The lingering crisis of labour post-pandemic

Source: The post is based on an article “The lingering crisis of labour post-pandemic” published in The Hindu on 6^th December 2022.

Syllabus: GS 3 – Economic Development

Relevance: rising income inequalities post-pandemic

News:  Global Wage Report 2022-2023 and Asia-Pacific Employment and Social Outlook 2022 are the two reports released by the International Labour Organisation (ILO) recently. Both these reports gave an indication of the global employment scenario post-pandemic.

What are the findings of the report?

Growth: As per the reports, the nominal wages in India rose to ₹17,017 per month in 2021 from ₹4,398 in 2006.

However, the real wage growth in India declined to -0.2% in 2021 from 9.3% in 2006 when inflation is taken into consideration. This negative growth in India started after the pandemic.

The growth for China also decreased from 5.6% in 2019 to 2% in 2022 and for Pakistan the growth was -3.8%.

Cost of Living: The reports highlighted that the increasing cost of living has the greatest impact on lower-income earners because they have to spend most of their income on rising prices of essential goods and services.

Employment: As per the report, only high-skill occupations saw a recovery after the COVID-19 crisis at the Asia-Pacific level which raises concerns about rising inequality. There is an employment gain of 1.6% among high-skill workers between 2019 and 2021 but there is no such substantial gain among low-to-medium-skill workers.

Gap amongst G-20 countries: There is a significant gap in the average level of real wages between advanced G-20 countries and emerging G-20 countries such as India.

What can be the course of action?

The ILO in reports have provided the following remedies for the problem –

1. a) improvement in the nominal wages of the employee will help in safeguarding the standard of living of households and cushion them against the rising inflation in the future, b) there is a need to strengthen labour market institutions and wage policies, c) there is a need to create decent formal wage employment for equitable and sustainable wage growth, d) decrease in gender pay gap with a multilateral approach that focus on mitigating climate change, decreasing inequalities, poverty, etc. is needed.