Transparency of wages, worldwide: why is it needed? The WageIndicator Conference 16 April Amsterdam

1. Transparency of wages, worldwide:why is it needed?The WageIndicator Conference 16 April Amsterdam Manuela Tomei and Sangheon Lee Conditions of Work and Employment Programme International Labour Office

2. 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

3. 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

4. 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)

5. 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

6. 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

7. 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

8. 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

9. 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)