TABLE T5: 1996-2011 REAL-WAGE GAP RATES FOR TWELVE ECONOMIES, IN PURCHASING POWER PARITY (PPP) TERMS, FOR ALL EMPLOYED IN MANUFACTURING.

Since 2010 the international comparison of hourly compensation costs (hourly wage rates) between the U.S. and selected developed and "emerging" markets refers to all employed in the manufacturing sector and no longer will be available for production workers only. Production-line wage rates are on average 20% below wage rates for all employed in manufacturing, including production workers, for the 1996-2009 period, for all countries included in the assessment. For further reference see wage-gap assessment of trends and differences between production-line and all employed in manufacturing in compensation cost terms here: <http:www.jussemper.org/Resources/Labour%20Resources/Resources/PLWvsAEM_wage_rates96-09.pdf>

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Overall, seven out of the twelve countries in this assessment are better off in 2011 than in 1996, with East Asian economies recording the greatest gains in their wage-rate position. In contrast, Canada and Brazil have lost much ground whilst Australia, France and the UK have the same gap as in 1996. Most countries recorded their best position between '02 and '08. Canada, Brazil and France had their best equalisation index (Eq-Idx) in '96 or '98. Mexico, as in the case of production-line wage rates, had negligible change in 15 years and continues to have the worst position of all countries.

• East Asian countries, particularly Singapore and South Korea, experienced very strong gains in Eq-Idx between 1996 and 2011. Singapore and South Korea registered powerful growth of their Eq-Idx between '96 and '08. South Korea recorded its best Eq-Idx in 2008 and managed to remain at the same level in 2011. Singapore recorded its best Eq-Idx also in 2008 to then drop drastically, but it has recovered much of its best position since 2008. Moreover, both countries have the best performance of all countries for the entire 15 year period. Japan has been gradually reducing its gap and, after a slump in 2010, it recorded its best Eq-Idx ever in 2011.

• The UK has been losing ground since its best Eq-Idx in '06 and suffered a heavy drop in 2011 of four index points due to a lower nominal wage rate growth than in the U.S, with a much higher PPP increase and little currency appreciation. This has taken the UK back to the same Eq-Idx of '96. As with the UK, Canada has been losing ground since its pre-crises '06 Eq-Idx due to a lower nominal wage rate growth than in the U.S. with a higher PPP increase and a smaller currency appreciation. Moreover, in 2011 it recorded its worst Eq-Idx ever and is now 10 points below its 1996 level and 13 points below its best Eq-Idx recorded in '98. Australia has also lost ground since 2004 and is now at the same level as in '96. Its PPP has recorded the strongest growth of all countries, making it extremely expensive to increase real wages and quite difficult to close the living-wage gap.

• Among the euro-area countries, Germany and Italy recorded small gains in 2011 but Germany is still behind its best Eq-Idx position of '06, while Italy retained its best Eq-Idx of '08. Spain lost a little ground in 2011 from its best Eq-Idx recorded in 2010. Yet, all three countries are clearly ahead of their 1996 Eq-Idx, with Germany maintaining its clear advantage over U.S wage rates, with an Eq-Idx of 120. France, in contrast, has barely changed its Eq-Idx since 1996, remaining, except for 2004, almost at par with U.S. wage rates. Despite the crises, euro-area countries have maintained or even improved, however slightly, their pre-crises equalisation position.

• Brazil managed to record a one point gain in its Eq-Idx in 2011, which could be the result of the start of its minimum wage recovery in 2010, which sets out to increase real wages annually by adding to the consumer price index of the previous year the GDP growth of the year two years prior. The plan, enacted in a new law, sets out to increase real wages annually until 2023. We will see how the increase in real minimum wages exerts a multiplying effect on the wages of all employed in the manufacturing sector, but it should establish a positive trend. Yet Brazil remains far behind its best Eq-Idx of '96. Its main obstacle is that, despite strong growth of nominal rates and good currency appreciation, its PPP is also growing rather strongly, making Brazil more expensive than the U.S. for the first time.

• Mexico's track record since 1996 exposes a deliberate State policy of maintaining real wages at the level of modern-slave-work wages, with a 28 Eq-Idx that is one point above its lowest index and two points below its best recorded index in fifteen years. Consequently, barring the Philippines, Mexico continues to have the worst position of the 31 countries in the three regions of our assessments.

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