This year wages fell in almost all countries of the world. At the same time, the disparities between the least and best-rewarded people have widened, a long-standing trend that the pandemic has only accelerated. Many therefore fear that this crisis, fueled by the corona virus, will shake the political stability of the countries, especially if property and social differences do not begin to ease.
One of the most concerned about this trend is certainly the International Labor Organization (ILO), which warned in its December report that wages fell in two-thirds of the countries in the world in the first half of this year. In a third of countries - including Italy, France, the United States and Canada - wages increased. However, it is a trick that has nothing to do with the sad reality. The average wages in those countries increased only in statistics, because a significant number of the lowest paid workers were dismissed.
This confirms that the most affected in this crisis are those who have been the most vulnerable, with the least work skills and the lowest incomes. In addition, women suffered far more than men, because during the closure of the economy, they primarily stayed at home and took care of the family. The crisis has least affected people with higher education and those who can perform their work tasks from home, via the Internet.
In the first half of this year in the countries of the European Union - for which the ILO had data - the wage bill fell by 6,5 percent, mainly due to reduced working hours, and partly due to layoffs. At the same time, the smallest decline in wages was recorded in Croatia, the Netherlands and Sweden, less than three percent. The largest drop in wages was in Ireland, Portugal and Spain, by more than 10 percent.
However, thanks to subsidizing entrepreneurs, who were paid by governments not to lay off employees during the crisis, the actual decline in the wage bill was half as much, around 3,1 percent, according to ILO research. It can be assumed that a similar relief of hardships took place in Croatia as well, all the more so since employees with minimum wages on forced vacation at home allegedly received HRK 4.000, more than at the workplace.
However, despite the state aid, the slice of the total wage pie received by the 50 percent of employees in the lower half of the scale, especially in Mediterranean countries, has significantly decreased, according to ILO data. Moreover, according to last week's Eurostat assessment, Croatia is the most severely affected EU member.
After the payment of state subsidies, the median "earnings from work" in Croatia was five percent lower in the first half of the year than in the same period last year, with the lowest-paid employees the most affected. That's twice as much as in the EU as a whole, where the median was reduced by just over two percent on average.
The Eurostat data are obviously worse than those from the ILO, because the European statistical agency applied a slightly different methodology, and the median it mentions is different from the average. The median is the middle line, below which 50 percent of employees have lower wages, and 50 percent more. The average salary, which currently amounts to HRK 6.700 in Croatia, is about 20 percent higher than the median. It actually confirms that the majority of employees receive wages below the average and that the mass of these people is increasing, which indicates the growth of inequality in income from work.
Until these latest data were available, the government decided to introduce tax breaks at the beginning of next year in order to fatten the pockets of employees. However, it is now quite clear that the best-paid people in Croatia will benefit the most, because their tax breaks are comparatively the biggest. True, the minimum wage will be increased to HRK 3.400 and smaller tax deductions will be introduced, especially for young people. This means that from January 1, the incomes of the most insecure, lowest-paid workers will improve, but inequality will certainly not decrease. On the contrary, the slice of the pie for the vulnerable is constantly decreasing.
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