factor impacting negatively
on the total real wage bill across countries from
2021 onwards. The year 2021 is, therefore, when
the effects of the two crises – the COVID-19 crisis
and the cost‑of-living crisis – overlap and interact to
shape changes in the total real wage bill. In 2022,
inflation is the dominant negative factor in most
countries. Nowhere is this more visible than in Brazil,
where the contribution of inflation to the reduction
of the total real wage bill in the first quarter of 2022
relative to the first quarter of 2019 was as high
as 18.2 per cent.
Figure 3.14 presents a decomposition of the change
in the total wage bill similar to that in figure 3.13,
but with disaggregation by sex. This helps one to
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
75

X Figure 3.13.  Decomposition of the change in the total wage bill for 2020,
2021 and the first two quarters of 2022, selected countries (percentage)

Brazil: Men and women Canada: Men and women

17 23
15 12.2
% change relative to TWB in 2019

% change relative to TWB in 2019

21
13 19
11 9.0 17 14.0
9 6.8 15
7 13
5 11 9.4
1.9 9 7.4 7.5
3
1 7 4.8 4.5
–1
5
3
–3 1
–5 –3.11
–3.1 –4.1 –1
–7 –4.9 –5.1 –3 –0.7 –0.7 –0.2
–9 –7.0 –5
–4.3
–11 –8.7 –7
–13 –10.9 –9 –7.3
–15 –11
–17
–13 –11.0
–15
–19 –18.2 –17
–21 –19
–23 –21

2020 2021 2022 2020 2021 2022

Colombia: Men and women Costa Rica: Men and women

35 15
11.4
% change relative to TWB in 2019

% change relative to TWB in 2019

31 28.8 13
27 11
23 9
19 7
15 11.1 5
2.1
11 3 0.7
7 3.6 1
3 0.6 0.8 –1
–1 –3
–0.6
–2.3 –2.1
–5 –1.9 –5
–9 –5.5 –7
–13 –9.4 –7.5 –9 –7.1 –6.4
–17 –11 –9.4–9.2
–21 –16.4 –13
–25 –23.4–22.1 –15 –13.9 –14.0
–29 –17
–33 –19

2020 2021 2022 2020 2021 2022

Equador: Men and women Indonesia: Men and women

6
6
% change relative to TWB in 2019

% change relative to TWB in 2019

4 2.2
2 0.3 0.2 2 1.5
0
–2 –0.2
–1.9 –1.9 –2.2 –2 –0.7
–4
–4.0 –1.9
–6 –4.8 –2.9 –2.7 –3.2
–3.5 –3.8
–8 –6.7
–6 –5.5 –5.1
–10
–12 –11.3 –11.3
–14 –10 –9.4
–16 –15.0
–18
–20 –14
2020 2021 2022 2020 2021 2022

Mexico: Men and women Paraguay: Men and women

28 14
24.0
% change relative to TWB in 2019

% change relative to TWB in 2019

24 12 10.1
10
20 8
16 13.5 12.0 6 3.9
4 2.8
12 1.4
2 0.2
8 5.4 5.3 5.2 0
4 1.6 –2
–1.7 –0.6
0 –4 –3.3
–6
–4 –1.1 –8 –6.5 –6.3 –6.4
–3.1 –3.4
–8 –10
–12
–12 –9.8 –14
–16 –16 –14.6
–20 –17.2 –18
–20

2020 2021 2022 2020 2021 2022

Total change Due to employment change Due to nominal wage change Due to inflation
76 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 3.13.  (concl.)

Peru: Men and women Portugal: Men and women

9 19
7 5.2
% change relative to TWB in 2019

% change relative to TWB in 2019

5 17 15.0
3 15
1 13 12.0 11.3
–1 –0.0 11 9.9
–3
–5 –2.4 –1.4 –3.6 –3.3 9
–7 –5.7 –6.0 7 5.8
–9 5 4.3
–11 2.0
–13 –11.2 3
–15 –12.6 1 0.0
–17 –1
–19
–1.6 –0.7 –1.4
–21 –3
–23 –5
–25 –22.5
–27
–7 –5.7
–29 –26.3 –9
–31 –11

2020 2021 2022 2020 2021 2022

United States: Men and women Viet Nam: Men and women
24 15
13 11.2
% change relative to TWB in 2019

% change relative to TWB in 2019

20 11
16 15.0 9
7 6.0
12 8.9 5 3.6
8 5.6 3 0.2
1
4 14.0 –1
–3 –0.6
0 –5 –2.7 –3.0
–1.2 –1.0 –0.0 –4.6
–4 –2.5 –7
–4.0 –9 –8.3
–8 –6.8 –5.9 –11 –8.8
–12 –13
–15
–16 –13.5 –17 –15.0
–20 –19 –17.5
–21
–24 –23

2020 2021 2022 2020 2021 2022

Total change Due to employment change Due to nominal wage change Due to inflation

Note: Appendix III describes the methodology used to decompose changes in the total wage bill between different years.
Source: ILO estimates. See Appendix I for the sources of survey data used in this report.

understand what may lie behind the larger decrease two observations taken together suggest that the
in the wage bill of men compared with that of composition effect, particularly in 2020, was far
women in many countries that was documented more pronounced among women. In other words,
in the previous section. The striking picture that women lost more employment than men at the
emerges for 2020, the year when the composition onset of the COVID-19 crisis and, at the same time,
effect of wage employment had its greatest impact this employment loss had a greater impact in terms
on average wages, may be interpreted as follows. of increasing the average nominal wage of those
In 2020, employment losses (including jobs and women who remained in wage employment. This
hours of work) were greater among women than suggests that employment losses for women were
among men in a majority of countries. At the same even more concentrated among low-paid workers
time, in 2020, increases in average wages were than for men.13
greater among women in all countries. These

13 Figures 3.13 and 3.14 show that, in some instances, the effect of inflation on the total wage bill varies slightly between
women and men, even though the inflation rate used to convert nominal to real values is identical for all wage employees.
These differences occur because when decomposing the change in the total real wage bill over a given period, the inflation
component is weighted by the relative change in employment, which varies between women and men. This can easily be
seen from a glance at equation 4 in Appendix III.
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
77

X Figure 3.14.  Decomposition of the change in the total wage bill for 2020, 2021
and the first two quarters of 2022, by sex, selected countries (percentage)

Brazil: Women Brazil: Men

17 15
15 13.4 13 11.3
% change relative to TWB in 2019

% change relative to TWB in 2019

13 11.0 11
11 8.1 9 7.2
9 7 5.6
7 5 2.3
5 3
3 1.4 1
1 –1
–1 –3
–3 –5 –3.1 –3.1
–5 –3.0 –3.5 –7 –4.2 –4.5
–7 –5.9 –9 –6.7 –6.7
–9 –7.4 –7.5 –11
–11 –10.9
–13 –11.0 –10.9 –13
–15 –15
–17 –17
–19 –19 –18.1
–21 –18.3 –21
–23 –23
2020 2021 2022 2020 2021 2022

Canada: Women Canada: Men

25 23
23 21
% change relative to TWB in 2019

% change relative to TWB in 2019

21 19
19 17
17 14.9 15 13.3
15 13
13 10.7 11 8.3
11 8.6 9 6.1 7.3
9 7.9 7 4.6 5.0
7 5.2 4.0 5
5 3 0.6
3 1
1 –1 –0.3
–1 –3 –0.7
–3 –1.2 –0.7 –1.1 –5
–5 –7 –4.3
–7 –4.4 –5.7
–9
–9 –11
–11 –9.0 –13 –11.0
–13 –11.1 –15
–15 –17
–17 –19
–19 –21
–21
2020 2021 2022 2020 2021 2022

Colombia: Women Colombia: Men

35 36
31
% change relative to TWB in 2019

% change relative to TWB in 2019

27 25.5 32 28.0
23 28
19 15.9 24
15 20
11 6.8 7.5 16
7 3.7 12 7.8
3 8
–1 4 1.2
–5 –1.8 0
–9 –5.5 –4 –1.8–1.9
–13 –9.5 –10.7 –8 –5.1 –5.5 –4.2
–17 –12 –9.4
–21 –17.1 –16
–25 –20 –16.0
–25.0 –26.9 –18.6
–29 –24 –22.3
–33 –28
–37 –32
2020 2021 2022 2020 2021 2022

Costa Rica: Women Costa Rica: Men

31
25.7 7
% change relative to TWB in 2019

% change relative to TWB in 2019

27 5
23 2.6
3
19 1
15 13.0 –1 –0.6 –0.5
11 –3 –2.2
6.3 6.1 –2.9
7 –5
3 –7 –5.8
–1 –9 –8.7 –8.2
–0.7 –11
–5 –2.4 –11.3 –11.4
–5.4 –13 –12.7
–9 –6.3 –7.4 –15
–13 –10.3 –10.0
–17 –16.2
–17 –16.0 –19
–21 –21
2020 2021 2022 2020 2021 2022

Total change Due to employment change Due to nominal wage change Due to inflation
78 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 3.14.  (cont’d)

Ecuador: Women Ecuador: Men

8 7
6 5
% change relative to TWB in 2019

% change relative to TWB in 2019

4 2.9 3 1.8
2 1.2 1 0.3 0.2
0.3 0.2
0 –1
–2 –3 –1.2 –0.8
–2.3
–4 –2.2 –5 –3.2
–3.8 –3.2 –3.9
–6 –7
–6.7
–8 –9 –8.3
–7.7 –9.6
–10 –11
–12 –13 –11.3
–11.3
–14 –13.1 –15
–16 –14.6 –17 –16.0
–18 –19
–20 –21
2020 2021 2022 2020 2021 2022

Indonesia: Women Indonesia: Men

7
5
% change relative to TWB in 2019

% change relative to TWB in 2019

3
1.3 0.9 1.3
0.6 0.0 1

–1 –1.2
–3 –1.9 –2.1
–1.9 –2.3 –2.9 –3.1
–2.9 –3.3 –3.8 –3.2 –4.3
–5 –4.2 –4.2
–7 –6.0

–7.5 –7.2
–9 –8.2 –11 –10.2

–13 –15
2020 2021 2022 2020 2021 2022

Mexico: Women Mexico: Men

31 28
26.9 22.6
24
% change relative to TWB in 2019

% change relative to TWB in 2019

27
23 20
19 15.6 17.0 16 12.4
15 12 9.3
11 8.2 8.0 8.0 8
7 4.0 3.9 3.5
3.2 2.5 4 1.1
3
0
–1
–1.5 –4 –3.5 –4.1 –3.3
–5 –3.5
–9 –8
–13 –10.0 –12 –9.6
–17 –16
–21 –17.9 –20 –16.8

2020 2021 2022 2020 2021 2022

Paraguay: Women Paraguay: Men

20
18 11
% change relative to TWB in 2019

% change relative to TWB in 2019

16 14.8 9 7.3
14 7
12 4.8
10 5
7.3 3 1.8
8
6 4.3 1
4 2.5 2.7 –1
2 –0.4 –0.2
0 –3 –1.7 –2.3
–2 –1.1 –1.9 –5 –4.7
–4 –1.7 –7 –5.0
–6 –7.1 –6.3
–8 –5.6 –6.5 –9
–10 –8.3 –11
–12 –13
–14 –15
–16 –15.1 –14.4
–18 –17
–20 –19
2020 2021 2022 2020 2021 2022

Total change Due to employment change Due to nominal wage change Due to inflation
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
79

X Figure 3.14.  (concl.)

Peru: Women Peru: Men

8 12
3.3 3.0 2.6 6.6
% change relative to TWB in 2019

% change relative to TWB in 2019

4 1.1 8
0 4
–4 –1.5 0
–4 –1.4 –1.4 –1.7
–8 –5.7 –5.6
–7.0
–8 –5.9 –6.1 –5.6 –6.2
–12 –11.5 –11.2 –12 –11.2
–16 –13.1
–16
–20 –20
–19.7
–24 –24
–24.9
–28 –26.7 –28 –27.0
–32 –32
2020 2021 2022 2020 2021 2022

Portugal: Women Portugal: Men

21 19
19 17
% change relative to TWB in 2019

% change relative to TWB in 2019

17 16.3 13.9
15
15 13.2 13 11.7
13 12.3
10.6 11 9.2 9.6
11 9
9 7 5.6
7 6.2
5.1 5 3.5
5 2.7
3 3 1.3
0.0 1 0.0
1
–1 –1
–1.1 –0.3 –3 –1.1 –1.4
–3 –1.4 –2.1
–5 –5
–7 –5.8 –7 –5.6
–9 –9
–11 –11
2020 2021 2022 2020 2021 2022

United States: Women United States: Men

28 21
19
% change relative to TWB in 2019

% change relative to TWB in 2019

24 17
20 18.6 15 12.2
13
16 11 7.8
10.4 9
12 7 4.8
8 6.5 5
4.0 3 0.6
4 0.2 1
–1 –0.4
0 –3 –1.2 –1.8
–4 –1.2 –0.7 –5 –2.9 –3.7
–2.0 –7
–4.3 –9 –6.4 –5.9
–8 –7.3 –6.0
–11
–12 –13
–16 –13.9 –15 –13.3
–17
–20 –19
–21
–24 –23
2020 2021 2022 2020 2021 2022

Viet Nam: Women Viet Nam: Men

15 16
11.5 14
% change relative to TWB in 2019

% change relative to TWB in 2019

13 12 11.1
11 10
9 7.8
7 5.3 8
6 4.8
5 2.4
3 4
1 2 0.4 0.1
–1 0
–3 –0.2 –2
–2.7 –2.0 –1.6 –4 –2.7
–5 –3.7
–7 –4.6 –6 –4.6
–9 –8
–11 –8.3 –9.0 –10 –8.2 –8.7
–13 –12
–15 –14
–17 –15.4 –16 –14.8
–19 –18.2 –18 –17.1
–21 –20
–23 –22
2020 2021 2022 2020 2021 2022

Total change Due to employment change Due to nominal wage change Due to inflation

Source: ILO estimates. See Appendix I for the sources of survey data used in his report.
80 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

This differentiated composition effect among
women and men is probably due to the clustering
of women and men at different points along the
wage distribution, a phenomenon that was already
highlighted in the Global Wage Report 2018/19 (ILO
2018). Thus, in many countries – particularly in
low- and middle-income countries, where women’s
participation in wage employment is often lower
than that of men – women tend to be concentrated
in specific sectors and occupations, often at the
two extremes of the wage distribution, while male
wage employees, who often dominate in number,
are more likely to be spread across the distribution.
When a crisis wipes out low-paid jobs, as was the
case in 2020, the effect among women, who are over-
represented at the low end of the wage distribution,
as demonstrated in the Global Wage Report 2020/21
(ILO 2020a), is greater than that among men. At the
same time, since the women remaining in wage
employment are likely to be at the upper end of the
wage distribution – whereas the men who remain
employed tend to be more evenly spread across that
distribution – the increase in nominal wages among
women is likely to be higher than that observed
among men. Paradoxically, therefore, the gender pay
gap as measured by comparing the average wages
of men and women may have diminished in some
countries during the COVID-19 crisis. However, this
most likely reflects the concentration of job losses
among low-paid women, and hence a stronger
composition effect, rather than an improvement in
the average wages of working women.

X 3.9. Changes in employment and wages

across the wage distribution in the formal
and informal economies

The decomposition of changes in the total wage
bill in figures 3.13 and 3.14 provides insights into
the impact of the two ongoing crises on all wage
employees, and on the different effects that they
have had – and continue to have – on women
and men. However, neither figure sheds light
on whether the crises have affected workers
differently depending on their position along the
wage distribution. By way of complementing the
findings presented in section 3.8, this section
therefore examines changes in employment and
wage outcomes (nominal and real) across the wage
distribution from 2020 to 2022 for a selection of
countries, and for paid workers in both the formal
and the informal economy. The analysis shows how
the employment and wages of low-paid workers
and workers in the informal economy have been
disproportionately impacted by the ongoing crises,
and in particular by the COVID-19 crisis.
Based on a selection of countries representing
various regions of the world,14 figure 3.15 shows
the changes in employment, nominal wages and
real wages over time and at five different pos-
itions on the wage distribution.15 These five pos-
itions are identified as follows: in 2019, wage
workers were ranked according to their month-
ly earnings and grouped into quintiles, that is, the
bottom 20 per cent of wage employees, the top
20 per cent and three intermediary groups, each

14 The selection includes only those countries with monthly or quarterly data extending to the first two quarters of 2022 at
the time of writing. Since Indonesia, for example, regularly provides data for the first and third quarters of each year and
the estimates in this section are based on annual aggregates, that country has been excluded from the sample.

15 The breakdown in this section should not be confused with the way in which the total wage bill was decomposed in sec-
tion 3.8 (that is, in figures 3.13 and 3.14). In that section, the aim was to identify the contribution of employment changes,
nominal wage changes and inflation to changes in the total wage bill. This was necessary to explain changes in the total wage
bill over time, and also to explain why women or men may exhibit a higher (or lower) total wage bill when in fact they have
lost more (or less) employment than the opposite sex. The estimates shown in figures 3.15 and 3.16 in the present section
compare simple changes in employment, in nominal wages and in real wages independently over different periods – that is,
without considering the interaction between the different components, which was the aim of decomposing the total wage
bill. See Appendix III for a detailed explanation of the method used to decompose the total wage bill in figures 3.13 and 3.14,
and of how this method differs from that used to obtain the simpler estimates in figures 3.15 and 3.16.
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
81

X Figure 3.15.  Changes in employment and in nominal and real wages,

by position on the wage distribution, selected countries, 2020–22 (percentage)

Brazil Canada

−22.7 −19.9
Lowest paid Lowest paid
−4.4
−1.3 −1.6 −0.9
−0.1 −19.2
Second 0.2 Second 1.3
−2.9 0.6
Third −3.5 Third −6.8 1.0
2020 −0.6 2.6 2020
0.3
−8.2 3.2
2.0
Fourth Fourth 1.3
0.0 0.6
−1.1 7.0
Top paid 4.6 Top paid 2.2
1.3 1.5
Lowest paid −4.6 12.2 Lowest paid −9.9 3.8
3.5 0.3
−2.3 −10.1 3.6
Second 8.2 Second
−0.1 0.2
8.2 1.7
2021 Third 9.7 2021 Third 3.3
1.3 −0.1
−24.6 9.3 8.0
Fourth Fourth
0.9 0.0 3.4
−1.4 2.8 9.6
Top paid Top paid 2.8
−5.1 −0.6
−9.6
Lowest paid −14.1 Lowest paid −3.4 4.1
−18.1 −1.3
33.5 0.0
Second Second 5.3
−2.6 2.2 −0.1
3.1 5.1
2022 Third 6.2 2022 Third 5.4
1.1 0.0
−11.1 12.8
Fourth 4.6 Fourth
−0.4 −0.2 5.2
−6.3 8.5
Top paid 4.4 Top paid
−0.6 −0.1 5.3

