Wages for Equitable Growth

Patrick Belser

Average wages around the world
The global financial crisis had significant negative repercussions for labour markets in many parts of the world. The most significant impact has been on employment figures. But the ILO Global Wage Report 2012/13, entitled “Wages and Equitable Growth”, shows that the weakening of the global recovery in the two years after 2010 was also reflected in average wages. Among the group of developed economies, real average wages (i.e. wages adjusted for inflation) fell by -0.5% in 2011, after having fallen a first time in 2008. Preliminary estimates based on quarterly data for 30 countries indicate that average wage growth in that group of countries was around zero in 2012. 

This contrasts with emerging and developing regions, where the growth of both GDP and real wages generally remained positive. Looking at the world as a whole the report found that real average wages grew by 2.1% in 2010 and slowed to 1.2% in 2011. But remove China from the equation and things look only half as impressive, even in the developing world. Note also that it is too early for even preliminary global estimates for 2012 as only few developing and emerging economies produce quarterly wage data, and as annual wage data is often published more than 6 months after the end of the year. 

Source: ILO Global Wage Report 2012/13

Constructing an Anti-Neoliberal Analysis to Arrive at Truly Alternative Alternatives

Salimah Valiani

The instance of nursing labour market restructuring

For the past few decades, the world economy has been shifting through radical restructuring and reorganisation. Within this context, the "anti-globalisation”, “anti-WTO”, “anti-neoliberal,” and other such movements are an important field within which to identify the thinking behind the action. For Antonio Gramsci (1971), questions of theory and practice are raised particularly when the “movement of historical transformation is at its most rapid”. The point of such questioning, as Gramsci says, is to make the “practical forces unleashed” more efficient and expansive and the “theoretical programmes” more realistically justified. Taking inspiration from this, the aim of this column is to provide methodological direction in analysing and responding to changes of the neoliberal era using the instance of the global restructuring of nursing labour markets.

Tackling Unemployment and Growing Public Debt

Anis Chowdhury

Jomo Kwame Sundaram

While global economic recovery remains anaemic, most industrialised countries continue to face growing unemployment and public debt. Average unemployment in the Organisation for Economic Co-operation and Development (OECD) countries rose from around 5% in 2007 to over 8% in 2012. The Eurozone is faring worse, with unemployment over 11%, and still rising in some countries. The unemployment rate in Spain rose to 26% in 2012, with youth unemployment surging to 55%. In Greece, it stood at 26.8%, the highest in the European Union (EU) with youth unemployment edging towards 60%.

After the Great Recession hit developed countries in 2009, the public debt situation deteriorated rapidly. The average public debt in industrialised economies increased from around 70% of GDP in 2007 to about 110% in 2012.

Planet Earth is Wage-Led!

Özlem Onaran

A simultaneous increase in the profit share by 1%-point in the major developed and developing countries, leads to a 0.36% decline in global GDP

The dramatic decline in the share of wages in GDP in both the developed and developing world during the neoliberal era of the post-1980s has accompanied lower growth rates at the global level as well as in many countries. Mainstream economics continue to guide policy towards further wage moderation along with austerity as one of the major responses to the Great Recession. In our recent report for the International Labour Office (Onaran and Galanis, 2012), we show the vicious cycle generated by this race to the bottom. The main caveat of this wisdom is to treat wages as a cost item. However, wages have a dual role affecting not just costs but also demand. We work with a post-Keynesian/post-Kaleckian model, which allows this dual role.

A fall in the wage share has both negative and positive effects
We estimate the effect of a change in income distribution on aggregate demand (i.e. on consumption, investment, and net exports) in the G20 countries. Consumption is a function of wage and profit income, and is expected to decrease when the wage share decreases. Investment is estimated as a function of the profit share as well as demand, and a higher profitability is expected to stimulate investment for a given level of aggregate demand. Finally, exports and imports are estimated as functions of relative prices, which in turn are functions of nominal unit labour costs, closely related to the wage share. The total effect of the decrease in the wage share on aggregate demand depends on the relative size of the reactions of consumption, investment and net exports. If the total effect is negative, the demand regime is called wage-led; otherwise the regime is profit-led. Mainstream economic policy assumes that economies are always profit-led, whereas in the post-Keynesian models the relationship between the wage share and demand is an empirical matter, and depends on the structural characteristics of the economy. 

The Meaning of Marikana

Ben Fine

Sam Ashman[1]

The mining core of South Africa’s economy saw, in 2012, the most explosive and significant strike wave since the defeat of apartheid. At Marikana, it involved the killing of 34 Lonmin strikers allegedly by police on 16th August. These events, and the response to them by the Tripartite Alliance of the African National Congress (ANC), Congress of South African Trade Unions (Cosatu) and the South African Communist Party (SACP), starkly reveal the economic and social issues in South Africa today, highlighting how many features of the apartheid system have been reproduced and even intensified.

These events have drawn attention to the scale of South Africa’s mineral wealth and the industry’s dependence on cheap, black, and often migrant labour. In April 2010, a Citigroup report identified South Africa as the world’s richest country in terms of its mineral reserves, valued at $2.5 trillion. Platinum group metals (PGMs) constituted $2.3 trillion, the bulk of this value, all located in the Bushveld Ignateous Complex (BIC) geological formation spreading across Gauteng, the North West and Limpopo provinces. This area also contains the world’s largest chromium and vanadium reserves and produces ferrochrome, nickel and other minerals.

Platinum is one of a family of six chemically-similar elements that make up the PGMs. South Africa is estimated to hold 87% of the world’s PGM reserves and accounted for 76% of world platinum production in 2009. Since the early 1990s, platinum has been the fastest growing sub-sector within the mining industry and the BIC area has been the fastest growing South African region with growth exceeding 15% in some years. The sector is dominated by three big producers: Anglo American Platinum (80% owned by Anglo American), Impala Platinum and Lonmin.

Against this backdrop, there are four systemic factors underpinning events at Marikana.