Economic policymakers and business leaders worry a great deal about wage inflation. Average workers, not so much. That’s because real global monthly wage growth — which reflects the purchasing power of wages once cost-of-living inflation is taken into account — actually fell to negative 0.9 per cent in the first half of 2022. That is the first time since 2008 that real global wage growth has been negative, according to a new report by the International Labour Organization.
While inflation in areas such as food and fuel hits the poor in every country hardest, the comparative decline in real versus nominal wages has actually been sharpest in the rich world. Among advanced G20 countries, real wage growth in the first half of 2022 declined to minus 2.2 per cent, whereas growth in emerging G20 countries slowed but remained positive at 0.8 per cent.
Among rich countries, North America has been particularly hard hit; average real wage growth in the US and Canada fell to minus 3.2 per cent in the first half of 2022. No wonder the hand-wringing about wage-price spirals among policymakers is so at odds with the actual experience of most North American workers.