Can the financial crisis be a good thing for poorer workers?

The word for "crisis" in Chinese has the extra connotation of "opportunity", the International Labour Organisation (ILO) Global wage report researchers explain. With a fair degree of wilful optimism, the study suggests that the current economic and job crises might provide a good, probably unique, opportunity to develop a much more effective wage policy, which would contribute to an economy that's actually sustainable, both in industrialised and developing countries.

The data shows that the crises have hit employment and wage levels harder in advanced economies, but these countries can rely on well established social protection systems. The question, beyond the statistics, is what the impact will be in developing countries, in terms of wealth redistribution, desirable work opportunities and social justice.

One of the main concerns is how to secure a minimum level of income for the vast majority of workers earning low wages, almost exclusively young, female workers and other disadvantaged groups. It's these people who are often trapped in "3D" kind of jobs: dirty, dangerous and demanding, mainly in the informal sector. People in this situation can feel left behind, which can lead to social and political tension and result in an increase in instability within the country and, consequently, forms of repression.

The report underlines the negative correlation between low wages and education. In China, for example, about 64% of low-educated local workers have low-paid jobs. . Similarly, in South Africa more than six out of 10 workers with no or little education end up in badly paid employment, while in Brazil the figure is more than four out of 10.

Low wages also come from discrimination based on ethnic, geographical or gender factors. Ethnic disparities are particularly evident in South Africa, while in China the urbanisation of the labour market has made rural migrant workers more vulnerable. As for gender, globally the average monthly wages of women still represent only about 75% of men's salaries. Female-dominated occupations, like domestic work, are most likely to be poorly paid. The ILO is currently adopting a new labour standard on decent work for domestic workers, that will also address the issue of minimum wages and protections.

However, the traditional policy measures aimed at securing decent wages and working conditions, such as collective bargaining and minimum wages, are often weak in developing countries.

"Unions play a vital role in linking wages to productivity growth, so higher union density would help to reduce the incidence of low pay," explains Erin Weir, a senior economist at the International Trade Union Confederation. But approximately half of the world's economically active population in major states, such as Brazil, China, India, Mexico, and even the US, is still not covered by ILO conventions on freedom of association and collective bargaining, the essence of "democracy in the workplace". Under the pretext of the crises, there has also been a significant erosion of core labour rights. The recession has led to a sharp increase of attacks against trade unionists, especially in developing countries: 101 murders in 2009, 30 more than 2008 and mainly in Latin America.

A diminishing reliance on collective bargaining for wage determination gives an increasingly important role to minimum wages, social protection tools and other in-work benefits, incentives and additional earnings. These should be aimed at the very bottom of the labour market, to secure minimum incomes for poor households. Only such enlightened wage policies can really turn the crisis into an opportunity and contribute to growth and stability, not only for the economy but for society as a whole.