L20 Argentina 2018 - Economic and social policy brief: The case for wage led growth

This L20 policy brief, prepared in advance of the 2018 G20 G20 The Group of Twenty, or G20, is a forum for international cooperation on the most important aspects of the international economic and financial agenda. It brings together 19 countries and the European Union, which together represent around 90% of global GDP, 80% of global trade and two thirds of the world’s population. Labour Ministers Meeting (LEMM) in order to inform discussions, provides a technical summary of global wage developments over the last decades. It shows that, overall, there is a trend of wage stagnation in many countries. Wage inequality has increased, and profits are not being shared with workers through pay rises.

This paper summarises the various factors behind these trends, which include the weakening of social dialogue and collective bargaining, a rise in low-paid and precarious work, ineffective labour market regulations, increased power for firms to dictate wages, technological change, and globalisation. It also shows how many workers across the world are not earning sufficient wages to live in dignity – and inadequate social protection systems are further exacerbating high levels of inequality and poverty. The paper highlights that governments, together with social partners, have the power to effectively address these challenges.

In the context of the L20, trade unions are calling on governments to set minimum living wages, based on cost of living and with full involvement of social partners. Obstacles to freedom of association need to be effectively addressed. Collective bargaining on wages should be promoted, and agreements should have wide coverage and be enforced by law. Finally, adequate, comprehensive social protection systems – in line with ILO Convention 102 and Recommendation 202 - need to be put in place in order to guarantee income security for workers and their families, as part of a comprehensive strategy of reducing inequality and promoting adequate living standards for all.

L20 Argentina 2018 - Economic and social policy brief: The case for wage led growth