−35 −25 −15 −5 5 15 25 35 45 −29 −19 −9 1 11 21

% change relative 2019 % change relative 2019

Employment change Nominal wage change Real wage change

Colombia Costa Rica

−11.6 −9.1
Lowest paid 1.3 Lowest paid 7.2
−1.2 6.4
−24.7 −19.5
Second 2.4 Second 0.5
−0.2 −0.2
−24.9 −15.2
2020 Third 3.6 2020 Third 0.2
1.0 −0.5
−27.8 −14.0
Fourth 1.7 Fourth 1.1
−0.8 0.3
−20.9 −12.1
Top paid −0.4 Top paid −0.5
−2.9 −1.2
−5.2 5.5 −12.6
Lowest paid Lowest paid 1.9
2.0 0.2
Second 1.5 Second −3.2
2.2 1.5
−1.2 −0.2
−11.3 −11.7 1.3
2021 Third 2.5 2021 Third
−1.0 −0.4
−5.5 −12.5
Fourth 2.6 Fourth 1.2
−0.8 −0.5
−7.8 −5.8
Top paid 2.7 Top paid
−0.8 −0.2
−1.9
0.0 −17.1
Lowest paid 4.4 Lowest paid 6.4
−2.8 3.3
−39.1 0.8
Second 8.3 Second 3.2
1.0 0.1
−3.4 5.4
2022 Third 8.4 2022 Third −0.1
1.0 2.9
−0.4 −24.1
Fourth 6.5 Fourth 2.7
−0.7 −0.3
27.4 −0.5
Top paid Top paid 9.5
17.8
9.8 6.3

−49 −39 −29 −19 −9 1 11 21 31 41 −34 −24 −14 −4 6 16

% change relative 2019 % change relative 2019
82 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 3.15.  (cont’d)

Ecuador Mexico

−0.6 3.5 6.3

Lowest paid Lowest paid
−0.2 3.8
−7.1 −15.6 0.4
Second −1.2−0.8 Second 5.6
2.1
−15.4 −3.2 2.3
2020 Third −0.8−0.4 2020 Third
−1.0
−21.7 −21.8
Fourth Fourth 2.3
−0.2 0.1 −1.1
−16.8 18.9
Top paid 0.3 Top paid
0.7 −1.0 2.4
22.7 3.4
Lowest paid −2.3 Lowest paid 9.2
−2.4 3.3
0.2 −19.0
Second 0.2 Second 2.9
0.1 −2.7
−16.4 12.2
2021 Third 0.3 2021 Third 6.6
0.1 0.9
−16.2 −15.0 4.7
Fourth −0.1 Fourth
−0.2 −1.0
−15.1 27.1
Top paid −0.5 Top paid 5.4
−0.6 −0.3
21.9 −4.5
Lowest paid Lowest paid 0.9
4.0 −3.7
1.4
Second −6.4 3.7 Second −6.8 3.8
1.1 −1.0
Third −18.4 3.2 Third −9.3 3.4
2022 2022 −1.4
0.6
−15.7 19.3
Fourth 2.1 Fourth
−0.5 −3.6 1.1
7.7 27.6
Top paid Top paid 4.8
4.0 −0.1
1.4

−32 −12 8 28 −32 −22 −12 −2 8 18 28 38

% change relative 2019 % change relative 2019

Employment change Nominal wage change Real wage change

Paraguay Peru
−50.5
−7.7
Lowest paid 1.7 Lowest paid 0.0
−50.4 −0.5 −1.9
−22.4
Second 1.7 Second 2.2
−0.5 0.2
34.3 −26.9
2020 Third 2020 Third 2.0
0.52.3 0.0
−4.8 87.3 −31.2
Fourth Fourth 1.7
−6.5 −0.3
−41.5 −25.1
Top paid 4.0 Top paid 0.1
1.7 −1.9
−19.4 8.0
Lowest paid 5.5 Lowest paid 7.2
0.5 2.8
Second −9.9 4.8 Second 7.2
−0.1 −2.0 2.1
−29.2 −2.5
2021 Third 3.8 2021 Third 2.8
−1.6 −1.4
90.2 −17.5
Fourth 8.5
Fourth −1.1 3.2
3.5 −14.1
Top paid −27.9 0.3 Top paid
−4.3 −0.2
−4.3
21.6 21.5
Lowest paid Lowest paid
2.9 8.9 4.4 9.0
28.4 15.2
Second −0.6 5.3 Second 5.0
−0.6 0.6
−23.0 5.0
2022 Third −0.8 2022 Third 4.6
0.2
−13.0 10.4 −11.7
Fourth Fourth −1.7 2.6
3.6
2.4 1.6
Top paid 11.9 Top paid −1.4
−5.5
5.6

−60 −30 0 30 60 90 −41 −31 −21 −11 −1 9 19 29

% change relative 2019 % change relative 2019
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
83

X Figure 3.15.  (concl.)

Portugal United States

−49.2 −15.3
Lowest paid −8.4 Lowest paid
−8.4 −6.8 −5.6
55.1 −21.5
Second Second 0.7
0.8 −0.6
0.8 −1.4
2020 Third −0.2 2.4 2020 Third 1.9
−0.2 0.7
4.2 −1.8 2.3
Fourth −0.1 Fourth
−0.0 1.0
13.9 6.0
Top paid Top paid
2.9 −0.3 0.9
2.9
−60.6 −14.3
Lowest paid −2.0 Lowest paid 8.2
−3.3 3.4
20.1 −16.2
Second Second 4.6
2.3 −0.1
1.0
12.6 3.5
2021 Third 2021 Third 4.1
0.3 −0.5
−0.9 22.5 1.8
Fourth 0.8 Fourth 4.3
−0.4 −0.3
26.2 1.5
Top paid 2.1 Top paid 4.1
−0.5
0.9
−57.6 −13.7
Lowest paid Lowest paid 4.7
−5.4−2.7 −1.6
−73.0 −7.6
Second 1.8 Second 7.2
−1.0 0.7
76.4 8.1
2022 Third −0.3 2022 Third
−3.1 −0.3 6.1
54.7 7.0
Fourth Fourth 6.4
−1.1 1.7 −0.0
9.5 −1.2
Top paid Top paid 5.0
−0.2 2.7 −1.3

−83 −63 −43 −23 −3 17 37 57 77 −32 −22 −12 −2 8 18

% change relative 2019 % change relative 2019

Employment change Nominal wage change Real wage change

Viet Nam

−9.2
Lowest paid −4.9
−7.8
−19.6
Second 2.5
−0.7
−27.6
2020 Third 2.5
−0.7
−0.8
Fourth 2.8
−0.4
−23.3
Top paid 1.9
−1.3
8.7
Lowest paid −0.7
−2.5
4.4
Second
−0.4 1.4
−13.6
2021 Third 1.7
−0.1
3.8
Fourth 1.2
−0.6
−19.4
Top paid 1.4
−0.4
−28.9
Lowest paid 4.1
2.0
−12.8
Second 1.5
−0.5
20.2
2022 Third
0.9 2.9
31.3
Fourth
1.4 3.5 Note: The classification of wage employees
5.3
Top paid into five groups is based on the wage distribution
−0.4 1.6
in 2019.
−39 −29 −19 −9 1 11 21 31 41 Source: ILO estimates. See Appendix I for
% change relative 2019 the sources of survey data used in this report.
84 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
The employment and wages of
 
low-paid workers and workers
in the informal economy
have been disproportionately
impacted by the ongoing crises.
also comprising 20 per cent. The threshold values
defining the five groups in 2019 were used to sub-
divide the population of wage employees in subse-
quent years after converting the thresholds into real
values using a given country’s CPI.16 Thus, whereas
each of the five groups includes exactly 20 per cent
of wage employees in 2019, the share of each group
in subsequent years can vary depending on how
the dynamics in the labour market, and in particu-
lar the ongoing crises, are impacting on the distri-
bution of wage employment and workers’ monthly
earnings in subsequent years. Therefore, when re-
porting changes in employment and wages during
2020‌–22, instead of “quintiles”, it is more appropri-
ate to refer to the five groups using ordinal terms:
the lowest-paid group, the second-lowest and so on
until the highest-paid group.
Figure 3.15 shows that all five groups across the
wage distribution in almost all countries suffered
employment losses during 2020, the first year of
the COVID-19 crisis. In 8 of 11 countries, the losses
were greatest among the lowest-paid and second-
lowest-paid groups. For example, in Brazil, the
group at the bottom lost almost 23 per cent of wage
employment relative to 2019, whereas employment
losses in the higher-paid groups ranged from 3 to
about 8 per cent. In Portugal, the employment
loss of the lowest-paid group was 49 per cent,
whereas employment in the second-lowest-paid
group increased by 55 per cent in 2020. This could
be because some workers in the third-lowest-paid
group received lower earnings, which would have
pushed them into the second-lowest-paid group,
but also because of an increase in earnings above
inflation, which would have pushed some of the
16 For example, let us assume that, in a hypothetical country, wage employees in the bottom quintile earned between 10 and
100 local currency units in 2019. The threshold values of 10 and 100 are then kept fixed in real terms for all subsequent years
by using the CPI to estimate inflation-adjusted thresholds. If inflation in this hypothetical country increased by 2 per cent
between 2019 and 2020, the threshold values delimiting the lowest-paid group in 2020 relative to 2019 would be set at
10.2 and 102 local currency units, respectively.
lowest-paid into the next group. An interesting
contrast between groups in 2020 may be observed
in relation to nominal wage increases. In most
countries, nominal wages increase – alongside a
decline in employment – for earners in the second-
lowest-paid and all higher-paid groups, but not
among the lowest-paid group. This means that
there is no composition effect among the lowest-
paid. In fact, in 2020, in 7 of 11 countries those in
the lowest-paid group received lower nominal (and
real) wages relative to 2019.
Turning to 2021 and 2022, employment in most
countries recovers to levels similar to those seen
in 2019. Nevertheless, in 7 of 11 countries, the
employment level among the lowest-paid group in
2022 remains below that of 2019, while most other
higher-paid wage groups have recovered to their
pre-crisis levels. For example, in the United States,
the lowest-paid and second-lowest-paid groups
have shrunk in size by, respectively, 13.7 per cent
and 7.6 per cent in 2022 relative to 2019. The
lowest-paid group is also the one that generally
has recovered the least in terms of nominal
earnings. In Brazil and Portugal, the lowest-paid
group receives nominal earnings in 2022 that
are, respectively, 14.1 per cent and 2.7 per cent
below the estimated average in 2019, whereas
the highest-paid group receives nominal earnings
that are, respectively, 4.4 per cent and 2.7 per cent
higher than the averages in 2019. In most other
countries, the lowest-paid have recovered nominal
earnings, but at a lower rate than higher-paid
groups. For example, in Colombia, Costa Rica
and Mexico, nominal monthly earnings among
the lowest-paid have increased by, respectively,
4.4 per cent, 6.4 per cent and 0.9 per cent, whereas
among the highest-paid group they have increased
by, respectively, 17.8 per cent, 9.5 per cent and
4.8 per cent. This means that, with inflation rates
rising fast, the real wage increase at the bottom
of the wage distribution lags behind that among
top wage earners. For example, in Canada the
lowest-paid have lost 1.3 per cent of the purchasing
power of their earnings, whereas the nominal gains
among top earners help them to (almost) keep up
their purchasing power relative to 2019: they have
experienced a real wage decline of just 0.1 per cent.
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
Low- and middle-income countries are often
characterized by a high degree of informal
employment, including informal wage employment.
Were the losses of wage employees in the informal
economy comparable to those of their formal
counterparts? Did wage employees in the formal
and informal economies recover at different speeds
during 2021 and 2022? To answer these questions,
figure 3.16 disaggregates wage employees by formal
and informal employment. As can be seen there, in
almost all countries the employment loss among
wage employees in informal wage employment
during 2020 was greater than that among their
counterparts in formal employment. For example, in
Brazil, the employment loss among the lowest-paid
formal wage employees was 10 per cent, compared
with 19 per cent among the lowest-paid informal
employees. Similarly, in Colombia and Costa Rica,
employment losses among the lowest-paid formal
employees in 2020 were, respectively, 9 per cent
and –0.4 per cent, whereas losses among the
lowest-paid informal employees were, respectively,
16 per cent and 30 per cent.
85
With regard to employment recovery during
2021‌–‌22
‌ , the picture is mixed. In some countries,
formal wage employment has recovered to a
greater extent than informal employment (for
example, Colombia and Viet Nam), but in others
the opposite is true (for example, Ecuador). It is
worth noting that during a crisis there can be shifts
between formal and informal employment, with
informal employment increasing at the expense of
formal employment. Some studies suggest that in
emerging market and developing economies the
recovery of informal employment has been faster
and stronger than that of formal employment,
which would point to “scarring” of the labour market
as a result of the COVID-19 crisis (ILO 2022b). This
could be driving some of the patterns in figure 3.16.
As regards earnings, the nominal wage increases
observed in 2022 in each of the income groups
among formal employees are almost always greater
than those of the corresponding groups among
informal employees. Among other things, this may
reflect the reduced bargaining power of informal
wage employees across the entire wage distribution
in the aftermath of the COVID-19 crisis.
86 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 3.16.  Changes in employment and in nominal and real wages, by position on the wage
distribution and by formal vs informal status, selected countries, 2020–22 (percentage)

Brazil – Formal Brazil – Informal

−10.0 −19.3
Lowest paid 2.7 Lowest paid 3.3
−0.4 0.1
−12.7 −15.9
Second 2.4 Second 2.5
−0.8 −0.7
−10.5 −22.0
2020 Third 1.5 2020 Third 1.0
−1.7 −2.2
5.0 0.8
Fourth −0.6 2.6 Fourth −2.3 0.8
−3.6 −15.6
Top paid 6.0 Top paid 12.5
2.7 9.0
4.1 −17.8
Lowest paid 7.0 Lowest paid 1.5
−1.1 −6.2
−16.6 2.8
Second 6.8 Second −1.9 6.2
−1.4
−13.2 −11.7
Third 5.8 Third 8.0
2021 −2.3 2021 −0.3
6.7 4.3
Fourth −2.1 6.0 Fourth −1.5 6.7
−6.0 −14.0
Top paid 3.8 Top paid 1.3
−4.1 −6.2
32.9 −10.9
Lowest paid 5.7 Lowest paid 2.7
0.6 −2.2
−32.6 21.2
Second 3.0 Second 6.0
−1.9 1.0
−9.2 −22.9
2022 Third 2.2 2022 Third 0.8
−2.7 −4.0
27.3 −1.8 40.2
Fourth 5.4 Fourth −6.5
0.3 −6.3
−12.6 7.6 −1.8
Top paid Top paid
2.4 −6.7

−43 −33 −23 −13 −3 7 17 27 37 47 −33 −23 −13 −3 7 17 27 37 47

% change relative to 2019 % change relative to 2019

Employment change Nominal wage change Real wage change

Colombia – Formal Colombia – Informal

−8.6 −16.4
Lowest paid −6.6 Lowest paid 0.1
−9.0 −2.3
−19.8 4.4 −16.8
Second Second 1.6
1.8 −0.9
Third −25.6 Third −11.9
2020 1.6 2020 3.3
−0.9 0.7
−23.0 −32.7 4.4
Fourth 2.3 Fourth 1.8
−0.2
−21.0
Top paid −1.4 Top paid −35.5 8.0
−3.9 5.4
−21.2 −12.3
Lowest paid 10.0 Lowest paid 5.6
−4.0 6.3 2.1
−2.9
Second 3.1 Second 2.1
−0.4 −1.3
−12.9 14.9
2021 Third 4.0 2021 Third 2.3
0.5 −1.2
−5.4 −10.7
Fourth −0.6 2.9 Fourth 2.1
−1.3
−8.3 −19.2
Top paid 3.3 Top paid −3.3
−0.2 −6.6
12.7 −17.8
Lowest paid −0.9 Lowest paid 4.6
−7.9 −2.5
1.6 −12.3
Second 9.2 Second 5.2
1.8 −1.9
−4.0 18.8
2022 Third 6.6 2022 Third −1.0 6.2
−0.6
2.1 −17.7
Fourth 6.1 Fourth 7.4
−1.1 0.1
32.2 −2.6
Top paid 16.8 Top paid 33.9
8.9 24.8

–36 –26 –16 –6 4 14 24 34 44 –36 –26 –16 –6 4 14 24 34 44

% change relative to 2019 % change relative to 2019
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
87

X Figure 3.16.  (cont’d)

Costa Rica – Formal Costa Rica – Informal

−0.4 −30.1 1.2

Lowest paid −3.2 Lowest paid
−3.9 0.5
−4.6 0.7
Second −9.6 0.9 Second
0.2 0.0
−18.1 −14.3
2020 Third 1.3 2020 Third 0.5
0.5 −0.2
−10.5 −34.1
Fourth 0.3 Fourth 0.2
−0.4 −0.5
−10.8 −38.6
Top paid Top paid −3.4
−1.1 −4.2
−1.8
5.2 −33.5
Lowest paid 5.0 Lowest paid −0.6
−2.3
3.3 −14.2 1.8
Second −6.1 Second
1.3 0.1
−0.4
−18.5 4.0
2021 Third 1.1 2021 Third −1.2 0.5
−0.6 −13.5
Fourth −10.6 Fourth 1.5
1.5 −0.2
−0.3
−1.8 −28.2
Top paid Top paid 1.6
−1.4 −0.1
−3.1
−55.5
Lowest paid 22.3 Lowest paid 10.1
−0.5 2.5 6.9
−10.7
Second 5.0 Second 2.5
−0.8 2.2 −0.4
−26.3 −2.9 5.0
2022 Third 2.6 2022 Third
−0.4 1.9
−12.4 −7.5
Fourth 1.5 Fourth 5.1
−1.5 2.0
5.3 −28.3
Top paid 10.6 Top paid 18.0
7.4 14.5

–36 –26 –16 –6 4 14 24 34 –66 –56 –46 –36 –26 –16 –6 4 14 24

% change relative to 2019 % change relative to 2019

Employment change Nominal wage change Real wage change

Ecuador – Formal Ecuador – Informal

−13.3 68.5 −27.1

Lowest paid Lowest paid 1.6
−13.0 2.0
−0.6 10.0 −31.3
Second −0.3 Second 0.1
0.4
−11.8 −37.1
Third 0.2 2020 Third 0.0
2020 0.5 0.4
−13.2 −48.7
Fourth −0.1 Fourth 0.6
0.2 0.9
−12.9 −66.8
Top paid −0.5 Top paid −7.1
−0.1 −6.8
−1.1 9.2 −1.6 31.3
Lowest paid Lowest paid
9.0 −1.7
−21.5 13.1
−0.4
Second −0.1 0.0 Second
−0.5
−18.6 7.1
2021 Third −0.0 0.1 2021 Third 0.5
−13.7 −5.2 0.4
Fourth 0.7 Fourth 0.2
0.6 0.1
−16.9 −15.5
Top paid 0.7 Top paid 6.3
0.5 6.1
−8.2 29.2
Lowest paid 8.7 Lowest paid 2.7
6.0 0.2
−48.3 4.3 19.0
Second 1.7
Second 4.6
2.0
−11.2 3.2 13.8
2022 Third 0.7 2022 Third 4.6
−16.1 2.0
4.4 −12.6 3.5
Fourth 1.8 Fourth
14.4 1.0
11.0
Top paid 2.1 Top paid −1.8 0.7
−0.4

−58 −38 −18 2 22 42 62 82 −77 −57 −37 −17 3 23 43

% change relative to 2019 % change relative to 2019
88 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 3.16.  (cont’d)

Mexico – Formal Mexico – Informal

−19.7 −10.0
Lowest paid Lowest paid
−16.3 −13.4 −3.9
−0.6
39.2 0.1
Second 2.4 Second 4.3
−1.0 0.9
Third −34.9 Third 8.7
2020 2.6 2020 6.9
−0.8 3.4
Fourth 11.0 Fourth −22.7
3.8 5.5
0.4 2.1
Top paid 9.0 Top paid −9.4
6.5 5.6
3.0 2.1
−15.4 −12.6
Lowest paid 18.8 Lowest paid 0.9
12.4 −4.6
32.7 4.0
Second 9.0 Second 6.4
3.1 0.7
−23.9 11.2
2021 Third 5.3 2021 Third 2.4
−0.3 −3.1
15.9 −10.6
Fourth 8.0 Fourth 5.2
2.2 −0.5
10.5 8.5
Top paid 5.9 Top paid 3.8
0.2 −1.8
−16.8 −18.4
Lowest paid 10.8 Lowest paid 2.8
5.7 −1.9
−4.3 −1.7
Second 2.5 Second 3.0
−2.2 −1.8
33.1 16.2
2022 Third 3.5 2022 Third 4.7
−1.3 −0.1
−17.2 −12.9
Fourth 2.0 Fourth 3.1
−2.7 −1.7
−0.9 47.2 24.2
Top paid Top paid −0.4
−5.5 −5.0

−45 −35 −25 −15 −5 5 15 25 35 45 55 −33 −23 −13 −3 7 17 27 37

% change relative to 2019 % change relative to 2019

Employment change Nominal wage change Real wage change

Paraguay – Formal Paraguay – Informal

−54.9 −48.2
Lowest paid Lowest paid 4.6
−2.7 −0.5 2.3
−51.2 −48.7
Second 1.3 Second 2.4
−0.9 0.2
84.9 −49.0
Third Third 3.7
2020 −0.3 1.4 2020
1.4
−52.4 −47.9
Fourth 2.8 Fourth 0.9
0.6 −1.4
−40.5 4.8 395.2
Top paid Top paid −13.1
2.5 −14.7
4.2 −21.7
Lowest paid 15.6 Lowest paid 5.4
10.1 0.6
−38.0 −21.2
Second 5.1 Second
0.2 −1.7 3.1
49.5 −20.9
Third Third 3.4
2021 2.2 7.0 2021 −1.5
−41.5 −12.6
Fourth 6.0 Fourth 4.7
1.0 −0.2
−30.9 217.2
Top paid 1.7 Top paid 14.4
−3.0 9.2
43.5 29.3
Lowest paid 7.0 Lowest paid −3.9 1.8
1.1
−17.8 −4.4
Second 6.7 Second 2.6
0.9 −3.1
−27.0 15.4
Third 6.3 Third
2022 −0.3 2022 −2.1 3.7
−20.2 8.2 49.8
Fourth 2.2 Fourth 3.8
−2.0
5.1 14.8
Top paid 10.0 Top paid 23.2
3.8 15.7

−65 −35 −5 25 55 85 −59 1 61 121 181 241 301 361 421

% change relative to 2019 % change relative to 2019
 Chapter 3. Wage trends in the context of the COVID-19 crisis and rising price inflation
89

X Figure 3.16.  (concl.)

