A latest International Labour Organization (ILO) report has revealed that wage inequality has declined in most countries since 2000, but it remains a significant challenge.
The report published on Thursday examined global and regional wage trends, real wage growth, and income differences within and between countries, offering insights into the key challenges faced by workers worldwide.
The ILO report titled 'The Global Wage Report 2024-25: Is wage inequality decreasing globally?' showed since the early 2000's, on average, wage inequality decreased in many countries that ranged from 0.5 to 1.7 per cent annually, depending on the measure used.
The most significant decreases occurred among low-income countries where the average annual decrease ranged from 3.2 to 9.6 per cent in the past two decades.
According to the report D9/D1 ratio, the income disparity between the top 10 per cent and the bottom 10 per cent stands at 4.9 in Bangladesh, underscoring persistent inequities in the country.
Similarly, there is a disproportionate concentration of income among the wealthiest 10 per cent compared to the poorest 40 per cent of Bangladesh.
The D9/D1 ratio which compares the wages of the highest-paid and lowest-paid workers in the labour market is a key indicator used to measure wage inequality by comparing the income of workers at the 90th percentile (D9)-the top 10 per cent of earners-with the income of workers at the 10th percentile (D1)-the bottom 10 per cent.
A higher ratio indicates a greater disparity between top and bottom earners, while a lower ratio suggests more equitable wage distribution.
In the latest global rankings, Tanzania leads the list with a staggering D9/D1 ratio of 22.4, signaling extremely high wage inequality, where the highest earners make more than 22 times what the lowest earners take home.
On the other hand, Vietnam shows one of the lowest ratios at 2.7, indicating a relatively more even distribution of wages.
Bangladesh's ratio, however, is lower than that of other South Asian countries such as India (6.8) and Sri Lanka (10.8) but it is still higher than countries like Myanmar (4.2) and Vietnam (2.7), which show lower wage disparities.
Despite the relatively low ratio, the 4.9 D9/D1 ratio reveals that income inequality remains a challenge for Bangladesh as it suggests while there is some level of wage compression, the gap between the top earners, often in sectors like manufacturing, finance, and trade, and the lowest earners, primarily in agriculture and informal labor, is still substantial.
ILO Bangladesh Country Director Tuomo Poutiainen in a statement said in a world of work that is quickly transforming, marked by globalized supply chains, and new forms of labour relations, it is confirmed today more than ever that wages and wage-setting mechanisms are pivotal to establish decent work and social justice in Bangladesh.
The declining trend of real wages in Bangladesh induces critical socioeconomic challenges such as working poverty, social exclusion and multidimensional poverty, he added.
Data suggest that for Bangladesh, real wage growth remained stable between 0.5 per cent and 1 per cent from 2018 until it declined sharply to -1.8 per cent in 2023 and further to -1.9 per cent in the first two quarters of 2024.
The persistent challenges of wage disparities, including the gender pay gap, underscore the urgent need for a comprehensive, evidence-based, and gender-responsive National Wage Policy, he said.
Coupled with effective wage-setting mechanisms, such a policy can ensure fair compensation that reflects both the needs of workers and the nation's economic realities, he said, expressing ILO's commitment to supporting this process through strengthened social dialogue and fostering collaboration among government, employers and workers.
"By implementing an inclusive and transparent wage-setting framework, we can reduce disparities, promote equitable opportunities, and enhance living standards for all workers and their families, ultimately contributing to a more sustainable and just society in Bangladesh," added Mr Poutiainen.
According to the report women and wage workers in the informal economy are more likely to be among the lowest paid.
This reinforces the need for targeted actions to close wage and employment gaps and ensure fair wages for all wage workers.
The ILO report's key recommendations included setting wages through social dialogue, wage-setting should take into account both the needs of workers and their families and economic factors while wage policies should support gender equality, equity and non-discrimination.
Decisions should be based on reliable data and statistics, it suggested adding national policies should reflect each country's specific context and address the causes of low pay such as informality, low productivity and the under-valuing of jobs in sectors such as the care economy.
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