Via L Larry Liu L Larry Liu A great consulting report that tells you all you need to know about the (poor) state of labor. Wages should, in theory, remain in line with productivity. Over the past few decades, however, growth in wages has lagged behind gains in worker productivity. This is true not only for countries where wages have stagnated, but also in several countries where real wages have grown, such as Germany. While large increases in productivity have led to rapid economic growth, the share of income that flows back to the workers has diminished. Given this recent evidence, economists today are re-evaluating past theories, which held that, while economies prospered, the total income of workers would grow at the same rate as that of capital owners. Why has labor’s share fallen? Technological change and globalization hold some responsibility for the increased pressure on labor costs. Technological advances allow higher returns with fewer workers, albeit generally more highly skilled ones. Moreover, companies find themselves in a strong negotiating position vis-à-vis those workers. As companies continue to become more global, capital becomes more mobile than labor, allowing companies to look for cheaper labor elsewhere. (...) indeed, the effect of technology and globalization on labor costs may well have been overstated at the expense of other causes. In its 2013 Global Wage Report, the International Labour Organization (ILO) sought to disentangle the contribution of various factors in the fall in workers’ share of the profits, and concluded that technology and globalization are not the main causes, contributing only 10% and 19%, respectively, to the decline in labor costs. However, it attributed about half (46%) to global financialization, and 25% to the effect of labor-market institutions, which include factors such as union participation, legislation, and unemployment benefits. futurehrtrends.eiu/cross-roads/
Posted on: Wed, 31 Dec 2014 17:07:51 +0000
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