Peru – Formal Peru – Informal

−3.7 0.7 −9.6

Lowest paid Lowest paid 1.5
−5.6 −0.5
−17.7 −20.7
Second 1.9 Second 0.8
−0.1 −1.2
−26.2 −38.1 2.1
2020 Third 1.6 2020 Third
−0.4 0.1
−25.3 −32.6
Fourth 1.6 Fourth 0.4
−0.3 −1.5
−24.8 −41.6
Top paid Top paid 3.0
−0.9 0.9
−2.9
19.4 2.7
Lowest paid 4.9 Lowest paid 2.1
6.4
0.6
−2.7 3.2
Second 2.4 Second 0.5
4.8
−1.7
−14.5 2.9
2021 Third 3.5 2021 Third 4.0
−0.8 −0.2
−8.1 −7.1 4.5
Fourth 5.8 Fourth
1.5 0.2
−24.3 −6.0
Top paid Top paid
−0.1
4.1 −4.6 −0.6
37.8 7.6
Lowest paid 8.3 Lowest paid −3.0 1.3
3.7
−0.5 25.7
Second 5.0 Second 2.57.0
0.5
−11.7 8.1
2022 Third 3.0 2022 Third −0.6 3.7
−1.3
4.7 −15.1
Fourth 4.0 Fourth −0.4 4.0
−0.4
−18.1 18.1
Top paid −1.2 Top paid −2.1 2.3
−5.3

−36 −26 −16 −6 4 14 24 34 44 −52 −42 −32 −22 −12 −2 8 18 28 38

% change relative to 2019 % change relative to 2019

Employment change Nominal wage change Real wage change

Viet Nam – Formal Viet Nam – Informal

−12.4 −4.0
Lowest paid Lowest paid −6.3 −3.3
−9.3 −6.4
−18.6 2.9 −28.6
Second Second 1.6
−0.3 −1.5
−14.6 −19.3
2020 Third 3.6 2020 Third 2.8
0.4 −0.4
−19.8 −6.6
Fourth 1.7 Fourth 4.4
−1.5 1.2
−16.5 −20.6
Top paid −0.4 Top paid 2.2
−3.6 −1.0
4.1 21.5
Lowest paid 1.7 Lowest paid 0.7
−0.1 −1.1
15.1 −13.0 2.4
Second Second
−1.4 0.4 0.5
−6.6 −10.8
2021 Third 1.1 2021 Third 2.9
−0.8 1.1
−24.3 −8.4
Fourth 0.6 Fourth 0.8
−1.2 −1.0
−4.5 −6.9
Top paid −2.3 Top paid 0.5
−4.1 −1.3
−32.9 7.3 −15.1
Lowest paid Lowest paid 2.6
5.1 0.6
43.7 −32.4
Second 5.3 Second −1.8 0.2
3.2
10.1 −16.8
2022 Third 3.3 2022 Third −0.8
1.3 −2.8
−3.7 32.1
Fourth 0.8 Fourth
−1.2 0.9
−1.1
19.6 27.2
Top paid −0.5 1.6 Top paid 2.3
0.3

−43 −33 −23 −13 −3 7 17 27 37 47 57 −42 −32 −22 −12 −2 8 18 28 38

% change relative to 2019 % change relative to 2019

Note: The classification of wage employees into five groups is based on the wage distribution in 2019.
Source: ILO estimates. See Appendix I for the sources of survey data used in this report.
Panos Pictures/GMB Akash
Wage inequality
in the context
of the COVID-19
crisis and rising
price inflation
�
  4
Wage inequality
in the context of the
COVID-19 crisis and
rising price inflation
Wage inequality, together with other labour income inequalities, is a major
contributor to total income inequality between households and thus an
important factor behind income inequality at the country level (ILO 2021b).
It is therefore relevant for policymakers to consider, on the basis of empirical
data, how wage inequality may have changed in recent times and the role
played by the ongoing crises in shaping these changes.

This chapter starts by presenting wage inequality estimates based on

data from before the COVID-19 pandemic (2019) and comparing these
with estimates based on more recent data (2021 or 2022). It then seeks
to decompose the changes in wage inequality so as to disentangle the
contribution due to a change in the composition of wage employees from
the contribution due to structural changes in the wage distribution. The
last section presents estimates that show the change in the gender pay gap
since the outbreak of the pandemic, emphasizing that the pay gap between
women and men continues to be an important factor behind wage inequality.

The pay gap between women and men continues

 
to be an important factor behind wage inequality.
94 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X 4.1. The COVID-19 crisis and wage inequality

Figure 4.1 compares estimates of wage inequality
between 2019 and 2021 (or 2022) using six differ-
ent inequality indicators for 22 countries for which
data are available.1 The use of several indicators
(see box 4.1 for the definitions of these) makes it
possible to construct a more detailed picture of
changing wage inequality. While the Palma ratio
and the Gini coefficient each compare the accumu-
lation of earnings across the wage distribution, in-
dicators based on the ratio of wages at two decile
thresholds compare different locations of the wage
distribution. In this report, the Palma ratio and the
Gini coefficient are estimated using monthly earn-
ings, whereas the decile ratios D9/D1, D9/D5, D8/‌D2
and D5/D1 are estimated using the distribution of
hourly wages. For example, D9/D1 measures the ra-
tio of the threshold of the top decile (D9) to that of
the bottom decile (D1) in the distribution of hourly
wages. Because monthly earnings take into account
both hourly wages and hours worked, comparing
changes in wage inequality as captured by indica-
tors that use monthly earnings with changes cap-
tured by indicators that use hourly wages can shed
light on how changes in working time shape wage
inequality. Table 4.1 complements figure 4.1, which
shows the change in wage inequality between
periods, by providing a summary of the extent to
which each of the six measures of wage inequality
has changed in each of the 22 countries.2
As can be seen from figure 4.1 and table 4.1,
there are similarities between estimates using the
Palma ratio and the Gini coefficient. In 10 of the
22 countries, monthly wage inequality increased
(visibly more in Colombia, Panama, Paraguay and
Thailand), while in the remaining 12 countries wage
inequality dropped (visibly more in the Plurinational
State of Bolivia, the Dominican Republic, Peru and
the United States). Colombia and Panama stand out
as the two countries with the greatest increase in
wage inequality between 2019 and 2021 (2022 in
the case of Colombia). Peru is the country where
wage inequality decreased the most between 2019
and 2022: the Palma ratio shows that in 2019 the
top 10 per cent accumulated 100 per cent more
in monthly earnings than the bottom 40 per cent,
while in 2022 the gap dropped to 72 per cent. For
most other countries the change in wage inequality
in the three years is small. Table 4.1 shows that in
16 of the 22 countries the magnitude of the change
in the Gini coefficient is less than 6 per cent, while
in some of these countries (for example, Ecuador,

X Box 4.1. Indicators of inequality subsequently accumulate almost nothing while

The Palma ratio is the ratio of the total wage
bill accumulated by the top 10 per cent of wage
employees to that accumulated by the bottom
40 per cent. The Gini coefficient summarizes
the wage distribution among ranked wage
employees: when the coefficient is zero, this
implies perfect equality (after being ranked,
wage employees subsequently accumulate
proportionately the same amount of earnings),
whereas a value of 1 implies perfect inequality
(after being ranked, most wage employees
one or a few people hoard all the wages earned
in the population). The indicators based on
threshold values of the distribution of (hourly)
wages are simply the ratio between thresholds
as defined. For example, D9/D1 is the ratio of
the threshold value of the ninth decile of the
distribution of hourly wages to that of the first;
D8/D2 is the ratio of the threshold value of the
eighth decile to that of the second; D9/D5 is the
ratio of the threshold value of the ninth decile to
the median; and D5/D1 is the ratio of the median
to the threshold value of the first decile.

1 In countries with data up to 2021, measures of wage inequality compare estimates based on data from the third quarter
of 2019 with estimates based on data from the third quarter of 2021. In countries with data up to 2022, measures of wage
inequality compare estimates based on data from the latest available quarter of 2022 with estimates based on data from
the corresponding quarter in 2019. See Appendix I for more details of the data sources.

2 Estimates are produced for each country separately. For all inequality indicators, the procedure begins by ranking wage em-
ployees according to the earnings variable that underlies the indicator: for the Palma ratio and the Gini coefficient the ranking
is based on monthly earnings, whereas for indicators based on decile thresholds the ranking is based on hourly wages.
 Chapter 4. Wage inequality in the context of the COVID-19 crisis and rising price inflation
95

X Figure 4.1.  Wage inequality in 2019 and 2021 (or 2022), selected countries

(a) Palma ratio (b) Gini index

Brazil 2.18
2.28 Brazil 43.4
44.2
Peru 1.72
2.01
Peru 38.9
41.7

Indonesia 1.96
1.99 Costa Rica 41.0
40.7
Costa Rica 1.89
1.83 Indonesia 40.9
41.2
Dominican Republic 1.55
1.69
Dominican Republic 38.2
36.6
United States 1.42
1.57
United States 37.5
36.1
Panama 1.52
1.81 Panama 36.8
40.4
Colombia 1.45
2.11 Colombia 35.3
43.1
Paraguay 1.37
1.59 Uruguay 34.5
34.0
Argentina 1.37
1.45 Paraguay 34.5
36.6
Uruguay 1.35
1.30 Argentina 34.4
35.2
Ecuador 1.35
1.36 Canada 34.4
33.8
Thailand 1.33
1.49 Ecuador 34.1
34.5
Canada 1.32
1.28 Thailand 33.7
35.7
United Kingdom 1.26
1.20 United Kingdom 33.5
32.4
Bolivia (Plurinational State of) 1.11
1.26
Bolivia (Plurinational State of) 33.3
30.8
Switzerland 1.23
1.19 Switzerland 33.0
32.5
Philippines 1.17
1.15 Philippines 31.0
30.7
Mexico 1.05
1.03 Mexico 29.5
29.2
Portugal 0.83
0.81 Portugal 24.3
23.5
Viet Nam 0.81
0.84 Viet Nam 23.4 23.4
24.6
Serbia 0.68
0.69 Serbia 20.0
20.6

0 0.5 1.0 1.5 2.0 2.5 0 10 20 30 40 50

Palma ratio 2019 Gini 2019

Palma ratio 2021 (or 2022) Gini 2021 (or 2022)

(c) D9/D1 (d) D9/D5

Indonesia 6.8
6.7 Costa Rica 3.2
3.2
Dominican Republic 5.9
5.8 Brazil 3.0
3.1
Bolivia (Plurinational State of) 5.3
5.8
Dominican Republic 3.0
2.8
Philippines 5.8
5.9 Bolivia (Plurinational State of) 2.8
2.7
Peru 5.8
5.5 Peru 2.8
2.8
Costa Rica 4.9
5.4
Thailand 2.7
3.1
Brazil 5.1
5.7 Philippines 2.7
2.7
Paraguay 5.0
5.7 Panama 2.6
3.2
Panama 5.0
6.7 Paraguay 2.6
2.8
Argentina 4.7
5.0 Colombia 2.6
2.9
United States 4.7
4.5 Indonesia 2.5
2.6
Thailand 4.6
5.4 United States 2.4
2.4
Colombia 4.3
7.5 Uruguay 2.2
2.1
Uruguay 4.1
4.4 Argentina 2.1
2.2
Ecuador 4.1
4.1 Ecuador 2.1
2.1
Mexico 3.9
4.0 Mexico 2.1
2.1
Switzerland 3.8
4.0 Viet Nam 2.0
1.9
Canada 3.4
3.4 Portugal 2.0
1.8
Viet Nam 3.2
3.3 Canada 2.0
1.9
United Kingdom 3.1
3.0 United Kingdom 1.9
1.8
Portugal 2.6
2.4 Switzerland 1.7
1.8
Serbia 2.6
2.6 Serbia 1.7
1.6

0 2 4 6 8 10 0 2 4 6 8

D9/D1 2019 D9/D5 2019

D9/D1 2021 (or 2022) D9/D5 2021 (or 2022)

96 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 4.1.  (concl.)

(e) D8/D2 (f) D5/D1

Indonesia 3.4
3.3 Indonesia 2.7
2.6
Peru 3.1
2.9 Argentina 2.2
2.3
Dominican Republic 2.7
2.9
Philippines 2.2
2.2
Bolivia (Plurinational State of) 2.7
2.9
Switzerland 2.2
2.3
United States 2.9
2.7 Peru 2.1
2.0
Brazil 2.8
3.2 Bolivia (Plurinational State of) 2.1
1.9
Paraguay 2.7
3.0 Dominican Republic 2.0
2.1
Philippines 2.7
3.2 United States 1.9
1.9
Argentina 2.7
2.9 Ecuador 1.9
1.9
Costa Rica 2.7
2.6 Uruguay 1.9
2.1
Thailand 2.6
3.0 Paraguay 1.9
2.1
Panama 2.5
3.1 Panama 1.9
2.1
Uruguay 2.5
2.5 Mexico 1.9
1.9
Canada 2.5
2.4 Canada 1.8
1.8
Mexico 2.4
2.3 Brazil 1.7
1.8
Ecuador 2.3
2.3 Costa Rica 1.7
1.5
United Kingdom 2.2
2.1 Thailand 1.7
1.7
Colombia 2.1
2.5 United Kingdom 1.7
1.7
Switzerland 2.1
2.1 Colombia 1.6
2.6
Viet Nam 2.0
2.1 Viet Nam 1.6
1.7
Portugal 2.0
1.8 Serbia 1.5
1.7
Serbia 2.0
1.9 Portugal 1.3
1.3

0 2 4 6 8 0 2 4 6 8

D8/D2 2019 D5/D1 2019

D8/D2 2021 (or 2022) D5/D1 2021 (or 2022)

Note: (a) The Palma ratio is the ratio of national income shares of the top 10 per cent of households to the bottom 40 per cent;
(b) the Gini index is the Gini coefficient (a measure of dispersion of income) expressed as a percentage, with lower values
indicating a more equal distribution; (c) D9/D1 denotes the ratio of the income of the richest 10 per cent to that of the poorest
10 per cent; (d) D9/D5 denotes the ratio of the income of the richest 10 per cent to that of those at the median of the earnings
distribution; (e) D8/D2 denotes the income of the richest 20 per cent to that of the poorest 20 per cent; (f) D5/D1 denotes the ratio
of the income of those at the median of the earnings distribution to that of the poorest 10 per cent.
Source: ILO estimates. See Appendix I for the data sources.

