Stock markets across the world plunged last week as financial institutions began to face up to the reality of a new global downturn. Revenues, profits and economic growth are all going to plunge as the recession begins to bite.
But what does this mean for the people whose work creates those profits in the first place? Many mainstream commentators have simply written off the global working class as a dying force, eclipsed by a rising “middle class” in developed nations and by casualised workers in the Global South.
But a new report from the International Labour Organisation (ILO) paints a very different picture. It shows in detail that the working class – those people who make their livelihood by working in return for wages – is still a force to be reckoned with.
There are around one billion people across the world that are classified as part of the labour force by the ILO. This figure excludes peasant farmers and other people who make a living by working on their own land.
This global workforce was once concentrated in the Western nations, but today it is becoming ever more global. The richest economies account for just over 15 percent of total employment.
This share has declined over the past decade. In contrast the regions of Asia, the Pacific, Latin America and the Caribbean now account for nearly two thirds of world employment. Asia alone accounts for more than half.
Far from being a dying force, there has been a rapid growth in the size of the global working class. Capitalism has expanded over the last 30 years, leading to an increase in the number of workers as well as in the wealth that they produce.
But there has also been a shocking redistribution of that wealth to the ruling class – the tiny minority of corporate bosses, senior politicians and the super-rich that run the world and suck up the wealth that the rest of us generate.
The people who will suffer the most in the coming recession are those who have gained the least or lost out during the previous period of growth.
Between the early 1990s and 2007 there was a 30 percent increase in global employment.
But the income gap between the rich and the poor grew ever wider. And the share of wealth created by workers that they actually receive is going down globally.
Wages as a share of GDP – the total wealth produced in any particular country – is a measure that tells us what proportion of wealth goes to those who create it.
In Latin America and the Caribbean it fell by 13 percent over the past 30 years. In Asia and the Pacific it dropped 10 percent and in the richest economies it dropped 9 percent.
Another way of looking at the same process is the relationship of workers to productivity. Workers are producing more – working harder and for longer hours – but their wages are not rising to match.
The ILO survey shows that in 24 of 32 countries surveyed between 1990 and 2006, productivity growth exceeded wage growth.
In other words, the amount of wealth that each worker created increased faster than any rise in their wages – another reason why the share of wealth owned by workers is going down globally.
Between 1990 and 2000 more than two thirds of the 85 countries for which data is available experienced an increase in inequality.
During the same period, the income gap between the top and bottom 10 percent increased significantly in 70 percent of countries.
But there are other lessons to be drawn from the report. Wherever you look in the world, workers do better if they are in a union.
Countries with a high “trade union density” – a large proportion of the workforce in unionised jobs – are those where the income distribution is less unequal.
Union density has grown in Brazil, China, India, Paraguay, Singapore and Spain, while it has stayed constant in Belgium, Finland and Pakistan.
Overall there has been a slight decline in union density, but this global figure is skewed by the rapid decline of state-backed “unions” in the former Eastern bloc countries.
Part time workers
Temporary employment is growing across the world, though not as fast as is often suggested. The importance of such jobs has increased in recent years, although with different intensity across countries.
The level of part time work in total employment since the mid-1990s has been broadly stable in the developed world, running at 16 percent in 2006.
Wherever you live, precarious jobs are less well paid than more secure jobs. In European countries, temporary jobs pay on average 20 percent less than their permanent equivalents.
In Latin America, workers with informal jobs earn on average 43 percent less than workers with formal jobs.
There are further disparities. The wages of casual workers in India constituted about 44 percent of the wages of salaried worker between 2004 and 2005 – as compared to 62 percent in 1983. Simply put, across the globe the drive to employ casual workers means that wages are driven down.
Women in work
The position of women workers since the early 1990s has varied considerably from region to region. In the richest economies, women have accounted for the bulk of employment growth – over 60 percent – but elsewhere they account for less than a third.
There has been a general shift of women progressing from precarious jobs to waged and salaried employment. But these trends have not made a substantial difference to the gender gap in the workplace.
The global employment rate of women is 49 percent, compared to 74 percent for men. In the Middle East, North Africa and Asia and the Pacific, women constitute some 80 percent or more of the non-employed.
The amount that the rich pay in tax has been cut across the world. The average corporate tax rate – in other words, the tax levied on profits – for the world as a whole decreased from 38 percent in 1993 to less than 27 percent in 2007. Not a single country has increased its corporate tax rates since 2000.
When it comes to personal tax rates, the very rich have also done well. Their average tax rate was cut from 37 per cent to 34 percent over the same period.
At the same time far higher proportion of government revenues have come from “indirect” taxes such as VAT. These hit workers harder, since workers spend a far higher proportion of their income on buying consumer goods.
Indirect taxes have increased across the world. VAT in Germany increased from 13 percent in 1980 to 19 percent in 2007. In Latin America the rate rose from 10 percent in 1980 to 15 percent in 2007.
Workers across the world are footing more of the bill for the public services – while the rich are paying less.
The pay of bosses across the world is at least 50 times higher than average wages and, in some cases, 180 times more – and that is excluding bonus payments.
The most unequal society in the developed world is the US, where the growing disparity is notably sharp between executives and the average worker.
Chief executives there earned 520 times the average worker in 2007, up from 360 times more in 2003.
In Hong Kong and South Africa executives are paid less than their US counterparts. But chief executive pay still represents 160 and 104 times the wages of the average worker respectively.
Once you factor in bonuses, the average pay of US bosses rose from $16 million per year in 2003 to $24 million in 2007. This increase – nearly 10 percent per year on average – compares to a 0.7 percent increase in wages for US workers.
And this huge global gap exists regardless of whether the company concerned is successful or not.
As the current crisis makes all too clear, capitalism is a global system – and it will take global action by the workers of the world to fight it. That is why workers in the more developed countries have a common interest with those in poorer countries.
Both need to unite to replace an economic system based on corporate greed with one based on production for human need.
The statistics show that in terms of numbers the global working class is as strong as ever – and has every reason to fight back. What they don’t show is the level of political and industrial struggle.
It is that struggle that will decide whether workers will be able to reverse the looting of wealth by the bosses that has taken place in the past 30 years. And it is that struggle that will decide whether capitalism’s current crisis will lead to the building of a socialist world, or with us all sinking ever further into barbarism.
The ILO report can be downloaded from » www.ilo.org/public/ english/bureau/inst/ download/world08.pdf [1.4mb PDF]