Wages around the world have stagnated during the recession and any recovery must start by putting more money in workers’ pockets to fuel consumption, the International Labor Organization (ILO) said today in its annual Global Wage Report.

The report reinforces what unions around the world have been saying about the economic crisis and the policy responses that governments need to put in place, says Sharan Burrow, general secretary of the International Trade Union Confederation (ITUC).

ILO Director-General Juan Somavia says the study “shows another face of the lingering employment crisis.”

The recession has not only been dramatic for the millions who lost their jobs but has also affected those who remained in employment by severely reducing their purchasing power and their general well-being.

According to the report, if you exclude questionable figures for China and adjust for inflation, global wage growth slowed from 2.2 percent in 2007 to only 0.8 percent in 2008 and 0.7 percent in 2009. The ILO defines low wages as any pay less than two-thirds of the nation’s median wage. Wages actually decreased in many countries, Burrow says.

Even workers who remained employed during the crisis experienced flat or falling pay.

To achieve a meaningful economic recovery, countries need to increase domestic demand based on rising wages and a more equal distribution of income. The ILO report emphasizes three policy solutions that include widespread collective bargaining, legislated minimum wages and social protection programs.

The ILO found that low pay is much less prevalent in countries with higher levels of union membership. Burrow says:

Unions are part of the solution, in terms of ensuring that wages rise along with productivity and that these gains are shared fairly.

To read the full ILO report, click here.