Indonesia, Mexico and the Philippines) it is less than

1 per cent. Countries that exhibit a large increase in
wage inequality could take a long time to achieve
Changes in wage inequality
 
more equitable wage structures, hence the need for can result from a mixture
suitable policies (see Chapter 5). In countries where
the Gini coefficient or the Palma ratio indicates a of changes in working time,
substantial drop in wage inequality, the estimates
could well be masking composition effects – this will changes in the earnings from
be explored further in section 4.2.
time worked and changes
Estimates of wage inequality using decile ratios,
(charts (c) to (f) in figure 4.1) are useful in detect- affecting specific regions
ing whether specific locations of the wage dis-
tribution are shaping the overall change in wage
of the wage distribution.
inequality. For example, in Colombia, the large in-
crease in wage inequality seems to be driven by
a distancing of the bottom decile from other de-
ciles in the distribution of hourly wages. This can
 Chapter 4. Wage inequality in the context of the COVID-19 crisis and rising price inflation
97

X Table 4.1.  Percentage change in wage inequality, selected countries, 2019–21 or 2019–22

Change in Change in Change in Change in Change in Change in

the Palma the Gini the D9/D1 the D8/D2 the D5/D1 the D9/D5
ratio (%) index (%) ratio (%) ratio (%) ratio (%) ratio (%)

Peru –14.54 –6.71 –5.03 –7.32 –5.32 0.31

Bolivia (Plurinational State of) –11.72 –7.33 –9.34 –8.16 –6.72 –2.81

United States –9.66 –3.91 –3.03 –5.02 –1.71 –1.34

Dominican Republic –8.21 –4.43 –1.61 –8.68 4.94 –6.24

United Kingdom –4.88 –3.30 –2.30 –1.61 –0.73 –1.58

Uruguay –3.61 –1.49 7.19 –0.82 8.86 –1.54

Canada –3.36 –1.85 –0.70 –1.95 –0.08 –0.62

Costa Rica –2.99 –0.70 –8.56 –2.20 –8.73 0.19

Switzerland –2.83 –1.58 7.12 2.04 6.51 0.58

Mexico –2.10 –0.94 1.58 –3.33 1.05 0.53

Portugal –1.86 –3.28 –7.54 –7.06 –0.40 –7.17

Philippines –1.72 –1.15 2.35 17.87 1.44 0.90

Ecuador 0.92 0.97 1.54 2.79 1.06 0.47

Indonesia 1.31 0.73 –2.04 –0.90 –3.51 1.52

Serbia 2.27 2.74 1.62 –4.54 8.89 –6.68

Viet Nam 4.23 4.93 3.24 3.26 6.91 –3.43

Brazil 4.68 1.86 10.86 12.95 6.94 3.67

Argentina 5.83 2.32 6.59 7.94 2.27 4.22

Thailand 11.74 5.76 17.11 13.85 3.01 13.69

Paraguay 15.76 6.18 14.94 8.43 7.53 6.90

Panama 19.28 9.66 33.35 23.09 9.96 21.27

Colombia 45.46 22.31 76.15 17.36 59.71 10.30

Note: The countries have been organized by ascending order of change in wage inequality, as measured by the Palma ratio,
between 2019 and 2021 (or 2022). A negative value indicates a decline in wage inequality between periods, while a positive
value indicates an increase. For example, in Colombia, the country with the largest increase in the Palma ratio and therefore
placed at the bottom of the table, the Palma ratio in 2019 was estimated at 1.45, meaning that the top 10 per cent of wage
employees accumulated 45 per cent more total earnings than the bottom 40 per cent in the first quarter of 2019. In 2022 (first
quarter) the Palma ratio had increased to 2.11, that is, the top 10 per cent accumulated 111 per cent more than the bottom
40 per cent. The increase between the estimate of 1.45 in 2019 and the estimate of 2.11 in 2022 is approximately 45.5 per cent.
Source: ILO estimates. See Appendix I for the data sources.

be seen because the increases in the D9/D1 and

Understanding the complex

  D5/D1 ratios between 2019 and 2022 are striking-
ly large, whereas the D8/D2 and D9/D5 ratios have
structure of changes in wage increased by much less. In contrast, in Panama,
the D9/D1, D8/D2 and D9/D5 ratios have increased
inequality is a prerequisite similarly, whereas the change in the D5/D1 ratio is

for designing policies to reduce much smaller. Therefore, in Panama, the country

that shows the greatest increase in wage inequality
such inequality. together with Colombia, the increase between 2019
and 2022 seems to be driven by a widening of the
98 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
wage distribution at the top: the threshold value for
the hourly wages of the top decile has increased.
In 4 of the 22 countries, wage inequality as
measured by monthly earnings (the Palma ratio or
the Gini coefficient) has changed in the opposite
direction to that of the change in wage inequality
as estimated using ratios between pairs of deciles
at their thresholds in the distribution of hourly
wages. In Mexico, the Philippines and Switzerland
the four decile ratios suggest that wage inequality
has increased across the distribution, since for all
three countries the changes in the ratios between
2019 and 2021 (or 2022) are positive. However, in
all three countries the Palma ratio and the Gini
coefficient are negative. This could indicate that
despite increasing inequality in hourly wages, the
number of hours worked has changed – increasing
on average among lower earners and/or decreasing
on average among higher earners – thereby leading
to a drop in overall inequality in monthly earnings.
X 4.2. Uncovering the factors
behind changes in wage inequality
During labour market shocks, wage inequality can
change significantly because of composition effects
associated with wage employment. For example,
as a result of the COVID-19 crisis, many countries
experienced massive job losses among the low-
paid, particularly in the second and third quarters
of 2020. These losses, clearly a negative labour
market outcome by any measure, would never-
theless have compressed the wage distribution at
the bottom, thus reducing wage inequality at that
time. In addition to composition effects, structur-
al shifts can also change wage inequality. For ex-
ample, the implementation of a minimum wage
can compress the wage distribution from below,
thereby reducing wage inequality without chang-
ing the composition of wage employees (unless the
minimum wage has a negative employment effect).
Given that composition effects are often transito-
ry, while structural changes tend to be more per-
sistent, disentangling the factors that lie behind an
overall change in wage inequality can be a useful
tool for policymakers.
The composition of wage employees, and how it
changes over time, is a complex outcome that reflects
their multiple characteristics and circumstances.
In Indonesia the opposite is true: hourly wage
inequality has declined across the wage distribution,
but changes in the pattern of hours worked among
top and bottom earners have led to increasing
inequality in monthly earnings.
For all other countries in figure 4.1 and table 4.1
there is consistency between the six estimates of
wage inequality: countries exhibiting an increase or
a decrease in the Palma ratio and the Gini coefficient
between 2019 and 2021 (or 2022) also exhibit an
increase or a decrease, respectively, in the ratios
of the various pairs of decile thresholds. However,
analysis of these indicators shows that changes
in wage inequality can result from a mixture of
changes in working time, changes in the earnings
from time worked and changes affecting specific
regions of the wage distribution, particularly the
extremes. Understanding the complex structure
of changes in wage inequality is a prerequisite for
designing policies to reduce such inequality.
During the COVID-19 crisis, the composition of
wage employment was observed to have changed
in relation to three of these characteristics: sex,
economic sector and occupational category (ILO
2020c). Thus, the shares of female (and male) wage
employees changed during and in the aftermath
of the COVID-19-related restrictions, probably
because women tend to be over-represented
in low-paid jobs involving face-to-face work. (As
already discussed in section 3.8, women’s share of
employment losses was greater than that of men in
several countries.) Similarly, some economic sectors
(particularly the service sector, manufacturing and
construction) and occupational categories (notably
lower-skilled and unskilled occupations) were found
During labour market shocks,
 
wage inequality can change
significantly because of
composition effects associated
with wage employment.
 Chapter 4. Wage inequality in the context of the COVID-19 crisis and rising price inflation
99

to be at greater risk of employment loss than

others during the crisis (ILO 2020c). Building on the
above observations, this section decomposes the
change in wage inequality by examining the extent
to which changes related to each of these three
characteristics of wage employees contributed to
the observed change in wage inequality between
2019 and 2021 (or 2022). The method is based on
DiNardo, Fortin and Lemieux (1996) and on Daly and
Valletta (2006); Appendix V provides further details.
Figure 4.2 presents a decomposition of changing
wage inequality that considers changes in the
Palma ratio, the D9/D1 ratio and the D5/D1 ratio.3
In each of the three charts, and for each country, the
differently coloured segments of each bar, which may
indicate negative or positive values, add up to the
total percentage change in wage inequality between
2019 and 2021 (or 2022). These totals correspond
to the values given in table 4.1. Whereas the
contributions due to the three worker characteristics
mentioned above are shown separately, the
contribution to changing wage inequality resulting
from compositional changes in “other factors” is
shown in a single colour segment.4 When a segment
appears to the right of zero, it means that changes
in the composition of the corresponding factor
between 2019 and 2021 (or 2022) have contributed
to an increase in wage inequality over that period;
when a segment appears to the left of zero, the
change in the corresponding factor has contributed
to a reduction in wage inequality over that period.
Structural change can also contribute to changes in
wage inequality: as with each of the compositional
factors, it can either increase or decrease inequality
and so the relevant colour segment in each bar
will appear either to the right or the left of zero, as
the case may be. In all three charts in figure 4.2,
the results of the decomposition for Colombia are
displayed separately. This is to prevent the scale
required to show the very large changes estimated
for Colombia from blurring the presentation of the
other countries.
In addition to composition
 
effects, structural shifts – 
such as the implementation
of a minimum wage – can also
change wage inequality.
The three charts in figure 4.2 show similarities
in terms of how the various factors may have
contributed to the compositional component of
the total change in wage inequality. The variables
that were considered separately (sex, economic
sector and occupational category) do not appear to
have had a decisive influence on the total change
in wage inequality, especially compared with the
role of the mixed “other factors”. In particular,
changes in the relative share of women and men
in the population of wage employees do not seem
to play an important role. A detailed inspection of
the microdata reveals that, among the 19 countries
covered by figure 4.2, the shares of female and
male wage employees in 2021 (or 2022) are almost
identical to those observed in 2019. Some countries
exhibit a slight increase in the share of men, but it is
less than 2 per cent in all cases. It seems, therefore,
that women gradually returned to their pre-
pandemic employment levels. This means that when
wage inequality is measured in 2021 (2022), relative
to 2019, the gender composition of the workforce
does not emerge as a relevant factor when it comes
to explaining observed changes in wage inequality.
Disentangling the factors that
 
lie behind an overall change in
wage inequality can be a useful
tool for policymakers.

3 This decomposition method relies on the estimation of quantiles from the natural logarithmic (Napierian) distribution. In
practice, this is identical to estimating the upper threshold of a decile from the (appropriately log transformed) distribution.
Therefore, to be consistent with other sections in the chapter, although it would be equally valid to define the change in
the ratios as “change in Q9/Q1” – where “Q” would stand for “quantile” – sections 4.2 and 4.3 use the terminology D9/D1 (or
D5‌/ ‌D1) in the figures and in the text to refer to quantiles. However, Appendix V relies on the more classical use of the term
“Q” to explain the decomposition of changes in wage inequality.

4 These “other factors” may include age, level of educational attainment, migration status, marital/parental status, number
of children/adults/working adults in the household, geographical location, contractual arrangements (permanent versus
temporary), institutional sector (public versus private), hours worked, size of the enterprise, and formal versus informal
status in employment.
100 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure 4.2.  Decomposing the change in real hourly wage inequality between 2019 and 2021 (or 2022)
to isolate the contributions due to composition and structural effects, selected countries (percentage)

Panel A: Palma ratio

Colombia

Panama
Paraguay
Thailand
Argentina
Brazil
Viet Nam
Serbia
Indonesia
Ecuador
0 5 10 15 20 25 30 35 40
Philippines % change

Mexico
Canada
Uruguay
United Kingdom
Dominican Republic
United States Due to changes in the distribution of employees
by economic sector
Bolivia (Plurinational State of)
Due to changes in the proportion
Peru of women wage employees
Due to changes in the distribution
of wage employees by a combination
–20 –15 –10 –5 0 5 10 15 20
of other remaining factors taken into account
% change in the decomposition of changes in wage inequality
Panel B: Q9/Q1 ratio Due to changes in the distribution
of wage employees by occupational
category
Due to changes in the proportion
Panama of men wage employees

Thailand Structural component

Paraguay Overall % change

Brazil
Uruguay
Argentina
Viet Nam
Philippines
Serbia
Mexico Colombia
Ecuador
Canada
Dominican Republic
Indonesia
United Kingdom
United States
Peru
Bolivia (Plurinational State of)

–20 –15 –10 –5 0 5 10 15 20 25 30 0 5 10 15 20 25 30 35 40 45 50 55

% change % change
 Chapter 4. Wage inequality in the context of the COVID-19 crisis and rising price inflation
101

X Figure 4.2.  (concl.)

Panel C: Q5/Q1 ratio

Colombia

Panama
Serbia
Uruguay
Paraguay
Brazil
Viet Nam
Dominican Republic
Thailand
–20 –10 0 10 20 30 40 50
Argentina
% change
Philippines
Due to changes in the distribution of employees
Ecuador by economic sector
Mexico Due to changes in the proportion
of women wage employees
Canada Due to changes in the distribution
of wage employees by a combination
United Kingdom of other remaining factors taken into account
in the decomposition of changes in wage inequality
United States
Due to changes in the distribution
Indonesia of wage employees by occupational
category
Peru
Due to changes in the proportion
Bolivia (Plurinational State of) of men wage employees
Structural component

–15 –10 −5 0 5 10 15 Overall % change

% change

Note: The lengths of the various segments (positive and negative) in the bar for each country add up to give the total percentage
change in wage inequality, as measured by (a) the Palma ratio; (b) the D9/D1 ratio; and (c) the D5/D1 ratio, between 2019 and
2021 (or 2022). Countries have been arranged in descending order of the overall change in wage inequality. The total changes are
almost identical to those presented in table 4.1 for the corresponding indicators. Whereas in table 4.1 the change was estimated
as a simple percentage change in the value of the indicator, the lengths of the colour segments for each country in these charts
represent logarithmic changes because of the decomposition method used (see Appendix V for more details).
Source: ILO estimates.

In comparison to gender composition, changes in
the relative shares of wage employees by economic
sector and occupational category seem to be slight-
ly more relevant as drivers of changes in wage in-
equality. For example, in Argentina, the change in
the relative share of wage employees by economic
sector increased wage inequality by 2.4 per cent
when measured using the D9/D1 ratio, with the
overall increase in wage inequality during the rele-
vant period estimated at 6.6 per cent. This means
that had the relative share of wage employees by
economic sector remained as in 2019 at the ex-
treme deciles of the wage distribution, the D9/D1
ratio would have increased by 4.1 per cent, rather
than by 6.6 per cent (all other things being equal).
When the Palma ratio is used, the factor “economic
sector” contributes negatively to changing wage in-
equality in Argentina. Thus, the relative shares, by
economic sector, of the top 10 per cent and the bot-
tom 40 per cent of earners changed between 2019
and 2021 in such a way that inequality as meas-
ured by the Palma ratio decreased by 1.8 per cent.
Apart from Argentina – and possibly Uruguay as
well – the factor “economic sector” does not seem
to play a significant role in driving changes in in-
equality among the countries studied. Compared
102 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
with gender composition or economic sector, a
change in the relative shares of wage employees
by occupational category appears to be a more
relevant contributor to changes in wage inequality.
Looking at the Palma ratio, changes in the relative
shares of the various occupational categories con-
tributed to a noticeable increase in wage inequality
in Colombia (14 per cent), Ecuador (1.5 per cent),
Panama (1.4 per cent) and Paraguay (1.4 per cent),
and to a noticeable drop in wage inequality in
Argentina (–1.4 per cent), the Dominican Republic
(–1.6 per cent), Indonesia (–1.1 per cent), Peru
(–2.9 per cent), the United Kingdom (–1.8 per cent)
and Viet Nam (–1.2 per cent).
In general, the charts in figure 4.2 show that
despite the compositional changes in employment
during the COVID-19 crisis in terms of occupations,
economic sectors and the relative shares of
female and male employees, at present, as the
effect of the crisis on labour markets begins to
fade, the composition effect behind changes in
wage inequality is also diminishing. This finding is
consistent with the transitory nature of composition
effects during labour market shocks. In a few
countries, the “other factors” group, which includes
education, age and formality status, does seem
to be a stronger determinant of changing wage
inequality – and in most cases, changes in the
composition of this mixed set of factors appear to
have contributed to an increase in wage inequality.
However, what is far more striking in figure 4.2
is that changes in wage inequality between 2019
and 2021 (or 2022) appear to be strongly driven by
changes in the wage structure. Once compositional
effects vanish altogether, structural changes are
likely to continue shaping the wage distribution in
the future. In some of the countries studied (for
example, Argentina, Colombia, Panama, Paraguay
and Thailand), this implies large increases in
wage inequality.
In most cases a change in
 
the relative shares of formal
and informal employment
between 2019 and 2021 (or
2022) was associated with
an increase in wage inequality.
Earlier in the report (see section 2.4) it was pointed
out that as employment gradually recovers to pre-
pandemic levels, in some countries – particularly
those with large numbers of informal workers –
informal employment is increasing at a faster rate
than formal employment. Figure 4.3 is based on a
similar decomposition exercise to that in figure 4.2,
but it seeks instead to identify how changes in the
relative shares of formal and informal employment
influenced changes in wage inequality between 2019
and 2021 (or 2022). As can be seen, in most cases a
change in the relative shares of formal and informal
employment was associated with an increase in
wage inequality. In Ecuador and Paraguay, where
informality among wage employees rose by
7 per cent and 4 per cent, respectively, the increase
in informal wage employment and concomitant
decrease in formal employment contributed to an
increase in wage inequality. In Uruguay, where the
microdata show a 4 per cent decrease in informal
wage employment (and a corresponding increase
in formal employment), there was compression
at the bottom of the wage distribution, reflecting
a reduction in wage inequality. The findings
from figure 4.3 serve to highlight the need for
formalization of the informal economy.
 Chapter 4. Wage inequality in the context of the COVID-19 crisis and rising price inflation
103

X Figure 4.3.  Decomposing the change in real hourly wage inequality (D9/D1 ratio) between 2019
and 2021 (or 2022) to isolate the impact of changes in formal and informal employment,
selected countries (percentage)

Argentina Bolivia (Plurinational State of)

–2 –1 0 1 2 3 4 5 6 7 –20 –15 –10 –5 0 5 10

% change % change

Brazil Ecuador

0 1 2 3 4 5 6 7 8 9 10 –1.5 –1.0 –0.5 0 0.5 1.0 1.5

% change % change

Paraguay Uruguay

–2 0 2 4 6 8 10 12 14 16 –6 –4 –2 0 2 4 6 8 10 12 14
% change % change

Due to changes in the distribution of employees

Due to changes in the distribution of wage employees by sex
by economic sector
Due to changes in the distribution of wage employees
Due to changes in the distribution of wage employees
by a combination of other remaining factors taken into account
by occupational category
in the decomposition of changes in wage inequality
Due to changes in the proportion of wage employees
Structural component
with informal employment
Due to changes in the proportion of wage employees Overall % change D9/D1
with formal employment

Source: ILO estimates.

104 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
X 4.3. The COVID-19 crisis and the gender pay gap
Did the COVID-19 health crisis contribute to a
widening of the gender pay gap? Figure 4.4 presents
estimates of the mean and median factor-weighted
gender pay gaps between women and men for
both hourly wages and monthly earnings. Factor-
weighted gender pay gaps were first used in the
Global Wage Report 2018/19 (ILO 2018). This method
is an alternative to the traditional use of mean and
median “raw” gender pay gaps, and eliminates
potential bias due to the unequal clustering of
women and men at different locations of the wage
distribution (see box 4.2 for more details). Although
this section relies on factor-weighted gender pay
gaps to compare pay differentials between women
and men, figure 4.5 complements the analysis by
presenting the traditional raw mean and median
gender pay gaps based on both hourly wages and
monthly earnings.
Panels A and B in figure 4.4 present estimates
of the factor-weighted gender pay gap for up to
22 countries for which comparable data for the
period from 2019 to 2021 (or 2022) are available.
When the factor-weighted method is used, as
opposed to the traditional method of raw pay gaps
underlying figure 4.5, all estimates of the hourly or
monthly (mean or median) gender pay gaps are
positive. This illustrates how, in many instances, use
of the raw mean or median can give a misleading
summary of the wage distribution for the purpose
of comparing the earnings of women and men.
Instead, the use of weighted averages of gender
pay gaps between subgroups of women and men
with similar labour market characteristics allows
one to avoid underestimating or overestimating the
pay gap in the population as a whole (see box 4.2).
Thus, although figure 4.5 is included in this section
for the sake of completeness, the analysis is centred
on figure 4.4, which shows estimates of the factor-
weighted gender pay gap.
The estimates presented in the Global Wage Report
2018/19 indicated a global average gender pay
gap of about 20 per cent, based on data from
80 countries (ILO 2018). This edition examines the
5 From a country-by-country comparison between panels A and B in figure 4.4 it can be seen that the pay gap estimated using
monthly earnings is greater than that based on hourly wages (either mean or median). This is because the use of monthly
earnings to estimate pay differentials between women and men takes into account both the gap in hourly wages and the
gap in hours worked per month.
evolution of gender pay gaps in a more limited
sample of countries, finding very little change
between 2019 and 2021–22. The charts in figure 4.4
show that the gender pay gap is positive in all the
countries studied and has remained so over time.5
Across these 22 countries, the factor-weighted
mean gender pay gap using hourly wages in 2019
ranged from about 2 per cent (Paraguay) to about
22 per cent (Plurinational State of Bolivia), while
in 2021 it ranged from 2 per cent (Costa Rica) to
about 24 per cent (Indonesia). Thus, whereas in
2019 the simple average of the mean gender pay
gap using hourly wages across the 22 countries
was 12.8 per cent, in 2021–22 it was 12.3 per cent.
Similar estimates are found for the factor-weighted
median gender pay gap, with the simple average
in 2019 and 2021–22 standing at 11.9 per cent and
11.7 per cent, respectively. The estimates based on
monthly earnings in figure 4.4 are a few percentage
points higher than those based on hourly wages:
whereas in 2019 the simple average using factor-
weighted mean monthly earnings was 17 per cent,
the average using median values was 16 per cent.
Overall, figure 4.4 suggests that the gender pay gap
continues to persist in labour markets around the
world, with women paid, on average, less than men.
A more detailed look at figure 4.4, panel A – 
complemented by table 4.2 – reveals that between
2019 and 2021 (or 2022) the gender pay gap based
on ­factor-weighted mean hourly wages increased
in 9 of the 22 countries, with the increases ranging
from about 0.6 percentage points (for example,
in Serbia) to as much as 6.3 percentage points
(Paraguay). Among the 13 countries where the
The gender pay gap continues
 
to persist in labour markets
around the world, with women
paid, on average, less than men.
 Chapter 4. Wage inequality in the context of the COVID-19 crisis and rising price inflation
105

X Figure 4.4.  Changes in factor-weighted gender pay gaps between 2019 and 2021 (or 2022),
selected countries (percentage)

Panel A. Based on hourly wages

Mean hourly wages Median hourly wages

Indonesia Indonesia
Bolivia (Plurin. State of) Bolivia (Plurin. State of)
Brazil Dominican Republic
Dominican Republic Brazil
Panama United States
Peru Peru
Argentina Argentina
United States Canada
Portugal United Kingdom
Serbia Portugal
United Kingdom Serbia
Canada Philippines
Switzerland Panama
Mexico Viet Nam
Viet Nam Uruguay
Uruguay Mexico
Thailand Thailand
Ecuador Switzerland
Colombia Colombia
Costa Rica Costa Rica
Philippines Ecuador
Paraguay Paraguay

0 5 10 15 20 25 30 0 5 10 15 20 25 30
Gap (%) Gap (%)

GPG at 2019 GPG at 2021 (or 2022)

Panel B. Based on monthly earnings

Mean monthly earnings Median monthly earnings

Indonesia Indonesia
Brazil Dominican Republic
Bolivia (Plurin. State of) Bolivia (Plurin. State of)
Dominican Republic Argentina
Peru Brazil
Argentina Peru
United States United Kingdom
Canada United States
Switzerland Canada
United Kingdom Portugal
Panama Philippines
Portugal Switzerland
Costa Rica Costa Rica
Mexico Mexico
Uruguay Panama
Serbia Serbia
Viet Nam Uruguay
Philippines Viet Nam
Colombia Colombia
Ecuador Ecuador
Thailand Thailand
Paraguay Paraguay

0 5 10 15 20 25 30 0 5 10 15 20 25 30
Gap (%) Gap (%)

GPG = gender pay gap.

