The gap between wage growth and labour productivity growth is widening while the difference between the top and bottom income earners is increasing and the labour income share is declining, globally.

This is contained in an International Labour Organization (ILO) “Global Wage Report 2012/13: Wages and Equitable Growth”, made available to the Ghana News Agency on Friday.

It analyzed average real wages across the world, giving a unique picture of wage trends and relative purchasing power across the world and by region.

The report also focused on the macro-economic effects of wages and in particular how current trends are linked to equitable growth.

It said “These worrying changes affect the key components of aggregate demand – particularly consumption, investment and net exports – that are necessary for recovery and growth.”

The report indicated that reasons for these trends range from the increasing financial and trade globalization to advances in technology and the decline in union density.

The report calls for internal and external “rebalancing” to achieve more socially and economically sustainable outcomes within and across countries, proposing policy actions beyond labour markets and national borders.

It said “in developing economies, employment guarantee schemes that pay minimum wages are ways to create incentives for private firms to comply with the minimum wage.”

The report said that because in developing and emerging countries only about half of all workers are wage earners, additional measures are needed to create more wage jobs and to raise the productivity and earnings of those in self-employment.

It said “raising average labour productivity remains a key challenge, which must involve efforts to raise the level of education and the capabilities that are required for productive transformation and economic development.”

The report noted that the development of well-designed social protection systems would allow workers and their families to reduce the amount of precautionary savings, to invest in the education of their children, and to contribute towards stronger domestic consumption demand and raise living standards.