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Global Recession Turns Top-Tier Economies Upside Down
It wasn't all bad news. Wages are generally on an upward trendline. But in its analysis of national wage data sampled from 115 countries and territories, the ILO reports:
growth in average monthly wages slowed from 2.8 per cent in 2007, on the eve of the crisis, to 1.5 per cent in 2008 and 1.6 per cent in 2009. Excluding China from the aggregate, the global average wage growth drops to 0.8 in 2008 and 0.7 in 2009....
In particular... since the mid-1990s the proportion of people on low pay – defined as less than two-thirds of median wage – has increased in more than two-thirds of countries with available data.
The range of countries that have seen a growth in low-paid workers span the spectrum of "development," including "Argentina, China, Germany, Indonesia, Ireland, the Republic of Korea, Poland and Spain." Paradoxically this growth in the low-wage labor force will be met with Europe's onslaught of harsh austerity measures, which economists predict will not only shred the safety net but also deepen the overall economic contraction (meaning more misery for ordinary people).
Some countries, however, might be getting smarter about rejiggering their economies with a combination of organized labor power and aggressive fiscal policy. For example, the ILO says, departing from policies tried by governments in response to earlier economic crises, half of the surveyed countries this time around "have adjusted their minimum wages either as part of the regular minimum wage review process or with the aim of protecting the purchasing power of the most vulnerable workers." Building on the baseline of economic security provided by government, the ILO finds, "Wages are better aligned with productivity in countries where collective bargaining covers more than 30 per cent of employees."
The United States saw a significant drop in real average weekly earnings from 2007 to 2008, followed by an uptick going into 2009, which the ILO attributes largely to falling consumer prices (increasing relative purchasing power). The U.S. sits near the top of the ILO's list of industrialized countries in terms of the portion of its workforce comprised of low-paid full-time workers (about a quarter of the U.S. labor force compared to six percent in Sweden, for instance).
On both sides of the Atlantic, the oft-maligned public sector again appears to be better shielded from recessionary woes. In most of the surveyed European nations, “nominal earnings in the public sector have risen faster – or fallen less – than earnings in the private sector." Earnings rose faster in the U.S. for state and municipal employees than for private sector employees from March 2008 to 2010.
But the budget axe looms over civil servants. The ILO says “this trend may be reversed in some of the countries that have implemented austerity measures to contain public debt and/or which have signed recent agreements with the IMF.”
In this recession, the bigger they come, the harder they fall. The “advanced" countries that helped drive markets over a cliff have spiraled downward while meeker economies have stayed afloat, according to the wage report. Though global average wages grew substantially over the past decade, the increase was unevenly concentrated:
while wage growth slowed but remained consistently positive in Asia and Latin America, other regions such as Eastern Europe and Central Asia experienced a dramatic fall. Advanced economies experienced a drop in the level of real wages which fell in 12 of 28 countries in 2008 and in seven in 2009.
For the "emerging economies," the psychological ramifications of feeling as though your nation is moving up as opposed to toppling over, are reflected in a new Gallup poll showing economic optimism clustered in less wealthy countries.
Yet the U.K. Guardian's analysis suggested that the global downturn could be a great leveler of sorts. On one hand, writes Vittorio Longhi, the recession will inevitably have an acute impact on the most impoverished, least educated, least politically empowered workers. Relegated to the "3D's" ("dirty, dangerous and demanding" jobs), these are often women, youth, ethnic minorities and members of otherwise marginalized communities.
Still, there's nothing like a crashing economy to concentrate officials' minds on designing a better safety net. Countering the EU's “austerity” mantra, the ILO identifies key areas where lawmakers can coordinate social and labor policies to boost recovery and reduce inequity.
The researchers recommend that on top of a government-mandated wage floor, "there must be a system of wage policies which benefits all workers, irrespective of wage levels, union membership or employment status." For workers higher on the economic ladder, that means stronger collective bargaining and organizing rights at work, especially in "non-standard" sectors like domestic workers. Wage supplements like tax credits need to work in tandem with minimum-wage guarantees to prevent employers from ruthlessly driving down wages.
The ILO report also notes that labor policies cannot be designed in a vacuum. While certain principles of decent work hold true universally, like the benefits of unionization, local patterns of racial, gender and ethnic discrimination must also be addressed to ensure a just recovery.
On that front, the U.S. remains a case study in the shameful entanglement of economic, racial and gender inequalities. Meanwhile a disillusioned underclass has spiraled into virulent jingoism and wingnutty theatrics amid increasing confusion over the root causes of the crisis. Once-privileged citizens of the U.S. and European economies will understandably feel dispirited during this holiday season. But the global wage report suggests it's possible to envision other ways overcoming the economic storm, as long as workers don't get mired in the politics of self-defeat.
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Show All"a disillusioned underclass has spiraled into virulent jingoism and wingnutty theatrics amid increasing confusion over the root causes of the crisis" -- they haven't "spiraled" into it, they've been led and orchestrated. It worked in the south for the entire Jim Crow era. Poor whites had much in common with sharecropper blacks but skilled manipulation had blacks scapegoated so the poor whites would be too busy maintaining segregation to notice that they were being royally ripped off.
