Transparency of wages, worldwide:why is it needed?

The WageIndicator Conference 16 April Amsterdam

Manuela Tomei and Sangheon LeeConditions of Work and Employment ProgrammeInternational Labour Office

Why transparent data?

Why transparent? To maximise the use of wages data (from macro-

economic policies to individual wage bargaining), transparency is the key

Urgent and huge demand for transparent occupational wage data

Transparency in: Procedure: the way in which data are collected

(reliable and “participatory”) Data processing Dissemination: “public goods” available to all members

of the society in an easy and time-effective manner

Why data? (I)Economic theories, information, and labour market failures Theories typically assume that individual workers

know how much others are earning (“perfect information”) They all know what are “prevailing market wages”, or do

they? If this is not the case, the labour market can fail

“Ignorance may prevent workers from moving from one to another in response to differences in the wages offered by the different firms” (Joan Robinson 1933)

Efforts have been made to address this problem By public authorities (e.g., labour market information

service) More traditionally by trade unions (e.g., occupation

unions) Yet, information on detailed wages has not been

easily available to workers

Why data? (II)Help determine decent and fair wages

Mutual interest in transparent and reliable data In job search, a good knowledge on current

wages help workers make informed decisions In wage negotiations, the availability of wage

data on their counterparts in other companies facilitate negotiations, potentially preventing “unfairness” (or “exploitation”)

Employers can enjoy similar advantages by making wage determination fairer and more transparent An employer who would like to cut wages (for apparently

understandable reasons relating to market situations) told that he could not do it because “it would be too hard to explain to workers in a reliable and convincing manner” (Bewley’s study on wage rigidity 1999)

Why data? (III)Promote and facilitate collective bargaining

Reliable and transparent data are the key for launching collective bargaining and ensuring productive and effective dialogue

Create “trust” on wage data (“I don’t believe your dodgy data, and my data says the opposite”)

Improve national wages policies

Why data? (IV): “Go Global”Making global debates more grounded: Social dumping? Upgrading? Increasing interest in wages in other

countries (e.g., China) where even official macro statistics remain poor

Rhetoric dominates without much empirical grounds

This is critical and unfortunate, as wages are the key dimension of job quality for workers and the major determinant of labour costs for employers

Why data? (V): “Go Global”Better address key policy issues

Internationally comparable data are not readily available to address key issues Pay equity and discrimination Minimum wages: awareness and effects Others

Tense debates on wages are expected, as inflation (coupled with recession?) accelerates in most countries. What to do? Wage moderation vs. keeping purchasing

power of wages

Then, where do we stand?Reality check

International statistics: insufficient to meet the goals ILO statistics on wages earning by economic activities ILO’s October Inquiry on occupational wages (Freeman

and Oostendorp 2001) National statistics

“Statistical divide”: industrialized vs. developing countries

Even in industrialized countries, more need to be done from the perspective of “transparency” (three dimensions)

A new initiative: Global Wage Trend Report

Global WageIndicator ProjectPotential contributions and impacts

A pioneering initiative to address the challenges relating to wage statistics Most updated data on “prevailing market” wages Easy access and wide dissemination Participatory approach (no problem of “free-rider”)

While attempting to meet the criteria of “transparency” in wage statistics: especially, Easy access and wide dissemination Participatory approach (no problem of “free-rider”)

Inputs to national and global debates (e.g., ITUC report on pay equity)