Note: Colombia and Mexico are not included in panel A because the data for these countries from 2022 do not allow wage
employees to be grouped as required in the factor-weighted method.
Source: ILO estimates.
106 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Table 4.2.  Change in various measures of the factor-weighted gender pay gap
between 2019 and 2021 (or 2022), selected countries (percentage points)

Change in mean Change in Change in mean Change in

hourly wage gap median hourly monthly earnings median monthly
wage gap gap earnings gap

Panama –7.49 –2.39 –2.88 –0.34

Mexico –5.58 –2.34 2.00 3.66

Peru –5.12 0.88 0.66 1.09

Ecuador –5.06 –1.70 –1.37 0.49

Costa Rica –4.85 –5.62 –6.83 –4.68

Dominican Republic –2.40 –4.45 –1.41 –2.45

Bolivia (Plurinational State of) –1.59 –1.99 –1.01 –1.78

Canada –0.80 –0.53 0.24 0.48

Thailand –0.67 0.96 –0.92 0.93

Uruguay –0.56 0.32 –1.02 –0.51

United Kingdom –0.54 –0.99 –1.79 –2.65

Brazil –0.41 –0.51 –0.79 –0.39

Colombia –0.26 –2.30 –1.05 –3.08

Serbia 0.61 –0.75 1.98 1.27

United States 0.97 –0.65 0.11 0.86

Portugal 1.24 –1.40 0.09 –1.03

Switzerland 1.31 5.15 –0.33 1.23

Indonesia 1.85 0.69 2.81 4.54

Argentina 2.37 4.53 3.84 3.00

Philippines 2.91 2.35 1.03 0.67

Viet Nam 4.39 2.79 2.34 0.07

Paraguay 6.28 3.85 5.92 3.35

Note: The factor-weighted gender pay gap is calculated by clustering women and men into groups based on educational
attainment, age, full-time versus part-time employment, and public versus private sector employment. For Paraguay,
the Philippines and Uruguay, data related to educational attainment are not comparable between different years, and
occupational sectors have been used instead to cluster women and men into homogenous groups. Colombia and Mexico
had, respectively, 4 and 6 clusters (out of 64 possible clusters) in which a single person dominated the resulting pay gap.
To avoid large variations, these clusters were excluded from the factor-weighted computation for both years. See box 4.2 for
more details of how factor-weighted gender pay gaps are estimated.
Source: ILO estimates. See Appendix I for the data sources.

factor-weighted mean hourly gender pay gap
declined, the decreases ranged from 0.3 percentage
points in Colombia to 7.5 percentage points in
Panama. Except for a few countries, there is
consistency in the direction of the change (that is,
the sign) of mean and median estimates between
2019 and 2021 (or 2022), whether hourly wages
or monthly earnings are used. One exception,
for example, is Peru: the factor-weighted mean
gender pay gap using hourly wages declined by
5.12 percentage points between 2019 and 2022, but
the median gap increased by 0.88 percentage points.
Overall, the four charts in figure 4.4 show that gender
pay gaps were not greatly ­altered by the COVID-19
crisis. While estimates using mean hourly wages
indicate an average drop of 0.61 percentage points
in the gender pay gap among the 22 countries
between 2019 and 2021 (or 2022), those based on
mean monthly earnings suggest an increase of less
than 0.1 percentage points. The average change
in the gender pay gap is similar if estimates based
on median hourly wages and median monthly
earnings are used: –0.19 percentage points and
0.21 percentage points, respectively.
 Chapter 4. Wage inequality in the context of the COVID-19 crisis and rising price inflation
107

X Figure 4.5.  Changes in raw gender pay gaps between 2019 and 2021 (or 2022),
selected countries (percentage)

Panel A. Based on hourly wages

Mean hourly wages Median hourly wages

United Kingdom Indonesia

United States United States
Switzerland United Kingdom
Indonesia Switzerland
Canada Bolivia (Plurin. State of)
Brazil Canada
Panama Dominican Republic
Serbia Portugal
Peru Peru
Viet Nam Brazil
Portugal Serbia
Uruguay Viet Nam
Argentina Uruguay
Bolivia (Plurin. State of) Argentina
Dominican Republic Mexico
Mexico Thailand
Ecuador Colombia
Colombia Panama
Thailand Paraguay
Costa Rica Ecuador
Paraguay Costa Rica
Philippines Philippines

0 5 10 15 20 25 30 40 0 5 10 15 20 25 30 40
Gap (%) Gap (%)

GPG at 2019 GPG at 2021 (or 2022)

Panel B. Based on monthly earnings

Mean monthly earnings Median monthly earnings

Switzerland Switzerland
United Kingdom United Kingdom
United States Indonesia
Argentina Dominican Republic
Canada Bolivia (Plurin. State of)
Indonesia Argentina
Uruguay Canada
Brazil United States
Bolivia (Plurin. State of) Uruguay
Peru Brazil
Portugal Peru
Paraguay Mexico
Viet Nam Portugal
Mexico Serbia
Serbia Paraguay
Dominican Republic Costa Rica
Costa Rica Viet Nam
Colombia Colombia
Panama Philippines
Ecuador Panama
Thailand Ecuador
Philippines Thailand

0 5 10 15 20 25 30 40 0 5 10 15 20 25 30 40
Gap (%) Gap (%)

GPG = gender pay gap.

Source: ILO estimates. See Appendix I for the sources of data.
108 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
X Box 4.2.  The factor-weighted gender pay gap:
An illustrative example
A factor-weighted gender pay gap is arrived at
by first selecting a set of variables (factors) that
are important determinants of wage structures
to cluster women and men into comparable
subgroups. Four factors have been highlighted
as particularly relevant for this purpose, and data
for them are readily available in most survey
databases. They are “education”, “age”, “working-
time status” (that is, full-time versus part-time)
and “private versus public sector employment”.
These variables are used to divide the sample into
subgroups. It is preferable to keep the number of
subgroups reasonably small so that one does not
end up with subgroups where a few individuals,
who may or may not be representative of their
group, dominate the outcome. The variables
“education” and “age” are used to classify
individuals into four subgroups in each case.
The variables “full-time versus part-time” and
“private versus public sector employment”
by definition comprise two subgroups each.
Altogether, these four variables generate a total
of (at most) 64 subgroups, as the result of the
interaction of 4 × 4 × 2 × 2 different subgroups.
Once the subgroups are formed, the next step
is to estimate the subgroup-specific gender pay
gap for each one, using mean and median values.
The final step is to estimate the factor-weighted
mean and median gender pay gaps, summing the
weighted values of the (at most) 64 subgroups.
The weight for each subgroup is its proportional
representation in the population of wage
employees, so the (at most) 64 subgroup weights
will add up to 1. Applying these weights and
adding up the weighted subgroup gender pay
gaps leads to a single value that is referred to as
the mean (or median) factor-weighted gender
pay gap.
The table below, using the example of Egypt,
provides some details to illustrate the method
described above and shows the effect of “clusters”
in the estimation. The first four rows present the
average hourly wage received by individuals in
each subgroup defined by their educational level
and by whether they are employed in the private
or public sector. The following three rows show
the proportional representation of each subgroup
in the total population of wage employees. For
example, Egyptian women educated to university
degree level or above who work in the private
sector are paid, on average, 4.8 Egyptian pounds
per hour, while men in the same category earn
6.0 Egyptian pounds. Overall, women and men
educated to university degree level or above
and who work as wage employees in the private
sector represent 17.2 per cent of all women and
men who work in Egypt, so this is the weight that
this particular gender pay gap would receive in
a weighted calculation that breaks the sample
down according to educational level and public
versus private sector employment.
One thing that emerges from this table is that
there is a positive gender pay gap (that is,
favouring men) in all cells defined by education
and economic sector. In Egypt, nearly 74 per cent
of female wage employees work in the public
sector, and of these 58.5 per cent are highly
qualified and are pushing the average hourly
wage higher for all women, while the fact that
a significant proportion of men are located in
lower educational categories – in particular, those
working in the private sector – pulls the men’s
average wage down. The result is a negative
gender pay gap (that is, favouring women), even
though within each of the subgroups defined
by education and private versus public sector
employment the gender pay gap is always
positive (that is, favouring men). Although not
all possible subgroups (of which there may
be at most 64) are shown in the table, once
the composition effects are accounted for by
weighting the (at most) 64 subgroups, the gender
pay gap becomes positive.
 Chapter 4. Wage inequality in the context of the COVID-19 crisis and rising price inflation
109

XTable 4.B1.  Details of the factor-weighted gender pay gap for Egypt

Private sector Public sector

Women Men Women Women Men Women

and men and men

Average wages Below secondary 3.4 4.5 4.4 3.4 4.4 4.3
per hour of each
subgroup Secondary/vocational 3.0 4.6 4.5 5.9 6.1 6.1
(Egyptian pounds)
University and above 4.8 6.0 5.8 6.5 7.7 7.2

Overall weighted 3.8 4.8 4.7 6.2 6.4 6.3

average

Share of each Below secondary 36.8% 47.0% 46.2% 4.4% 23.3% 17.0%
subgroup in the
total population Secondary/vocational 27.3% 37.4% 36.6% 37.1% 36.8% 36.9%
of wage employees
(%) University and above 36.0% 15.6% 17.2% 58.5% 39.9% 46.1%

Total number 759 874 8 769 7 01 9 529 575 2 138 373 4 318 519 6 456 892

of wage employees
in each subgroup

Source: ILO estimates using national survey data from Egypt, 2012 (see ILO 2018a, Appendix V).

Source: Based on box 3 in ILO (2018).

istockphoto.com/South_agency
Policy options
and responses
to the cost-
of-living crisis
�
  5
Policy options
and responses to
the cost-of-living crisis
This report highlights how the various crises of the past three years have
interacted to affect both wage growth and labour market outcomes for
wage employees worldwide. At a time when WHO has announced that
the end of the COVID-19 pandemic is in sight,1 the growing impact of a
widespread and severe inflationary crisis, together with a global slowdown in
economic growth, driven in part by the war in Ukraine and the global energy
crisis, is pushing real wage growth into negative figures in most countries
and regions. Indeed, it is the first time since the ILO started presenting
wage trends through the Global Wage Report that global wage growth is
negative – this with a data series that goes back to 2006 and thus covers a
period that includes the most significant economic crises of the twenty-first
century so far.

1 On 14 September 2022, the WHO Director-General announced that the end of the COVID-19 pandemic was in sight,
presenting the most optimistic outlook yet on the two-year-long health crisis, which has killed nearly 7 million people
worldwide.
114 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
Before the pandemic, slow wage growth across
countries and regions was often highlighted as
a concern and there was much discussion of
possible ways of increasing wage growth to help
sustain domestic demand and reduce inequalities
(IMF 2017; ILO 2018; OECD 2016). The COVID-19
crisis triggered an unprecedented response by
countries around the world as they sought to
support workers and incomes and save labour
markets from collapse. However, the difference in
the capacities of advanced, emerging market and
developing economies to respond to the crisis has
exacerbated global income inequality, which has
increased to levels last seen in 2008–10, thereby
partly reversing the decline achieved in the past
two decades (Adarov 2022).
Poverty has also been on the rise. Although global
poverty more recently resumed its downward trend,
between 75 million and 95 million people were
pushed into extreme poverty during the COVID-19
crisis (Gerszon-Mahler et al. 2022). The negative
wage growth reported for 2022, which has been
fuelled by the fast rise in inflation, is likely to lead
to further increases in within-country inequality, not
only because inflation hits low-income households
the hardest (Bulíř 2001; Benson 2021; Orchard 2022)
X 5.1. Macroeconomic policies
From the second quarter of 2022 onwards, cen-
tral banks and monetary authorities across the
globe have responded to the current inflation cri-
sis by, in particular, raising interest rates to stop in-
flation from soaring further. On 15 June 2022, the
US Federal Reserve raised its benchmark interest
rates by 0.75 percentage points – the biggest hike
since 1994 – as a first step towards gradually achiev-
ing a 2 per cent inflation rate by 2024. Similarly, in
the second quarter of 2022, the European Central
Bank (ECB) announced a gradual lifting of accom-
modative monetary policy. It subsequently raised
interest rates by 0.25 percentage points in July
2022 and by a further 0.75 percentage points in
September 2022 – the biggest rise ever. Like the
Federal Reserve, the ECB also expects to achieve a
2 per cent inflation rate by 2024.
With interest rates going up, it is expected that the
cost of financing will increase (as will the benefits of
Policies required to contain
 
rising inflation have an impact
on households across the
income scale, so it is essential to
support wage workers and their
families through the provision
of adequate wages.
but also because inflation-vulnerable households
are likelier to have lost more in terms of wage
employment and total wage bill in the harshest
phases of the crisis. Policies are clearly required to
put a brake on rising inflation, but consideration
should also be given to the way in which such policies
impact on households across the income scale. More
than ever, it is necessary to support wage workers
and their families through the provision of adequate
wages. The purpose of this final chapter is to provide
an overview of policy options and responses to the
current cost-of-living crisis.
saving), that consumption and investment will drop,
and that inflation will stop growing as the economy
slows down. However, the tight monetary policy
could lead to adverse outcomes for certain segments
of the population and trigger a period of recession.
Households, for example, may find it difficult to
repay their debts, including their mortgages, the
taking out of which entails the greatest investment
risk for most households. The moves by the ECB
during 2022 have already increased the cost of
repaying an average mortgage in Spain by about
€120 per month. This is likely to cause significant
financial distress for low-income households in a
country where the gross minimum wage is €1,167
per month. Higher interest rates increase the cost
of both servicing mortgages and renting a house,
which could delay the decision of young workers
to become independent and start a family, further
contributing to an ageing population. Moreover,
those households that fell into debt during the
 Chapter 5. Policy options and responses to the cost-of-living crisis
115

COVID-19 crisis so as to make ends meet now face middle- and low-income ones, most of which are
the double burden of repaying their debts at higher still at employment levels below those observed
interest rates, which will further drag down their before the pandemic (IMF 2022d; Orchard 2022).
standard of living. Although central banks are aware It would seem, therefore, that much of the recent
of these risks, the alternative scenario of continued rise in inflation is the result of expansionary policies
price inflation is considered even more undesirable. over the past few years combined with the recent
increase in energy prices, bottlenecks in global
For business owners, higher interest rates increase
supply chains caused by the COVID-19 crisis, and
the cost of financing their business, including the
geopolitical conflicts, notably the war in Ukraine
cost of investment. This may dampen the creation
(ILO 2022c). It is also a moot point whether some
of wage employment in the private sector and
large corporations may have taken advantage of
contribute further to a slowdown in economic
the inflationary environment to raise their prices
growth. Public employment creation can also suffer
and profits (Zahn 2022). Wage workers, particularly
in periods of tight monetary policy. While high
those in the lower deciles of the wage distribution,
interest rates increase the attractiveness of public
are faced with higher and rising prices resulting
debt among investors because government bonds
from a battery of exogenous shocks which do
bring greater returns at a risk that is considered
not seem related to spiralling wages. In such
low, the interest payments on public debt faced
circumstances, the bargaining process for future
by governments increase and this may ultimately
nominal wage adjustments should embrace a
divert resources away from public employment
sufficiently large but prudent price expectation.
creation. For low- and middle-income countries,
This could contribute to safeguarding the standard
the current increase in interest rates in the United
of living of households – particularly low-income
States, together with the ensuing appreciation of
households – against unexpected future inflation
the US dollar, means that debt repayments have
hikes, while avoiding an undesirable wage-inflation
become more expensive, putting their economies
spiral. Moreover, the report has shown that the
in a weaker position at a time when their labour
gap between wage growth and labour productivity
markets are still recovering from the effects of the
growth is widening further: in fact, the gap in 2022
pandemic (Estevaõ 2022).
is at its widest since the beginning of the twenty-
One mechanism whereby tight monetary policy first century. This means that there is room for
can stop inflation from rising further is the average real wages to increase, not just to catch
effect of such a policy on inflation expectations up with inflation but also to become aligned with
and therefore on moderating wage demands productivity growth.
to avoid a wage–price spiral1 (ECB 2022). This is
because price expectations (or expectations of
inflation in the future) are a key element in wage
negotiations, including collective bargaining.2 But
The gap between wage growth
 
is there a case for such a mechanism to play a and labour productivity growth
role in reducing current inflation rates? Drawing
on empirical evidence, this report has shown that is widening further – there is
nominal wages are not catching up with inflation
and that the subdued wage growth, lagging behind room for real wages to increase,
productivity growth, that was already highlighted in
the Global Wage Report 2018/19 (ILO 2018) continues
not just to catch up with inflation
to characterize wage outcomes in many countries but also to become aligned with
worldwide. There is in fact no evidence of a wage–
price spiral either in high-income countries or in productivity growth.

1 The Phillips curve posits a negative relationship between unemployment and wage growth, whereby lower unemployment
leads to higher wage and price inflation.

