“The share of global labor income, that is, the proportion of total global income that goes to workers, is falling“This means that while workers are contributing to the growth of the global economy, they are reaping a smaller share of that growth. This needs to change because it is increasing inequality, which will have a disproportionate impact on workers,” said Celeste Drake, deputy managing director.
The Trillion Dollar Question
In a scheduled update on global employment, the ILO cited data from 36 countries indicating that Total income globally declined by 0.6 percentage points between 2019 and 2022 “and has remained stable since then.”
This seemingly modest drop in income represents an annual shortfall of some $2.4 trillion, which is consistent with the longer-term decline of 1.6% between 2004 and 2024.
Nearly 40 percent of this decline occurred during the three years of the COVID 19 pandemic from 2020 to 2022, the ILO said, before highlighting other data that showed that Although production has increased over the past two decades, revenues have not kept pace.
Increase in production welcomed
Between 2004 and 2024, workers’ hourly output increased by 58% globally, said Steven Kapsos, head of the UN agency’s Data Production and Analysis Unit.
“It’s a very positive trend, it’s an important result,” he said, but over the same period, revenues only increased by 53 percent. “So there’s a five percentage point gap between productivity growth over that period and labor income growth over that same period, which is leading to this decline in the labor income share.”
In light of these findings, the ILO’s latest World Employment and Social Outlook report argues that without policy intervention by governments, Advances in generative AI ‘could put additional downward pressure’ on wages.
It is essential that countries work to reduce these inequalities in accordance with international agreements. Sustainable Development Goals (ODD), insisted Mr. Kapsos of the ILO, highlighting the gloomy global economic outlook.
“Over the last two years, when we have seen inflation rates come down, labor incomes have stagnated, so we haven’t seen a recovery…an increase in the share as inflation has fallen” he told reporters in Geneva.
ILO recommendations to governments to overcome this rising trend in inequality by 2030, in line with the SDGs, include providing universal social coverage.
Countries should also seek to promote policies that support freedom of association and recognition of collective bargaining, “so that workers and employers can negotiate the sharing of these productivity gains,” ILO Deputy Director-General Drake said.
Youth unemployment overview
Other key elements of the ILO report include the finding that the level of youth unemployment worldwide has declined only modestly, from 21.3 per cent in 2015 to 20.4 per cent this year.
The Arab States have the highest percentage of young workers unable to find a job – one in three – followed by Africa (nearly one in four – a figure that has not changed for two decades), Asia and the Pacific (one in five), Latin America and the Caribbean (nearly one in five), Europe and Central Asia (more than one in six) and North America (more than one in ten).
Unemployment among young women (nearly one in three) remains more than twice that of men (nearly one in eight).
