Wage inequality has decreased in about two-thirds of all countries since 2000, according to a report from the International Labour Organization. Despite the positive trend, significant wage differentials persist worldwide, it added.

The ‘Global Wage Report 2024-25: Is wage inequality decreasing globally?’  finds that since the early 2000s, on average, wage inequality, which compares the wages of high and low wage earners, decreased in many countries at an average rate that ranged from 0.5 to 1.7% 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% in the past two decades.

The report found that wage inequality is declining slower in wealthier countries, shrinking annually between 0.3 and 1.3% in upper-middle-income countries and between 0.3 to 0.7% in high-income countries. Moreover, even though wage inequality narrowed overall, decreases were more significant among wage workers at the upper end of the pay scale.

ILO’s report also found that global wages have grown faster than inflation. In 2023, global real wages grew by 1.8%, with projections reaching 2.7% growth for 2024, the highest increase in more than 15 years. These positive outcomes mark a notable recovery compared to the negative global wage growth of -0.9% observed in 2022 when high inflation rates outpaced nominal wage growth.

However, wage growth has been uneven across regions, with emerging economies experiencing stronger growth than advanced economies, the report finds. While advanced G20 economies registered a decline in real wages for two consecutive years (−2.8% in 2022 and −0.5% in 2023), real wage growth remained positive for both years in emerging G20 economies (1.8% in 2022 and 6.0% in 2023).

However, wage growth has been uneven across regions, with emerging economies experiencing stronger growth than advanced economies, the report finds. While advanced G20 economies registered a decline in real wages for two consecutive years (−2.8% in 2022 and −0.5% in 2023), real wage growth remained positive for both years in emerging G20 economies (1.8% in 2022 and 6.0% in 2023).

Despite recent progress, high levels of wage inequality remain a pressing issue. The report shows that globally, the lowest-paid 10% of workers earn just 0.5% of the global wage bill, while the highest-paid 10% earn nearly 38%. Wage inequality is the highest in low-income countries, with nearly 22% of wage workers classified as low-paid. 

Women and wage workers in the informal economy are more likely to be among the lowest paid. This finding reinforces the need for targeted actions to close wage and employment gaps and ensure fair wages for all wage workers.

Wage inequality is relevant in all countries and regions. Globally, however, one in every three workers is a non-wage worker. In most low- and middle-income countries, most are self-employed workers who can only find opportunities to earn a living in the informal economy. For this reason, the report broadens its analysis to include the self-employed in the case of low- and middle-income countries.

This led to a significant rise in labour income inequality in these regions compared to when only wage workers’ incomes are considered.

“National strategies to reduce inequalities require strengthening wage policies and institutions,” says Giulia De Lazzari, ILO Economist and one of the report’s main authors. “But equally important is to design policies that promote productivity, decent work and the formalisation of the informal economy.”

Key ILO recommendations include: 

• Setting wages through social dialogue: 
• Taking an informed approach
• Promoting equality and equal opportunity of treatment and outcomes
• Using strong data
• Addressing root causes of low pay.