Combating labour inequality at a global level, the challenge of our times

In an increasingly globalized and interconnected world in which overlapping crises abound and disorientation has come to define the spirit of the age, labour inequality remains an unmet challenge in many societies all over the world.

The only way to address this challenge properly is to abandon traditional models and responses, such as those favouring deregulation and market-based solutions, that have already been proven not to work and to accept that an expansive social response must be consensual and shared.

Thus, in an expression of strengthened cooperation from three different continents, the Labour Ministers of Brazil, South Africa and Spain seek to advance towards a fairer distribution of the products of labour at a global level, adopting a common approach to tackling this problem that reflects our collective commitment to expanding labour rights the world over.

The decline in labour share has been observed in many of the world's economies, particularly since the wave of neo-conservatism in the 1980s. The term "labour share" refers to the proportion of national income allocated to workers in the form of labour compensation, as opposed to that going to capital owners. The aforementioned decline means that a smaller share of economic income is reaching workers, with most of it being distributed as returns to capital.

The undesired effects of a digital transition at the service of the few, labour flexibility and deregulation policies, and painful and ineffective austerity measures are just some of the causes behind this worrying trend. Such developments sometimes result in the delocalization of production, in the absence of social dialogue and trade union participation, in the growing precariousness of working conditions, in an imbalance in collective bargaining that gives rise to low salaries or to fiscal policies that prioritize capital over work, or restrict natural growth in salaries.

Neither Brazil, South Africa nor Spain is unaffected by these trends.

In Brazil, the recovery of the economy following the COVID-19 pandemic has been underscored by positive milestones, including robust growth of the GDP and improvements in employment metrics. In 2023, the GDP increased by 2.9% compared to the previous year, the job stock reached 43 million, formal employment ended the year with the creation of 1,488,598 jobs, and the unemployment rate stood at 7.4% (PNAD-C/IBGE).

Despite these positive results, enduring challenges persist within the Brazilian labour market. According to the ILO, Brazil exhibited very slight productivity growth between 2015 and 2023 (an annual average of 0.1%), while real wages fell 6.9 % in 2023. Informal employment, low wages, and unacceptable labour practices, such as child labour and forced labour, remain prevalent in Brazil. In view of this, Brazil is promoting the Fundamental Principles and Rights at Work (FPRW), is revising the National Plans on the Prevention and Elimination of Child Labour and Forced Labour, has submitted its candidature to be a pathfinder country in the Alliance 8.7 and is implementing a National Pact for Decent Work in Rural Areas (PACT).

South Africa's labour market is also a prime example of declining labour share. Real wages have shown significant fluctuations, failing to keep pace with steady productivity growth. This has led to a situation where workers are not proportionally benefiting from the wealth they help create. The volatility of real wage growth compared to productivity underscores the disparity, which has been further exacerbated by shocks like the COVID-19 pandemic, which severely impacted economic growth, job stability, and both productivity and wage levels, leading to declining living standards and economic inequality for many South Africans.

These disruptions highlight the vulnerability of workers' livelihoods and contribute to widening labour inequality. The decline in labour share is evident, with a smaller proportion of national income reaching workers while capital owners receive a larger share. Consequently, South African workers face increased economic insecurity and a diminished share of the nation's wealth. This situation underscores the urgent need for a new approach that prioritises fairer wealth distribution and strengthens worker rights globally.

In Spain, productivity growth over the past few decades has been sluggish, with certain significant exceptions such as the upturn seen in 2022. However, salaries have grown at a considerably lower rate than corporate profit. Between 1995 and 2022, labour productivity increased by 15.3%; by contrast, real wages rose by only 1.2%. The conclusion is clear: the products of labour are unfairly distributed.

We have approached this problem by reversing the paradigm, placing workers' rights front and centre by means of the first labour reform to expand rights in four decades of democratic rule in Spain. This labour policy has tackled the problem regarding temporary contracts, provided alternatives to laying workers off during moments of crisis or strengthened collective bargaining, together with feminist policies that led to a record of 10.1 million women working for the first time in Spain. Within this framework, we have also raised wages, achieving a 54% increase in the minimum wage over a five-year period.

With this reform and its outcomes, we have debunked neoliberal dogma and demonstrated that it is possible to modify the growth model by transforming the world of work.

But much remains to be done. In order to expand labour rights, our countries must overcome at least four fundamental challenges.

Firstly, we must continue to raise wages. Real wages are growing at a far slower pace than productivity. As we have already demonstrated, abandoning neoliberalism and embracing policies aimed at increasing labour compensation —and in particular the legal minimum wage— contributes decisively to ensuring that productivity gains are distributed to workers, reducing inequality and the scourge of the gender pay gap. We are committed to doing what we know to work.

Secondly, while we have made substantial progress in terms of equality and diversity in the world of work, there are major challenges we must yet overcome in order to ensure that all people —irrespective of their gender, race, sexual orientation or gender identity— enjoy equal opportunities, fair treatment and decent working conditions. We are all aware, for example, of the recent, unacceptable cases of racial discrimination in the world of sport. This is just a short stretch of the long road ahead. 

Thirdly, the digital transition must be just, and workers' individual and collective rights must be safeguarded throughout. We must make certain that digitalization is placed at the service of decent work and not the other way around, ensuring that the use of technology makes human work less onerous. As Daron Acemoglu has observed, technological innovation in itself does not spur prosperity, “you have to exercise democratic control over the direction of technology". Technological innovation must be placed at the service of social justice.

Fourthly and lastly, we must combine our efforts to strengthen collective bargaining, halting, once and for all, the continuing decline in its coverage rate across the world. In this regard, we have trust in social dialogue as a powerful tool for mutual understanding and collaboration and thus as a means of achieving better living and working conditions.

This is why, today, the Labour Ministries of Brazil, South Africa and Spain —reaching across the traditional and antiquated North-South divide— have agreed to establish a permanent and strengthened framework of collaboration and exchange on social and labour matters between our countries. Said framework will guide our policies in defence of increasing labour participation to ensure that workers receive a just share in national wealth.

In each corner of the world we will champion fair wages, greater equality and diversity in the workplace, and strengthened social dialogue and collective bargaining, pushing for transformations in the world of work that have social justice at their core. As asserted by Alain Supiot, it is more necessary today than ever to advance towards a new Declaration of Philadelphia that will pave the way for economic democracy and a world of work of the 21st century.

In short, Brazil, Spain and South Africa will advance towards a new labour international, a global alliance that is fully aware that the major challenges to be overcome —the climate crisis, rising inequality, the erosion of democracies— must be tackled by expanding labour rights, and not by cutting them.

Luiz Marinho, Minister of Labour and Employment of Brazil

Nomakhosazana Meth, Minister of Employment and Labour of South Africa

Yolanda Díaz, Second Vice-President and Minister of Labour and Social Economy of Spain

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