Global Wage Debates: Politics or Economics?

11 September 2015

The 10-chapter volume examines a rich diversity of wage-related policy issues from around the world: wage inequality in Brazil; minimum wage setting in decentralized Indonesia; the gender dimensions of agricultural wages in India; and the impact of state-level minimum wages in the United States, among other topics.

From advanced economies like the United States and Germany to emerging markets like Indonesia and South Africa, policy debates are increasingly focused on how to tackle growing income inequality. Wages are at the heart of the question of how to create more equitable economic growth. Policymakers, employers, and workers are all engaged in a complex tug-of-war to determine the best way for wage levels to meet the needs of families, societies and economies.

Boosting wages is not only a social imperative – a prerequisite for giving more people more opportunity and mobility. It is also an economic imperative. Anemic aggregate demand is part of the reason the post-crisis recovery has been so sluggish. A rise in wage levels across the globe can benefit the private sector as well as workers and governments. To assume that there is a trade-off between high wages and competitiveness does a disservice to all three.

In particular contexts and circumstances – some of which this volume will explore – high wages do come at the cost of efficiency and growth. But it is more often the case that higher wages strengthen economies. In short, giving people – women and men – more and equal opportunity through higher wages also gives businesses new consumers, allowing them to grow and thrive.

The subject of debate and research should not be whether high wages are good or bad, but rather which pathways to better wages are the most viable and sustainable. The authors of this volume share evidence from their respective countries to add value to this conversation.