2 The expectation of a 2 per cent inflation rate in 2024 should certainly affect the adjustments behind collective pay agree-
ments currently negotiated for the next two years. However, not too long ago, central banks together with the IMF had
called for wages to increase since these were far too low to drive up inflation to the 2 per cent target (Vieira 2016).
116 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X 5.2. The need to strengthen labour market

institutions and wage policies

The report has demonstrated how inflation rates
are also eroding the purchasing power of minimum
wages. Given that 327 million wage earners before
the pandemic, or 19 per cent of all wage employees
worldwide, earned at or below the applicable
hourly minimum wage (ILO 2020a), an adequate
adjustment of minimum wages would in itself help
significantly to improve the living standards of low-
income households in the current cost-of-living
crisis. The importance of minimum wages as a tool
for reducing working poverty is highlighted by the
fact that 90 per cent of ILO Member States have
minimum wage systems in place. Minimum wages
can protect low-paid workers against hefty losses
of purchasing power at times of high inflation.
However, for this mechanism to be effective, it
is necessary that minimum wages be adjusted
regularly to take into account the needs of workers
and their families, along with economic factors. This
adjustment process should be undertaken with the
full participation of the social partners, in line with the
Minimum Wage Fixing Convention, 1970 (No. 131).
An adjustment of minimum wages would make a
positive contribution to mitigating the current cost-
of-living crisis while helping to sustain aggregate
demand at a time when the global economy is
slowing down as a result of various concurrent
crises (ILO 2016). It is worth emphasizing that
minimum wages also played a positive role during
the COVID-19 crisis by serving as a benchmark in
temporary wage subsidy schemes (ILO 2020b).
Strong social dialogue, including collective
bargaining, can be instrumental in achieving
adequate wage adjustments during a crisis. The
prerequisite for this is adequate representation of
employers’ and workers’ voices. However, several
studies have pointed to the gradual decline in
union power, accompanied by the rising power of
large companies, as an important factor behind the
slow real wage growth over the past three decades.
Social dialogue, both bipartite and tripartite,
played a critical role in the immediate response
to the COVID-19 crisis in many countries and
sectors, particularly when it came to designing and
implementing national recovery plans. Considerable
efforts were undertaken to strengthen the capacity
of public institutions and employers’ and workers’
organizations to participate in such dialogue and
arrive at common positions in tackling the challenges
brought by the crisis (ILO 2021c). Unfortunately,
according to a recent report by the Organisation
for Economic Co-operation and Development
(OECD), union membership among OECD countries
has declined from about 33 per cent in 1975 to
16 per cent in 2018, while the share of workers
covered by a collective bargaining agreement shrank
from 46 per cent in 1985 to 32 per cent in 2017
(OECD 2019). In the United States, for example, the
share of workers covered by collective agreements
fell from 27 per cent in 1979 to just 11.6 per cent in
2019 (Hirsch and Macpherson, n.d.).
Collective bargaining and social dialogue can
benefit from the use of sound empirical evidence
to inform bipartite or tripartite negotiations. This
report has highlighted the importance of using
relevant data to examine how the COVID-19
crisis impacted on the labour market outcomes
of wage employees. In particular, Chapter 4
sought to disentangle the effects of employment
Minimum wages can protect
 
low-paid workers against hefty
losses of purchasing power at
times of high inflation. However,
for this mechanism to be
effective, it is necessary that
minimum wages be adjusted
regularly to take into account
the needs of workers and their
families, along with economic
factors. This adjustment
process should be undertaken
with the full participation of the
social partners.
 Chapter 5. Policy options and responses to the cost-of-living crisis
composition on wage outcomes, leading to a more
accurate understanding of how the crisis affected
employees across the wage distribution. It thus
emerged that wage employment losses among
women were greater than those among men,
that low-wage earners lost more employment
than higher-wage earners, and that wage earners
in informal employment were more adversely
impacted than those in formal employment. From
a policymaking point of view, robust and detailed
empirical evidence is required to guide the social
partners and labour market institutions. During
the pandemic, national statistical offices made
great efforts to maintain the regular collection of
survey data, but in several countries the coverage
of data up to the end of 2021 (and sometimes into
the first half of 2022) was not comparable to that
of previous years. This was noticeable not least in
wage statistics (see Appendix I, in particular the
sections on the processing of data). Therefore,
one relevant recommendation for policymakers
is to enhance the capacity of national statistical
offices – mostly, though not exclusively, in low- and
middle-income countries – to collect labour market
information, even during a crisis.
As pointed out in Chapter 3, consumer price inflation
generally impacts most adversely on low-income
households, which spend a larger share of their
income on price-inelastic goods, particularly food,
housing and transport. In some countries, the
higher cost of living faced by low-income households
is already taken into account when adjusting the
minimum wage. For example, in Brazil the National
Consumer Price Index (INPC), rather than the
general price index, is used to adjust the minimum
wage.3 The INPC is computed over a consumption
bundle of households earning between one and
eight minimum wages, whereas the general price
index uses a consumption bundle of households
earning up to 40 minimum wages, which therefore
covers almost all wage earners except for those in
the top deciles. The INPC puts a greater weight on
goods consumed among poorer households, and
since 2011 it has been the index used to adjust the
national minimum wage together with the variation
in the previous year’s GDP. Another example of a
differentiated index is the US Consumer Price Index
for Urban Wage Earners and Clerical Workers
3 INPC stands for Índice Nacional de Preços ao Consumidor. There is a third basket of goods and services calculated by the
Brazilian Institute of Geography and Statistics known as the Necessary Minimum Wage basket. This basket has proved to be
unaffordable at the prevailing minimum wage, but it helps policymakers to understand the effective inflation experienced by
households earning one minimum wage, a rate that has been historically higher than that implied by the INPC (Lemos 2004).
117
The creation of decent
 
formal wage employment
is a prerequisite for a more
equitable distribution of wages
and income, and is a key
contributor to equitable and
sustainable wage growth.
(CPI-W), which is slightly above the Consumer
Price Index for All Urban Consumers (CPI-U) since
the former effectively considers low- and middle-
income workers. In the United States, the CPI-W
is used exclusively to adjust social security and
federal retirement benefits, and not the earnings of
wage employees (not even those on the minimum
wage). Both countries (Brazil and the United States)
provide examples of action that could help to adjust
the nominal wages of low-income households
so that – especially at times of high and rising
inflation – real wages are aligned with spending
patterns at the low end of the income distribution.
It should be added that the creation of decent
formal wage employment is a prerequisite for a
more equitable distribution of wages and income,
and is a key contributor to equitable and sustainable
wage growth. By the end of 2021, employment in
high-income countries had recovered to the levels
observed before the pandemic (sometimes even
exceeding these), with some of these countries
experiencing a surge in job vacancies (particularly
in low- and semi-skilled occupations) while the
number of jobseekers remained stable (ILO
2022a). In low- and middle-income economies,
employment has not yet recovered to pre-pandemic
levels, while informal employment seems to be
on the rise – a scarring effect that may last far
beyond the aftermath of the COVID-19 crisis. The
Transition from the Informal to the Formal Economy
Recommendation, 2015 (No. 204), provides
guidelines that can help low- and middle-income
countries to mitigate such effects.
118 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
X 5.3. Policies to support households, particularly
the most vulnerable, during high inflation
Policies to ease the impact of the cost-of-living cri-
sis on households range from measures targeting
specific groups, such as means-tested vouchers pro-
vided to low-income households to enable them to
buy essential goods, to more general interventions
aimed at reducing the cost of living for all house-
holds, such as the (often temporary) reduction of in-
direct taxation on goods and services. For example,
many governments, particularly among countries
in the eurozone, are providing low-income house-
holds with energy vouchers to help them cope with
the current energy crisis. In September 2022, the
German government announced a €200 billion
package to mitigate the impact of soaring energy
prices on companies and households; the measure
includes a brake on gas prices and a cut in sales tax
for fuel. Likewise, in the same month the French
Ministry of Finance announced a €45 billion pack-
age to shield households and businesses from en-
ergy price shocks. Also in France, households with
an annual income below €10,800 have since 2018
been eligible for energy vouchers ranging from €48
to €277 per month.
Some countries (or blocs of countries) have
introduced taxes, temporary or permanent, on oil
and gas companies, large corporates or wealthier
households, to help pay for measures during times
of crisis. For example, in September 2022 the EU
proposed a windfall tax on fossil fuel producers to
offset the effects of the energy crisis. At the same
time, Spain announced a battery of measures
(some temporary, some permanent) aimed at
increasing the Government’s revenue to help
cope with the current crisis while avoiding hurting
vulnerable households. These measures included a
(temporary) tax of 1.7 per cent on the patrimony of
large fortunes (that is, households with €3 million
or more in wealth), an increase in the tax paid
by the top income bracket of up to 2 percentage
points, a temporary tax applied to both large
energy companies and the banking sector and, at
the same time, a reduction in income tax among
low-income households along with a reduction in
tax payments among small enterprises and own-
account workers. In the United Kingdom a levy of
25 per cent was imposed in May 2022 on the profits
of major oil and gas companies operating on its
territory, a levy that is expected to raise more than
£28 billion in the next few years. In October 2021
the OECD agreed to introduce a landmark reform
to the international tax system, which will ensure
that multinational enterprises (MNEs) will be subject
to a minimum 15 per cent tax rate from 2023. The
agreement covers 136 countries and jurisdictions
representing more than 90 per cent of global GDP
and, if applied, could reallocate more than US$125
billion of profits from around 100 of the world’s
largest and most profitable MNEs to countries
worldwide (OECD 2021). Measures such as these
could help governments raise the resources needed
to weather the current crises. Assuming that energy
producers do not pass their higher costs on to
consumers, such policies could significantly mitigate
the cost-of-living crisis for low-income households
without negatively impacting on inflation or prices.
Cuts to VAT can mitigate
 
the burden of inflation among
low-income households
while further helping
to reduce inflation.
Cuts to value added tax (VAT) can mitigate the
burden of inflation among low-income house-
holds while further helping to reduce inflation. In
Germany, for example, VAT was reduced for six
months, from 1 July to 31 December 2020, as part of
the COVID-19 stimulus package to foster aggregate
demand. In addition to considerably lowering the
cost of basic goods and services (for example, the
earlier VAT rate of 7 per cent on food was reduced
to 5 per cent), it is estimated that the policy boost-
ed German GDP by 0.3 per cent (Funke and Terasa
2022). As the current cost-of-living crisis begins
to threaten the economic survival of households,
several countries are cutting VAT rates on energy.
For example, Spain has reduced VAT on electricity
 Chapter 5. Policy options and responses to the cost-of-living crisis
from 21 per cent to 5 per cent as of June 2022, while
VAT on gas in Germany has been reduced from
19 per cent to 7 per cent as of August 2022. The
benefits of reducing VAT on essential goods and ser-
vices are twofold. As highlighted in Chapter 4, these
are the goods that take the largest share of income
among low-income households, which means that
cutting their cost can help the latter to weather the
crisis. At the same time, the reduction of VAT con-
tributes to lowering the general price level, which is
also the objective of tight monetary policy.
X 5.4. Tackling the gender pay gap
The Global Wage Report 2018/19, which drew on data
from 2014–16, estimated the global gender pay gap
at around 20 per cent (ILO 2018). On the basis of
a smaller sample of countries, the current edition
suggests that gender pay gaps have changed little
in recent years, despite the efforts by several coun-
tries across all regions of the world to reduce pay
discrimination and achieve equal pay for work of
equal value. This reflects the complexity of tackling
pay gaps between women and men.
Significantly more needs to be done to further re-
duce gender pay inequalities in the world of work.
This includes addressing the part of the gender pay
gap that can be explained in terms of the labour
market attributes of women, that is, by improving
the educational situation of women and striving for
a more equitable distribution of women and men
across occupations and industries. It also includes
addressing other factors underlying the gender pay
gap – notably by reducing the motherhood pay gap,
increasing pay in undervalued and highly feminized
sectors and industries, and implementing legal
frameworks and policies to increase pay transpar-
ency at the enterprise level with a view to eliminat-
ing pay discrimination. The Equal Pay International
Coalition, a joint initiative launched by the ILO,
UN‑Women and the OECD in September 2017, has
4 See https://www.equalpayinternationalcoalition.org/.
119
As the current cost-of-living
 
crisis begins to threaten
the economic survival of
households, several countries
are cutting VAT rates on energy.
managed to reach out to governments, the social
partners and a considerable number of enterprises
in the private sector as part of its mission to achieve
equal pay for work of equal value.4 This and simi-
lar initiatives enable countries across the world to
learn from successful examples of how to measure
and monitor pay gaps at the national level, to fa-
miliarize themselves with the tools that some major
economies are applying, and to understand which
are most effective in reducing pay discrimination
between women and men.
In addressing gender inequalities in the world
of work, it is important to take into account one
possible consequence of the COVID-19 crisis, namely
a wider gender gap in employment, particularly in
low- and middle-income countries (ILO 2022a). When
women leave the labour market, they are less likely
than men to return; moreover, women are less likely
than men to find a job (ILO 2017a). The widening
of employment gaps between women and men
can also weaken the bargaining power of women
in the labour market, especially in low- and middle-
income countries, where they tend to dominate in
low-paid jobs. This would undoubtedly contribute to
maintaining or even increasing the gender pay gap
between women and men, which could become one
of the long-lasting effects of the COVID-19 crisis.
120 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
X 5.5. The role of multilateralism
Although prices were already on the rise before
the outbreak of war in Ukraine, it is unquestionable
that the conflict has contributed to increasing
inflation rates, particularly among countries that
depend heavily on the supply of oil and gas from
the Russian Federation. A prolongation of the
war could thwart expected productivity outcomes
and drag large economies, especially those of the
eurozone, into a recession. In such circumstances,
despite the need to channel public spending into
support measures for low-income households, it
is also important to consider public investment in
the promotion of energy sources that are a viable
alternative to carbon-based fuels. This could in
itself be a way of increasing wage employment in
new sectors, but more importantly, it would help to
increase global stability by cutting dependence on
geopolitically sensitive energy sources and facilitate
a just transition to a resource-efficient economy.
Although the recent health crisis and the war in
Ukraine seem to be the key drivers of uncertainty
at present, the fact is that over the past two
decades the world has arguably been drifting in a
direction that endangers the prospect of achieving
prosperity and peace for all, as called for by the
United Nations 2030 Agenda for Sustainable
Development. The 17 Sustainable Development
Goals pursue a world without extreme poverty and
with equal opportunities for everyone to realize
their potential. Global funding and mobilization
of resources are key to achieving these goals, and
although the international community has so far
provided considerable support, more needs to
be done.
The negative effects of climate change; increasing
inequalities; the poverty, discrimination, violence
and exclusion endured by millions of people,
including the discrimination that women and girls
continue to suffer in many parts of the world;
the lack of vaccines and access to adequate
sanitation and essential healthcare for all; and the
growing digital divide between poor and wealthier
countries – all these factors may contribute to
economic, social and political conflicts that threaten
the very existence of humankind.
Accordingly, in 2021, the United Nations Secretary-
General presented an agenda of key proposed
actions grouped under 12 commitments, which
together seek to reaffirm global solidarity as a way
of overcoming crises. Our Common Agenda, as the
document is entitled, includes the strengthening of
decent work as one of these key actions (UN 2021).
The creation of decent wage employment, along
with policies to ensure adequate wages, which are
relevant to several of the Sustainable Development
Goals, can make a vital contribution to the pursuit
of social justice.
Appendix
 Appendix I. Sources of quarterly survey data, spending patterns of households, and processing of the data
123

X Appendix I. Sources of quarterly survey data,

spending patterns of households, and processing
of the data

Sources of quarterly survey data

Country Region Available periods Name of survey Institution responsible
for survey

Angola Africa Q1 2019 and Q1 2021 Inquérito ao Emprego em Angola National Institute of Statistics
(Survey of Employment in Angola)

Argentina Americas Q1 2019 to Q4 2021, Encuesta Permanente de Hogares National Institute of Statistics
all quarters (Permanent Household Survey) and Censuses

Bolivia Americas Q1 2019 to Q4 2021, Encuesta Continua de Empleo National Institute of Statistics
(Plurinational all quarters (Continuous Employment Survey)
State of)

Botswana Africa Q3 2019, Q4 2019, Multi-Topic Household Survey Statistics Botswana

Q1 2020 and Q4 2020

Brazil Americas Q1 2019 to Q1 2022, Pesquisa Nacional por Amostra de Brazilian Institute of
all quarters Domicílios Contínua (Continuous Geography and Statistics
National Household Sample Survey)

Canada Americas M1 2019 to M6 2022, Labour Force Survey Statistics Canada

all months

Colombia Americas M1 2019 to M4 2022, Gran Encuesta Integrada de Hogares National Administrative
all months (Great Integrated Household Survey) Department of Statistics

Costa Rica Americas Q1 2019 to Q1 2022, Encuesta Continua de Empleo National Institute of Statistics
all quarters (Continuous Employment Survey) and Censuses

Dominican Americas Q1 2019 to Q4 2021, Encuesta Nacional Continua de Fuerza Central Bank of the Dominican
Republic all quarters de Trabajo (Continuous National Republic
Labour Force Survey)

Ecuador Americas Q1 2019 to Q2 2022, Encuesta Nacional de Empleo, National Institute of Statistics
all quarters Desempleo y Subempleo (National and Censuses
Employment, Unemployment and
Underemployment Survey)

Eswatini Africa 2016 and 2021, Labour Force Survey Central Statistics Office
annual of Eswatini

France Europe and Q1 2019 to Q4 2020, Enquête sur l’emploi, le chômage et National Institute of Statistics
Central Asia all quarters l’inactivité (Survey of Employment, and Economic Studies
Unemployment and Inactivity)

Greece Europe and Q1 2019 to Q4 2020, Labour Force Survey Hellenic Statistical Authority
Central Asia all quarters

Guyana Americas Q1 2019 to Q4 2019, Labour Force Survey Bureau of Statistics

Q1 2020, Q1 2021,
and Q3 2021 to Q4
2021

Indonesia Asia and the 2019 to 2021, Q1 and National Labour Force Survey Statistics Indonesia
Pacific Q3 only per year

Italy Europe and Q1 2019 to Q4 2020, Rilevazione sulle Forze di Laboro National Institute of Statistics
Central Asia all quarters (Labour Force Survey)
124 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

Country Region Available periods Name of survey Institution responsible

for survey

Mali Africa 2018 and 2020, Enquête Modulaire et Permanente National Institute of Statistics
annual auprès des Ménages (Modular and
Permanent Household Survey)

Mexico Americas Q1 2019 to Q1 2022, Encuesta Nacional de Ocupación y National Institute of Statistics
all quarters Empleo (National Survey of and Geography
Occupation and Employment)

Mongolia Asia and the Q1 2019 to Q4 2020, Labour Force Survey National Statistics Office
Pacific all quarters of Mongolia

Panama Americas 2019, 2020 and 2021, Encuesta de Mercado Laboral National Institute of Statistics
annual (Labour Market Survey) and Censuses

Paraguay Americas Q1 2019 to Q1 2022, Encuesta Permanente de Hogares National Institute of Statistics
all quarters Continua (Continuous Permanent
Household Survey)

Peru Americas Q1 2019 to Q1 2022, Encuesta Nacional de Hogares sobre National Institute of Statistics
all quarters Condiciones de Vida y Pobreza and Informatics
(National Household Survey on Living
Conditions and Poverty)

Philippines Asia and the Q1 2019 to Q3 2021, Labour Force Survey Philippine Statistics Authority
Pacific all quarters

Portugal Europe and Q1 2019 to Q1 2022, Inquérito ao Emprego – Condição Statistics Portugal
Central Asia all quarters Perante o Trabalho (Employment
Survey; module on labour status)

Serbia Europe and Q1 2019 to Q4 2021, Labour Force Survey Statistical Office of the Republic
Central Asia all quarters of Serbia

Switzerland Europe and Q1 2019 to Q4 2021, Enquête suisse sur la population Federal Statistical Office
Central Asia all quarters active (Swiss Labour Force Survey)

Thailand Asia and the Q1 2019 to Q1 2021, Labour Force Survey National Statistics Office
Pacific all quarters of Thailand

