This paper analyses the impact of currency crises on the labour share and identifies two main types of channel: within‐ and across‐sector effects. First crises erode the bargaining power of workers so that within sectors, crises lower the labour share. Nevertheless, structural changes occurring during currency crises may change the aggregate level of the labour share if sectors differ in their capital intensities. We perform estimations on manufacturing sectoral panel data for 20 countries. We conclude that currency crises lower the aggregate manufacturing labour share by around 2 percentage points, and that this decline reflects mostly changes within manufacturing subsectors.