"ILO finds, 'Wages are better aligned with productivity in countries where collective bargaining covers more than 30 per cent of employees.'" Part of the plan too. The corruption that permeated many of the big unions, the organized crime tie-in, all got plenty of publicity, and the media behavior of unions and union leaders helped sour the always easily sourable general public on them. Please note how well this worked for capital and management. Nobody was able to make the case as to why unionism was valuable and helpful. Thus it has been by and large chipped away. The Public Sector unions are now being pressured to give up what little influence they have. Another win for the Bigs.
"the global wage report suggests it's possible to envision other ways overcoming the economic storm, as long as workers don't get mired in the politics of self-defeat."
Who will lead them out of the mire? Skilled "reporting" keeps the people blaming their fellow victims (immigrants, people on unemployment, etc., etc.). During the 30s FDR vociferously supported unionism, but our current president's use of the bully pulpit has only reemerged in the past couple days to blow his own horn after his recent spate of victories, which I believe were contrived behind the scenes by the Powers That Be to keep the president in there as an effective implementer of their policies. The public was starting to see him as a totally ineffective joke, and he can't effectively do their bidding if that trend were to go too far.
'... our current president's use of the bully pulpit has only reemerged in the past couple days to blow his own horn after his recent spate of victories, which I believe were contrived behind the scenes by the Powers That Be to keep the president in there as an effective implementer of their policies.'
Couldn't agree more. The worst thing that could happen to the progressive movement was O's last-minute hollow 'victories' for his base. But it worked. MSM progressives are beside themselves telling us how this is the 'real' Obama, fighting the good fight for truth, justice, and the American way.
Alas, these legislative victories were only a brilliant, karl rove-type strategy; not one whit of it changes substantially or substantively how things are going to be fixed.
Diana
You may be surprise these recent spate victories will be Obama's signature accomplishment for his 2012 reelection. From NPR, the economy will improved next year. It look like Obama will be reelected again. Given the choice in 2012, Will you vote for McCain/Palin or Obama again? For me it's an easy choice, McCain/Palin!
Yes, sivasm, you are right. I left out the obvious, that this was primarily a show that O put on for his base, in order to get reelected.
As to 2012, I think we as a nation will be too far gone to care much about elections--the unraveling is happening at such lightening speed. The campaign will be a circus beyond anything we've ever witnessed.
I respect your choice; I will vote for whomever is the loudest, truth-telling alternative, viable or not.
How astute was your comment about the "contrived victories behind the scenes"!
I have to constantly remind myself not to slip into the category of a conspiracy nut. It brings to mind that you don't have to be paranoid to think somebody is out to get you. There are times when somebody is out to get you.
>>The U.S. sits near the top of the ILO's list of industrialized countries in terms of the portion of its workforce comprised of low-paid full-time workers (about a quarter of the U.S. labor force compared to six percent in Sweden, for instance).
Given that the USA claims itself as the richest country in the history of humankind , this in itself speaks to how dysfunctional the US economy is and clearly illustrates that cuts to Social program spending and other programs that shift wealth downwards is NOT the course to take.
Yet countries are claiming this as the solution.
Now is the time to expand such programs not cut them back and if it means Gold Man Sachs does not get paid back on the Government debt they hold then SO be it.
U.S. economic policy is engineered to crush hope among the working citizens. While economic cheerleaders populate the media, economic hardship stalks workers. That dichotomy too is designed to dismantle hope. It's just more corrupt christian soldiers of death.
"Still, there's nothing like a crashing economy to concentrate officials' minds on designing a better safety net."
I assume Ms. Chen is talking about Europe and not about the United States.
The fools who run the show have failed to read history. Revolutions are grown out of despair and anger.
On my most cynical days, I sense that things have always been this way --- I simply have just figured it out. How sad.
I hope I'm wrong and that real solutions are somewhere on the horizon - that divide-and-conquer techniques will fail - and that when/if/as sites like this give me a clear vision of positive action, I'll be able to take it.
Maybe things have always been this way but never, never, in the history of the world to this extreme and picking up speed all the time.
Rome was nothing compared to the USA Empire. Persia to the North and Egypt to the West were comparable rivals to Rome.
The rich ruling class has always pitted segments of the poor against each other: the young against the old, the new immigrants against the old immigrants, the white against the brown against the black, but never never have we sheep fallen so hard for one lie after another or been so confused by 'supporting the troops', 'you poor people are like us rich people, not those other poor people so do as we say', 'Welfare and Social Security are Communist plots', and on and on.
When we keep eating up that shit they will keep dishing it out. WHY CAN"T WE SEE THE OBVIOUS???
"never, never, in the history of the world to this extreme and picking up speed all the time". It's because there are more people to go to extremes. Our planet is way beyond carrying capacity, so all intra-cultural behaviors are getting and will continue to get pushed to their extreme.
There's a part of Thucydides' book on the Peloponesian war that describes how the good guys because they hesitated before perpetrating acts of cruelty were overwhelmed by the violent psychopaths, who did not have that disadvantage. If I wasn't half swacked to keep away the Christmas Eve blues, I'd Google until I found that passage and paste it here.