United Europe and Q1 2019 to Q4 2021, Labour Force Survey Office for National Statistics
Kingdom Central Asia all quarters

Uruguay Americas Q1 2019 to Q4 2021, Encuesta Continua de Hogares, National Institute of Statistics
all quarters (Continuous Household Survey)

United Americas M1 2019 to M6 2022, Current Population Survey Bureau of Labor Statistics
States all months

Viet Nam Asia and the Q1 2019 to Q2 2022, Labour Force Survey General Statistics Office,
Pacific all quarters Ministry of Planning and
Investment

Processing of the survey data
In the above table, “Q” stands for “quarter” and “M”
for “month”. Thus, “Q1 2019” denotes the first quar-
ter of 2019 and “M1 2019” denotes January 2019.
X For all estimates, the first quarter (or month or
year) in the data is taken as the base period. In
most cases this is the first quarter of 2019 (or
January 2019 in the case of Canada, Colombia
and the United States).
X Canada, Colombia and the United States provide
data every month. Quarterly estimates for these
countries are obtained by averaging over the
three months within a quarter. Before averaging,
however, each monthly estimate is weighted by
the corresponding monthly CPI. Therefore, the
quarterly estimates in real terms are based on
average monthly estimates in real terms.
X France, the United Kingdom and the United
States provide wage information from a sample
 Appendix I. Sources of quarterly survey data, spending patterns of households, and processing of the data
selected at random among wage employees
(each quarter in the case of the France or the
United Kingdom; each month in the case of the
United States). This randomly selected group
(the eligible) was used to estimate distributional
measures (such as averages, quintiles, deciles
and pay gaps). For other estimates (particularly
total wage bills) the objective was always to
incorporate the full sample. This was achieved
by imputing the wages of those who were
not selected to declare earnings in the survey
(the non-eligible). The imputation relied on
an extended Mincer specification that took
into account all available labour market and
personal information. The estimated total
wage bill obtained by using the full sample (with
imputed values) and that obtained by using only
the eligible group were practically the same. We
decided to use only the eligible respondents
in the population with appropriate frequency
weights.
X The survey data for the Plurinational State
of Bolivia are complete for all quarters from
Q1 2019 to Q1 2021. However, the quarters
Q2 2020, Q3 2020 and Q4 2020 have a
significantly smaller data size: while the
survey in Q1 2020 captures data for 7.2 million
individuals aged 15 to 71 years, in each of the
quarters from Q2 2020 to Q4 2020 the number
of individuals covered drops to 5.3 million. This
was probably due to the restrictions imposed
in response to the COVID-19 pandemic, which
affected the collection of survey data. To ensure
the same sample representativeness – and
comparability with other quarters – we took the
information from Q1 2020 and estimated the
probability of each individual appearing in the
Q1 2020 sample with respect to age, education,
sex, regional location and other variables that
reflect an individual’s characteristics not related
to labour market outcomes. These weights were
applied to the data for Q2 2020, Q3 2020 and
Q4 2020 to bring the samples up to the size
that they would have had in the absence of the
pandemic. This made it possible to estimate the
total wage bill throughout all quarters in a way
that is comparable across time.
X The survey data for Guyana provide information
for irregular quarters from 2019 to 2021.
Considering that for 2020 and 2021 some of
the quarters were missing, it is not possible to
estimate the full trends for this country. The
125
report, therefore, provides estimates only for
available quarters between 2019 and 2021.
X Survey data for Paraguay are missing for
Q2 2020 and Q3 2020, so we used the data
from Q4 2020 to complete the sequence. The
same applies to survey data for Q2 2021, with
Q1 2021 used to complete the series. This allows
a complete set of information from Q1 2019 to
Q4 2021.
X The survey data for the Philippines provide
information up to the third quarter of 2021. To
complete the sequence, we took the wages from
Q3 2021 and applied the corresponding CPI to
emulate wages for Q4 2021 and emulate the last
missing quarter.
X The survey data for Switzerland come in
both a quarterly and an annual format. The
quarterly data allow one to correctly estimate
employment trends but do not include earnings
information. The annual data allow one to
obtain wage information for each quarter of
the year and can be used to estimate wage
trends across quarters. However, they cannot
be used to estimate employment trends
because seasonality impacts on the size of
the sample surveyed at particular times of the
year. Therefore, the estimates of wage trends
for Switzerland in this report are based on the
annual data, while the estimates of employment
trends are based on the quarterly data.
X The survey data for Thailand provide information
up to the second quarter of 2021. To complete
the sequence, we took the wages from this last
available quarter and imputed wages in Q3 2021
and Q4 2021 using appropriate CPI measures.
X The survey data from the United Kingdom for
Q2 2019, Q3 2019, Q4 2019, Q2 2021, Q3 2021
and Q4 2021 do not include wage data but
include all other information from employees. In
order to obtain employment and wage trends,
we used wage data from Q1 2019 to impute
information for Q2–Q4 2019 with appropriate
CPI deflators. We did the same with data from
Q1 2021 to impute wage information for the rest
of the year.
126 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

Sources of data on spending
patterns by household income
Figure 3.8 in Chapter 3 shows the extent to which
the cost of living has increased for households in
each decile of the income distribution. These esti-
mates were constructed by applying the increase
in the cost of living from April 2021 to April 2022 –
using the item-specific CPI estimates published by
the IMF – to the spending patterns of households
in different deciles of the income distribution. The
table below shows the sources of data used to iden-
tify the spending patterns of households across the
income distribution.

Country Region Year(s) Source

Argentina Americas 2018 Encuesta Nacional de Gastos de los Hogares 2017-2018: Resultados
preliminares [National Household Expenditure Survey 2017–2018:
Preliminary Findings] (National Institute of Statistics and Censuses,
2019)

France Europe and Central Asia 2017 Structure des dépenses des ménages selon le niveau de vie: Données
annuelles de 2001 à 2007 [Breakdown of spending by households
according to their standard of living: Annual data for 2001–07]
(National Institute of Statistics and Economic Studies)

Canada Americas 2021 Household Spending, Canada, Regions and Provinces (Statistics
Canada, 22 January 2021)

Mexico Americas 2020 Encuesta Nacional de Ingresos y Gastos de los Hogares 2020 [National
Survey of Household Income and Expenditure 2020] (National Institute
of Statistics and Geography)

Mongolia Asia and the Pacific 2002–03 Main Report of Household Income and Expenditure Survey/Living Standards
Measurement Survey, 2002–2003 (National Statistical Office, World Bank
and United Nations Development Programme, 2004)

South Africa Africa 2022 “What South Africans Spend on Groceries, Rent, and Other Items Each
Month – Based on What They Earn” (BusinessTech, 11 May 2022)

Spain Europe and Central Asia 2021 Total Expenditure, Average Expenditure and Distribution of Household
Expenditure (National Statistics Institute)

Switzerland Europe and Central Asia 2015–17 Enquête sur le budget des ménages 2015–2017: Résultats et tableaux
commentés (Federal Statistical Office, 2022)

United Kingdom Europe and Central Asia 2020/21 Average Weekly Household Expenditure Breakdown in the United
Kingdom in 2020/21, by Income Decile and Category (Statista)

United States Americas 2020 Consumer Expenditures in 2020 (Bureau of Labor Statistics)

Processing of the data

on spending patterns
by household income
All countries except for Argentina, Canada and the
United Kingdom provide information for each item
of expenditure and at each decile of the household
income distribution. Argentina, Canada and the
United Kingdom provide information on spend-
ing patterns at quintiles. For these three countries
we interpolated between quintiles to project an ex-
pected series at each decile of the household in-
come distribution.
 Appendix II. Evolution of the total wage bill in 2020, 2021 and the first two quarters of 2022
127

X Appendix II. Evolution of the total wage bill in 2020,

2021 and the first two quarters of 2022

This appendix complements figure 3.12 in section
3.7. The charts below trace the evolution of the to-
tal wage bill – for all wage employees, as well as for
women and men separately – from the first quar-
ter of 2019 up to the last available quarter in the
data, which may be the last quarter of 2020, the
last quarter of 2021 or the first or second quarter
of 2022. The charts cover only countries that were
not included in figure 3.12. They are bar charts if the
frequency of the data is annual or irregular between
quarters, and line graphs showing trends in all oth-
er cases.

X Figure A2.1  Evolution of the total wage bill, by sex, selected countries, 2019–22 (percentage)

Angola Argentina
120
118
116
Index (base=2019Q1)

114
Index (base=2019Y)

112 110
108 106
102
104 98
100 94
96 90
92 86
82
88 78
84 74
80 70
2019Y 2021Y
1

4
Q

Q
Q

Q
19

19

19

21
19

20

20

20

20

21

21

21
All wage employees
20

20

20

20
20

20

20

20

20

20

20

20
Men Men and women in first period
Women All wage employees Men Women

Bolivia (Plurinational State of) Botswana

116 120
112
116
Index (base=2019Q1)

108
Index (base=2020Q3)

104 112
100 108
96
92 104
88 100
84
80 96
76 92
72 88
68
64 84
60 80
2019Q4 2020Q4
1

4
Q

Q
19

19

19

19

20

20

20

20

21

21

21

21

All wage employees

20

20

20

20

20

20

20

20

20

20

20

20

Men Men and women in first period

All wage employees Men Women Women

Dominican Republic Eswatini

117 120
113 116
Index (base=2019Q1)

Index (base=2016Y)

109 112
105 108
101 104
97
100
93
89 96
85 92
81 88
77 84
73 80
2016Y 2021Y
1

4
Q

Q
19

19

19

19

20

20

20

20

21

21

21

21

All wage employees

20

20

20

20

20

20

20

20

20

20

20

20

Men Men and women in first period

All wage employees Men Women Women
128 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure A2.1 (cont'd)

France Greece
110 123
Index (base=2019Q1)

Index (base=2019Q1)
119
106 115
111
102 107
103
98 99
95
91

4
1

Q
Q

19

19

19

19

20

20

20

20
19

19

19

19

20

20

20

20

20

20

20

20

20

20

20

20
20

20

20

20

20

20

20

20

All wage employees Men Women All wage employees Men Women

Guyana Italy
120 109
116
Index (base=2019Q1)
Index (base=2020Q3)

112
105
108
104
100 101
96
92
97
88
84
80 93
2019Q3 2021Q3
1

4
Q

Q
19

19

19

19

20

20

20

20
All wage employees
20

20

20

20

20

20

20

20
Men Men and women in first period
Women All wage employees Men Women

Mali Mongolia
120
128
116
Index (base=2019Q1)

124
Index (base=2018Y)

112 120
108 116
104 112
100 108
96 104
92 100
88 96
84 92
80 88
2018Y 2020Y
1

4
Q

Q
19

19

19

19

20

20

20

20

All wage employees

20

20

20

20

20

20

20

20

Men Men and women in first period

Women All wage employees Men Women
 Appendix II. Evolution of the total wage bill in 2020, 2021 and the first two quarters of 2022
129

X Figure A2.1 (concl.)

Panama Philippines
108 122
118

Index (base=2019Q1)
104
114
Index (base=2021Y)

100 110
96 106
92 102
88 98
84 94
80 90
86
76 82
72 78
68 74
64 70
60 66
2019Y 2020Y 2021Y

4
4

2
Q

Q
Q

Q
19

19

19

19

20

20

20

20

21

21

21

21
All wage employees

20

20

20

20

20

20

20

20

20

20

20

20
Men Men and women in first period
Women All wage employees Men Women

Serbia Switzerland
173
120
165
Index (base=2019Q1)

Index (base=2019Q1)

157 116
149 112
141 108
133 104
125
100
117
109 96
101 92
93
88
1

4
Q

4
Q

Q
19

19

19

19

20

20

20

20

21

21

21

21

19

19

19

19

20

20

20

20

21

21

21

21
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
All wage employees Men Women All wage employees Men Women

Thailand Uruguay
111 122
107 118
Index (base=2019Q1)

Index (base=2019Q1)

114
103 110
106
99 102
95 98
94
91 90
86
87 82
78
83 74
79 70
66
75 62
1

4
1

Q
Q

19

19

19

19

20

20

20

20

21

21

21

21
19

19

19

19

20

20

20

20

21

21

21

21

20

20

20

20

20

20

20

20

20

20

20

20
20

20

20

20

20

20

20

20

20

20

20

20

All wage employees Men Women All wage employees Men Women

United Kingdom
125
Index (base=2019Q1)

121
117
113
109
105
101
97
93
89
1

4
Q

Q
19

19

19

19

20

20

20

20

21

21

21

21

Source: ILO estimates. See Appendix I for

20

20

20

20

20

20

20

20

20

20

20

20

All wage employees Men Women the sources of survey data used in this report.
130 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
X Appendix III. Decomposing changes in the total
wage bill and estimating changes in employment
and earnings across the wage distribution
(A)  Decomposing the change
in the total wage bill over time
The total wage bill for any given country is defined
as the sum of total earnings generated by all wage
employees in that country at some specific time. For
example, if the total number of wage employees in
country Z in January of year Y is 1 million and their
average wage in January of that year is 100 local
currency units, the total wage bill in country Z
in January of year Y is 100 million local currency
units. In generic terms, if EMPt represents the total
number of wage employees at time t for a given
country, and   represents the average (nominal or
observed) earnings over the period between time 0
and time t (for example, over one year), the total
wage bill, TWPt , in nominal terms at time t in that
country is given by the following equation:
(1)
Equation (1) can be used to estimate the change in
the total nominal-wage bill between a base period
(time 0) and time t. For example, the change in the
total wage bill in 2021 for any country relative to
its total wage bill in 2019 (the base year) would be
given by:
(2)
Continuing with the above example, if the number
of wage employees at time t remains the same
as in the base year, but earnings at time t have
increased to 110 local currency units, the total wage
bill has, on average, increased by 10 per cent over
the intervening period relative to the base year. In
general, the change in the total wage bill expressed
by equation (2) is the sum of three components:
a contribution due to the change in the number
of wage employees over the period up to time t ;
a contribution due to the change in inflation over
that period; and a contribution due to the change in
nominal earnings over that period. If αt represents
the nominal wage increase between time 0 and
time t , and πt represents the increase in price levels
between time 0 and time t, the relationship between
nominal wages (w n) and real wages (w R) over that
period can be expressed as follows:

therefore,
(3)
Equation (3) provides a link between real and
nominal earnings and, together with equation (2),
can be used to obtain an equation for the change
in the total wage bill in real terms between time 0
(the base period) and time t, namely:
(4)
Equation (4) shows that in decomposing the change
in the total real-wage bill between some base year
and a later year, the effect of inflation and nominal
changes cannot be fully disentangled – or, to be
more precise, the way that inflation impacts on the
total wage bill also includes the effects of inflation
on the nominal change expressed by αt. This term
can be constructed using the following expression:
αt  =  (   /  )  – 1, while πt = (CPI t  / CPI 0)  – 1 where
CPI t is the consumer price index at time t. Using
equation (4), we therefore proceeded as follows:
X On the basis of the monthly labour earnings
of wage employees throughout the year we
estimated the total wage bill in 2019 and used
this as the benchmark for comparison when
determining the changes in 2020, 2021 and
2022. In the case of 2022, data are available
only up to the first or second quarter, and so
the comparison was performed against the
corresponding quarters of 2019.
X Since 2019 is the base year, the total wage bill
in real or nominal terms for 2019 is likewise
used as the baseline. For the other three years,
the estimate of the total wage bill is adjusted
 Appendix III. Decomposing changes in the total wage bill and estimating changes in employment and earnings
for inflation. The total wage bill in 2019 is the
denominator in the expression on the right side
of equation (4).
X Estimates of each component of the expression
on the right side of equation (4) identify the
contributions due to employment, the nominal
change and inflation to changes in the total
wage bill.
The decomposition method described above was
used to obtain the estimates presented in figures
3.13 and 3.14 in section 3.8, and Appendix II.
(B)  Decomposing the total
wage bill across the wage
distribution over time
Employment and earnings (nominal and real) can
change differently over time at different locations
of the wage distribution. These changes were
estimated as follows:
1. Using the base year 2019, we ranked wage
employees according to their monthly earnings
and created j groups of equal size. For example,
if these equally sized groups are quintiles, each
will include 20 per cent of wage employees in
the population and j will be equal to 5. Each
group is associated with an upper and lower
threshold of (real) monthly earnings.
2. Once the thresholds have been estimated at
the base year (2019), they can be used to divide
the population of wage employees observed
in follow-up surveys (monthly, quarterly or
annual) but with the 2019 thresholds adjusted
131
for inflation. For example, if in 2019 the lowest
quintile earned between 10 and 100 local
currency units, and inflation in 2020 was 1 per
cent, the thresholds in 2020 for this lowest-paid
group would be 10.1 and 101 local currency
units.
3. After obtaining thresholds for the subsequent
years, we divided the population of wage
employees in each year into j groups. We used
real monthly earnings to identify who falls
into each of the groups in subsequent years.
In the base year, the groups are of equal size
(for example, if j = 5 they are groups containing
20 per cent of wage employees each) but in
subsequent years the size of each group can
change. Therefore, after the base year the
groups are named ordinally as lowest, second,
third, fourth and top earners.
4. For 2019, we estimated the total number of wage
earners in each group, the average nominal
wage and the average real wage.
5. The change in employment was estimated for
subsequent years by comparing each group’s
share of total employment with the share of the
corresponding group in 2019.
6. The changes in nominal and real wages were
estimated by comparing each group’s average
wage in 2019, 2020 or 2021 with the average
wage in the following year, that is, 2020, 2021
or 2022.
The method described above to estimate changes
in employment and in nominal and real monthly
wages was used to obtain the estimates presented
in figure 3.15 and 3.16 in section 3.9.
132 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Appendix IV. Decomposition of the change

in the total wage bill for 2020 and 2021

This appendix complements figures 3.13 and 3.14 employment (including changes in the number
in Chapter 3. The charts present a decomposition of jobs and in the number of hours worked) and
of the change in the total real-wage bill between both real and nominal changes in hourly wages.
2019 and 2020, and between 2019 and 2021 (for Whereas the charts in figure A4.1, panel A, present
countries that have already released data for a decomposition for all wage employees, panel B
2021 at the time of writing). The decomposition presents sex-­disaggregated estimates. The charts
shows the contributions to the change in the in the two panels show only countries that were not
total wage bill (TWB) due to changes in total included in figures 3.13 and 3.14.

X Figure A4.1, panel A.  Decomposition of the change in the total wage bill
for 2020 and 2021, selected countries (percentage)

Angola: Women and men Argentina: Women and men

104.2
27 23.8 107
% change relative to TWB in 2019

% change relative to TWB in 2019

19 17.5 83

11 59
5.4 36.4
35
3
11 0.6
–5
–13 –10.7 –9.7 –3.3
–13
–37
–21 –37.4
–61
–29
–85
–37 –35.9 –109
–108.1
2021 2020 2021

Bolivia (Plurinational State of): Women and men Botswana: Women and men

3
% change relative to TWB in 2019

% change relative to TWB in 2019

–1 4
–0.7 –0.5 –1.5
–5 0.6
–5.4
–9 0
–10.4 –1.2
–13 –12.4
–13.7 –2.1
–2.8
–17 –4

–21 –19.8

–25 –8

2020 2021 2020

Total change Due to employment change Due to nominal wage change Due to inflation
 Appendix IV. Decomposition of the change in the total wage bill for 2020 and 2021
133

X Figure A4.1, panel A (cont'd)

Dominican Republic: Women and men Eswatini: Women and men

8 33
% change relative to TWB in 2019

% change relative to TWB in 2019

29 27.2
4 2.9 25
21
0 17
–0.6 13
–4 –3.2 9
5 0.9
–8 1
–8.5 –7.6
–3
–12 –10.5 –7
–12.3 –11 –7.9
–16 –15.2 –15
–19
–20 –23 –18.4

2020 2021 2021

France: Women and men Greece: Women and men

10
% change relative to TWB in 2019

% change relative to TWB in 2019

6
8
4
2.2 6
2 4.5
1.0
4
0 2.3
–0.7 –0.5 2 0.9 1.4
–2
0
–4
–2
–6
–4
2020 2020

Guyana: Women and men Italy: Women and men

15
% change relative to TWB in 2019

% change relative to TWB in 2019

11 5
8.7
7.1 6.6 3
7
0.8
3 1 0.2

–1 –1 –0.5
–1.6
–5 –3

–9 –8.1 –5

–13 –7
2021 2020

Mali: Women and men Mongolia: Women and men

11
% change relative to TWB in 2019

% change relative to TWB in 2019

13
7 6.0 11
8.7
3 9
1.1
7 6.1
–1 5
–5 3 1.3
1
–9 –1
–9.0
–13 –3
–5 –3.9
–17 –16.1 –7
–21 –9
2020 2020

Total change Due to employment change Due to nominal wage change Due to inflation
134 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure A4.1, panel A (concl.)

