Page last updated at 07:05 GMT, Wednesday, 26 November 2008

Workers face 'painful' wage cuts

Former workers of a Chinese firm that recently went bankrupt
The ILO says 210 million people could be out of work by the end of 2009

Millions of workers face "painful" wage cuts because of the global economic crisis, the International Labour Organization (ILO) has said.

"For the world's 1.5 billion wage-earners, difficult times lie ahead," said ILO director general Juan Somavia.

The body forecasts that global growth in real wages will reach 1.1% at best in 2009, after rising 1.7% in 2008.

In industrialised countries, wages are expected to fall by 0.5% in 2009 after rising by 0.8% in 2008.

"Slow or negative economic growth, combined with highly volatile food and energy prices, will erode the real wages of many workers, particularly the low-wage and poorer households. The middle classes will also be seriously affected," said Mr Somavia.

'Delay in recovery'

According to the report, entitled Global Wage Report 2008/09, for each 1% decline in gross domestic product per capita between 1995 and 2007, average wages fell even further by 1.55 percentage points.

"If this pattern were to be followed in the rapidly spreading global downturn it would deepen the recession and delay the recovery," Mr Somavia said.

The eurozone and Japan are already in recession after two successive quarters of negative growth.

Many economists believe that the US economy is in recession as well.

In October, the United Nations agency predicted that the global financial crisis would add at least 20 million extra people to the world's unemployed.

This would bring the total number of people without work to 210 million by the end of 2009, the ILO said.



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