We "can't see the obvious" because the implications are too scary. The thought "Maybe horrible things will happen, but then again maybe they won't" is more comforting than the thought "things are going to hell in a hurried handcart and horrible things can't help but happen, the only question being how soon." I don't blame people from not wanting to face reality, for retreating into silly media escapism. The stuff is there to distract us, and who would not want to be distracted from rapid social deterioration?
Maybe the typhoon will turn away before hitting us directly full force. Maybe.
This entire economic collapse has been all about greed at the expense of others - period. Some of it has been orchestrated and purposely done to roll back the gains of the New Deal era. Some of it has simply been pure greed and any harm to the country or its working people has simply been the price those who sought to enrich themselves were willing to pay.
We are now in what one could consider a death spiral.
Many of the jobs that are now gone - think manufacturing - will more than likely not be coming back. Real wages for blue collar workers will continue to stagnate or decline as corporations continue to seek increased profits at the expense of workers. The price of those things that working people really need continue to increase: Food, transportation, medical care, education, electricity, water, and sewer rates.
The loss of income of the average worker coupled with the rising prices of basic needs leads to the inevitable loss of discretionary income that is needed to sustain a varied and viable economy.
Less discretionary income means less nights out at a restaurant, not going out to the movies, less clothing purchases, no more dry cleaners, more individual handyman type repairs instead of calling an electrician or plumber or taking a vehicle to a mechanic. All of these cutbacks will put further downward pressure on those segments of the economy with the attendant loss of income and jobs.
Further fueling this downward spiral are the failures of governments at all levels, local, state, and federal to entertain the notion of raising taxes (revenues) instead of balancing budgets strictly through cuts. The inevitable result being either the the elimination of government workers through layoffs and firings or the lowering of government workers pay through decreased salaries or furloughs (a tactic all too familiar here in California).
Again, these reductions will put further downward pressure on the overall economy as these workers now find themselves with less disposable income.
30 years of trickle down economics, financial deregulation, and the outsourcing of our manufacturing base - and now service jobs such as information services - have utterly destroyed this nations economy while vastly increasing the wealth of a very few at the top.
What awaits a very great many in the next few years is a continuing downward standard of living as the private sector economy continues to collapse while governments at all levels continue to slash spending on those things that provide for the general welfare in response to falling revenues.
Add in the fact that unlike the Great Depression of the 1930's when most of this nations population still resided outside the large urban cities and was still able to at least provide for all or most of their own food, we now have a mostly urbanized population that is for the most part unable to do so.
Anyways, Happy Holidays :)
"a continuing downward standard of living"
krazykatz, i think you have a pretty good handle on the big picture. a great many of our friends, romans and countrymen assess the economy in very subjective terms. many hold tight to the idea that success equates to a standard of living that allows one to satify every whim, every impulse NOW. to live the "american dream" means never having evaluate or budget expenditures. as a member of the "richest most powerful" nation on earth, the envey of all, i can eat at the finest restaurants, the ones where the menu doesn't include prices, while dressed in the latest designer clothes and still have plenty of available credit should i run across a yacht or auto in my favorite color. we see in the movies and on tv great examples of people who have it all and are the face of america presented to the world.
for too many the credit card became the path to instant gratification allowing people the heady, stress-free feeling of living forever beyond our means. of course, when that small prints jumps up and bites them in the butt and that most affordable minimum payment looms ever larger so grows the stress.
i heard a warning just last week that the next bubble ready to burst is the college loan bubble.(translation: it's already burst and we're telling you a bit at a time) our education systems has become an elimination derby in which, say, a thousand eager young students borrow for careers for which one or two in that thousand will be hired. a poenix ad i saw entices young people to prepare and invest in a "career" perhaps in the booming medical field. in a few months you'll learn the programs to qualify for much needed billing. a happy young lady in that field exclaims, "the health industry hasn't been affected by the economy!" yeah! when 300 people respond to each ad there's no impetus for the corporate owners to seek the best by offering a better pay package. that means 299 will be, if lucky, back at the waitress job and the one who snared the billing career doesn't earn enough to pay the rent, buy the groceries and pay back that loan.
what may happen in overpopulated cities should give us all something to think about. right now walmart with monsanto are working to "help" the u.s. agricultural class just like they've helped the nations of africa, india, mexico yaddah, yaddah.
If the bourgeoisie push austerity to the point that capitalism folds in on itself as there will be no one to buy their junk; the proletariat may just rise up and send them all to the "guillotine." Austerity sounds a lot like "let them eat cake." Combined with the limits to growth embodied in resource scarcity this could be the last gasp of capitalism itself. If growth is over, as Heinberg and others posit, then we are just seeing the beginning of a very grim scenario that will surely lead to great tragedy.
If you can afford a steak. Enjoy it while you can. Seems to me the great depression 2 has only entered its first quarter. There is no true recovery ahead. Only the death spiral of debt liquidation and collapsing standards of living.
Cake anyone?