Panama: Women and men Philippines: Women and men

9 9
% change relative to TWB in 2019

% change relative to TWB in 2019

5 2.8 3.5
1.3 5 4.0 4.2
1
–0.1
–3 1
–7
–8.1 –3 –2.2
–11 –3.0
–11.6 –4.9
–15 –7 –6.1
–19 –18.0 –8.4
–11 –10.3
–23 –22.1
–27 –15
2020 2021 2020 2021

Serbia: Women and men Switzerland: Women and men

43
% change relative to TWB in 2019

% change relative to TWB in 2019

39 36.7 38.0
35 6
31
27
23 2.7
2.1 1.9
19 2 1.2
0.7
15 0.1
11 6.3 6.5
7 5.7 –0.2
2.4 –0.8
3 –2
–1
–5 –1.7
–9 –7.9
–13 –6
2020 2021 2020 2021

Thailand: Women and men United Kingdom: Women and men

10
% change relative to TWB in 2019

15
% change relative to TWB in 2019

11.3
11
6 8.0 8.5
4.6 7.0
3.5 7

2 0.9 0.8 0.8 3 1.0

0.1
–0.7 –0.7 –0.4 –1
–2 –1.1
–5 –3.8

–6 –9
2020 2021 2020 2021

Uruguay: Women and men

% change relative to TWB in 2019

14 11.4
10
6.3 Total change
6
2 Due to employment change
–2 –0.7
–6 –4.4 Due to nominal wage change
–7.2 –6.3
–10 –9.0
Due to inflation
–14
–18 –17.1
–22
2020 2021

Source: ILO estimates. See Appendix I for the sources of survey data used in this report.
 Appendix IV. Decomposition of the change in the total wage bill for 2020 and 2021
135

X Figure A4.1, panel B.  Decomposition of the change in the total wage bill
for 2020 and 2021, by sex, selected countries (percentage)

Angola
Women Men
27
% change relative to TWB in 2019

% change relative to TWB in 2019

31 27.6 22.1
27 23 19.3
23 19
19 15
15 13.4 11
11 7 5.4
7 5.2 3
3 –1
–1 –5
–5 –9
–9 –13
–13 –17
–17 –21
–21
–25 –25
–29 –29
–33 –33
–37 –35.8 –37 –35.9
–41 –41

2021 2021

Argentina
Women Men
109 102.6 105.0
% change relative to TWB in 2019

% change relative to TWB in 2019

106
89 86
69 66
49 38.6 46 34.9
29 26
9 6
1.9
–11 –9.3 –10.1 –4.7 –0.9 –14 –11.5 –9.3
–2.4
–31 –34
–51 –37.9 –37.1
–54
–71 –74
–91 –94
–111 –106.4 –114 –109.2
2020 2021 2020 2021

Bolivia (Plurinational State of)

Women Men
6
4
% change relative to TWB in 2019

% change relative to TWB in 2019

2 0.1 0
–2 –0.7 –0.7 –0.9 –1.5
–1.5 –4
–3.5
–6
–8 –6.8
–10
–9.9
–11.3 –12 –10.6
–14 –11.7
–13.0
–18 –16.5 –16

–22 –20.7 –20 –19.3

–26 –24

2020 2021 2020 2021

Botswana
Women Men
13
% change relative to TWB in 2019

% change relative to TWB in 2019

1
9
7.0
6.0
–3 –2.0
5
–3.9 –4.0
1.3
1 –7

–11 –9.9
–3 –2.3

–7 –15

2020 2020
136 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure A4.1, panel B (cont’d)

Dominican Republic
Women Men
9 7
% change relative to TWB in 2019

% change relative to TWB in 2019

5 4.0 3 2.0

1 –1 –0.5
–0.8 –3.2
–3 –5
–3.2
–7 –9 –7.7 –8.1
–7.1
–9.2 –10.3
–11 –13 –11.5
–10.6
–15 –13.2 –13.8 –17 –16.4
–19 –21

2020 2021 2020 2021

Eswatini
Women Men
30
% change relative to TWB in 2019

% change relative to TWB in 2019

38 33.4
34 26 23.7
30 22
26 18
22
18 14
14 12.7 10
10 6
6 2
2
−2 −2
−6
−0.2 −6
−10 −10 −7.1
−14 −14
−18 −14.0
−22 −18
−20.5 −16.9
−26 −22

2021 2021

France
Women Men
8 7
% change relative to TWB in 2019

% change relative to TWB in 2019

6 5
4
2.7 3
1.7
2 1.3
1 0.8
0
–0.9 –0.5 –1 –0.5 –0.5
–2

–4 –3

–6 –5

2020 2020

Greece
Women Men
% change relative to TWB in 2019

% change relative to TWB in 2019

10 7

8 5
6.3 3.3
6
3 2.3
4 1.3
2.5 2.4 1
2 1.4
–1 –0.4
0
–3
–2
–5
–4
2020 2020
 Appendix IV. Decomposition of the change in the total wage bill for 2020 and 2021
137

X Figure A4.1, panel B (cont’d)

Guyana
Women Men
15 15
% change relative to TWB in 2019

% change relative to TWB in 2019

11 9.1 11 8.8 9.0
8.0
7 7
4.3
3.1
3 3

–1 –1

–5 –5

–9 –7.9 –9 –8.3
–13 –13

2021 2021

Italy
Women Men
% change relative to TWB in 2019

% change relative to TWB in 2019

5 4

3
2
1.3
1 0.2 0.4 0.2
0
–1 –0.7 –0.5
–1.1
–2
–3 –2.2

–5 –4

–7 –6

2020 2020

Mali
Women Men
7
32 27.2
% change relative to TWB in 2019

% change relative to TWB in 2019

28
24
20 3
16 1.1
12
8
4 1.0 –1
0
–4
–8
–12 –5 –4.1
–16 –14.6 –4.9
–20
–24
–28 –7.8
–32 –9
–36
–40
–44 –42.9
–48 –13

2020 2020

Mongolia
Women Men
17 13
% change relative to TWB in 2019

% change relative to TWB in 2019

15 11
13 12.0
10.9 9 7.9
11
7
9
7 5
5.3
5 3 1.6
3 1
1 −1
−1
−3
−3 −2.5
−5 −5 −3.8
−4.1 −7
−7
−9 −9

2020 2020
138 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power

X Figure A4.1, panel B (cont’d)

Panama
Women Men
16 6
% change relative to TWB in 2019

% change relative to TWB in 2019

12 9.5 1.2
8.6 2
8 –0.0
–2 –1.6 –1.1
4 1.4
–6
0
–0.1 –10
–4 –3.2
–14 –11.9 –10.7
–8
–12 –9.4 –18
–12.7 –22
–16
–20 –19.4
–26 –24.6 –24.1
–24 –30

2020 2021 2020 2021

Philippines
Women Men
12
9
% change relative to TWB in 2019

% change relative to TWB in 2019

8 6.0
5.1 5 3.7
2.8
4
1
0
–3 –2.2 –1.6
–4 –2.2
–4.1
–5.4 –6.0 –7 –6.2
–8 –6.8 –6.4

–11 –9.4 –10.0

–12 –10.6

–16 –15

2020 2021 2020 2021

Serbia
Women Men
43
% change relative to TWB in 2019

% change relative to TWB in 2019

37.1 43 38.5 38.7

39 34.6 39
35 35
31 31
27 27
23 23
19 19
15 15
11 11 7.7
5.6 5.6 5.2 6.9 5.6
7 7
1.6 3.0
3 3
–1 –1
–5 –1.7 –5 –1.7
–9 –7.7 –9 –8.0
–13 –13

2020 2021 2020 2021

Switzerland
Women Men
11
% change relative to TWB in 2019

% change relative to TWB in 2019

5
7
5.5 5.2
1.8
3.9 3.5 1.1
1
0.7
3 0.1
0.8 –0.1 –0.3
0.1 0.2
–1.8 –1.7
–1 –0.4 –3

–5 –7

2020 2021 2020 2021

 Appendix IV. Decomposition of the change in the total wage bill for 2020 and 2021
139

X Figure A4.1, panel B (concl.)

Thailand
Women Men
10
10
% change relative to TWB in 2019

% change relative to TWB in 2019

6
6 5.0 4.3
4.2
3.0
2 0.8
2 1.1 1.1 0.8 0.7 0.5

–0.4 –0.4 –0.7 –0.4

–0.8 –2 –0.9
–2

–6 –6

2020 2021 2020 2021

United Kingdom
Men
% change relative to TWB in 2019

% change relative to TWB in 2019

19 15

15 14.2
11 9.6
10.5 10.7 7.4
11 9.5
7 5.1
7 4.1
3 1.7
3 0.1
0.1 0.4
–1
–1 –1.0
–1.1
–5 –3.8
–5 –3.9

–9 –9

2020 2021 2020 2021

Uruguay
Women Men
14
% change relative to TWB in 2019

% change relative to TWB in 2019

17
13.5 10.2
13 10
9 8.0 6 5.1
5 2
0.5
1 –2
–3 –1.8
–3.9 –3.6 –6 –4.9
–7 –5.1
–10 –8.7 –8.8 –8.4
–11 –9.2
–15 –14
–19 –17.6 –18 –16.7
–23 –22

2020 2021 2020 2021

Source: ILO estimates. See Appendix I for the sources of survey data used in this report.
140 Global Wage Report 2022–23. The impact of inflation and COVID-19 on wages and purchasing power
X Appendix V. Decomposing the change
in wage inequality over time
Section 4.2 of this report applies the method
proposed by DiNardo, Fortin and Lemieux (1996)
and further elaborated by Daly and Valletta (2006)
to decompose changes in wage inequality between
2019 and 2021.1 In general, a change in wage
inequality between two periods is the sum of a
change in the composition of wage employees (for
example, a change in the share of female wage
employees) and a change in the wage structure
(that is, a compression or widening of the wage
scale, with the characteristics of wage employees
held constant). Decomposition methods are useful
in empirical labour economics because they allow
one to distinguish between these two components.
The method proposed by DiNardo, Fortin and
Lemieux (1996) involves comparing measures
of wage inequality between two periods (for
example, between 2019 and 2021) with the wage
distribution in the later period (2021) adjusted to
reflect the composition of wage employees from
the earlier period (2019) while keeping the wage
structure in the later period (2021) intact. The
adjusted distribution is called the counterfactual
wage distribution – that is, the distribution
that would have been observed in 2021 in the
absence of changes in the composition of wage
employees relative to 2019. Since the counterfactual
distribution emulates the 2019 composition of wage
employees – thereby keeping the wage structure in
2021 intact – a comparison of the wage distribution
in 2021 with the counterfactual distribution reveals
the contribution that changes in the composition
of wage employees have made to changes in wage
inequality between 2019 and 2021. Likewise, since
the counterfactual emulates the composition of
wage employees in 2019, any difference between
the counterfactual wage distribution and the wage
distribution in 2019 reveals the contribution of
structural changes to wage inequality. In short,
the proposed decomposition method involves
constructing a counterfactual wage distribution
(for 2021) that emulates the composition of wage
employees in 2019 (the pre-pandemic year) to
disentangle the compositional and structural
components that together make up the change in
wage inequality observed between the two years.
1 For some countries discussed in section 4.2, data are available for 2022 but this appendix refers to 2021 only for the sake of simplicity.
In what follows we explain: (a) how to construct
the counterfactual wage distribution; and (b) how
to use the proposed counterfactual to estimate
the compositional and structural components
of changes in wage inequality. Although in this
report the counterfactual is based on the method
proposed by DiNardo, Fortin and Lemieux (1996)
there are other methods that are equally valid for
this purpose. See Fortin, Lemieux and Firpo (2011)
for a detailed account and comparison of various
methods used to decompose measured outcomes
in wage distributions.
Considering 2019 as the adjusting year, the
counterfactual wage distribution for 2021 is the wage
distribution that would have been observed in 2021
if the composition of wage employees in 2021 had
remained the same as in 2019. Let  
and   represent the wage
distributions in 2019 and 2021, respectively,
conditional on characteristics    , where the suffix t
denotes the year. For example, one characteristic in
the set   can be sex. Following DiNardo, Fortin and
Lemieux (1996), we use “re-weighting” functions so
that the composition of wage employees observed
in 2019 (that is,    ) is imposed on the wage
distribution observed in 2021 while keeping the
wage structure in 2021 (that is,    ) intact.
Continuing with sex as the example characteristic, let
us assume that women wage employees make up
48 per cent of the total population of wage employees
in 2019 and that in 2021 they make up 40 per cent.
Men wage employees would account for 52 per cent
and 60 per cent in 2019 and 2021, respectively. A re-
weighting function so that the gender composition
in 2019 prevails in the 2021 wage distribution would
be one that weights each woman observed in 2021
by the ratio 48/40 and each man by the ratio 52/60.
Assuming that sex is the only variable in the set    ,
the result of re-weighting women and men in 2021
according to their composition in 2019 results in
a counterfactual wage distribution for 2021 that
has the composition (of women and men) of 2019
but keeps the wage structure of 2021 intact. This
counterfactual distribution can be expressed as  
 . By comparing measures of
wage inequality between     and  
 Appendix V. Decomposing the change in wage inequality over time
  we can uncover the changes
in wage inequality between the two years due to
composition effects, while a comparison of measures
of wage inequality between     and  the (survey-provided) frequency weights by the
  reveals the changes in wage
inequality between the two years due to changes in
the wage structure.
In practice, the set includes several variables
which together describe the characteristics of wage
employees (for example, sex, age and education);
their working conditions (for example, contractual
arrangements, occupational category, hours
worked, and formal versus informal employment);
and workplace attributes (for example, geographical
location, economic sector and institutional sector).
At the same time, the re-weighting functions are
not ratios as in the simple example above: they
are, rather, the outcomes of estimating conditional
probability functions that take into account the
categorical nature of variables when imposing their
2019 distribution on the wage distribution of 2021.
For example, in the case of sex – a variable with only
two categories – a logit specification can be used to
estimate the conditional probability of being a woman
(   ) or a man (1–   ) in 2019 and
2021, respectively, where the conditional     includes
all variables in     except the variable “sex”. Using
this example, the re-weighting function to adjust
the wage distribution in 2021 so that it emulates the
gender composition in 2019 would be ­constructed
as:   for women
and  for men, with 
  and     identifying women and men in each
of the two years, respectively. Whereas the variable
“sex” has only two categories, other variables may
have several. For example, the variable “occupation”
distinguishes several categories, from managers,
professionals and technicians to semi-skilled, lower-
skilled and unskilled occupations. When a variable
has multiple categories, a multinomial logit model
can be used to estimate the conditional probability
of belonging to each category: the re-weighting
function to impose the composition of a categorical
variable with possible categories is constructed as  sex, economic sector, occupational category and,
  for any categorical
variable . Daly and Valletta (2006) extended the
method of DiNardo, Fortin and Lemieux (1996)
to cover categorical variables using multinomial
(logit) specifications.
Imposing the composition of wage employees
in 2019 on 2021 requires the estimation of
re‑weighting functions to account for all variables
141
in the conditional set    : these would include all
the variables thought to be important in the wage
determination process in both periods. Multiplying
re-weighting functions produces newly adjusted
weights so that wage employees in 2021 emulate
the composition of wage employees in 2019.
Thus, if     is the conditional density function
for wages in 2019 and     the conditional
density function for wages in 2021,     is the
counterfactual conditional density function for
wages in 2021 estimated using the newly adjusted
frequency weights. Measures of wage inequality
can be estimated from each of these three density
functions: for example, the ratios between top
and bottom deciles, which in logarithmic form
can be expressed as    . Using as
an indicator of wage inequality, each of the three
density functions can produce the corresponding
measures:  ,  
and     – where the suffix 19 and
21 make references to years 2019 and 2021,
respectively. The change in wage inequality
between 2019 and 2021 for  , that is,  ,
can be expressed as follows:
 
(1)
Equation (1) shows the outcome of a counterfactual
with all re-weighting functions applied to obtain
. In practice, the method proposed in
DiNardo, Fortin and Lemieux (1996) makes it
possible to identify the separate contributions
of different factors in the composition of wage
employees to the overall change in wage
inequality between two periods. In section 4.2 of
the report, the contributions to changing wage
inequality due to compositional changes related
to the following variables are identified in turn:
lastly, “all other remaining factors”. The method is
path‑dependent, which means that the contribution
of each component in the composition effect to
the overall change in wage inequality can vary
depending on the order in which the re-weighting
function is updated to obtain the final estimate of
the counterfactual wage distribution. See DiNardo,
Fortin and Lemieux (1996) for further details.
 References and databases
143

X References

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inequality-and-covid-19-pandemic-three-charts.
Ahrendt, Daphne, Jorge Cabrita, Eleonora Clerici, John Hurley, Tadas Leončikas, Massimiliano Mascherini,
Sara Riso, and Eszter Sándor. 2020. Living, Working and COVID-19. Eurofound Research Report.
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X Databases used

European Commission, AMECO (annual macro-economic database)

ILO Global Wage Database
ILOSTAT
IMF Consumer Price Index database
IMF World Economic Outlook database
World Bank Open Database
For the sources of quarterly data used in the report, see Appendix I.
Advancing social justice,
promoting decent work
The International Labour
Organization is the United
Nations agency for the world
of work. We bring together
governments, employers and
workers to drive a human-centred
approach to the future of work
through employment creation,
rights at work, social protection
and social dialogue.
ilo.org
International Labour Organization
Route des Morillons 4
1211 Geneva 22
Switzerland
This report examines the evolution of real wages around the world,
giving a unique picture of wage trends globally, by region and at
country level. The current edition includes new evidence on how
the COVID-19 crisis and recent inflation have impacted on wages
and purchasing power across countries and regions up until the
middle of 2022.
Using quarterly survey data from a selection of countries
representing different geographic regions and income groups, the
report shows that, although the erosion of real wages affects all
wage earners, the current cost-of-living crisis is having a greater
impact among low-income households. These losses come on top
of significant wage losses incurred by workers and their families
during the COVID-19 pandemic, losses that were greater among
low-paid workers, women wage employees and wage workers in
the informal economy. The report provides a review of possible
countervailing policies that could support economic recovery, help
workers and their families, and potentially reduce inequalities in
the world of work.
“This well thought through, highly informative and
very timely report forcefully demonstrates that a
failure to adjust nominal wages could – in the absence
of adequate policy – lead to a massive increase in
inequality and poverty, threatening the livelihoods
of countless workers and their families, while
endangering economic recovery across the globe.”
Timo Weishaupt
University of Göttingen