“The global labor income share, the portion of total global income that goes to workers, is shrinking,” said Celeste Drake, Deputy Director-General. “This means that even as workers contribute to a growing global economy, they take home a smaller share of that growth. This must change, as it increases inequality, which will disproportionately affect working people.”
Trillion dollar question
In a planned update on global employment, ILO cited data from 36 countries indicating that Global total income fell by 0.6 percentage points between 2019 and 2022 “and has remained flat since then”.
This seemingly modest drop in income represents an annual income shortfall of about $2.4 trillion, which is in line with the longer-term decline of 1.6 percent 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 pointing to further data showing that while production has increased over the past two decades, income has not kept up.
Production increases welcome
According to Steven Kapsos, head of the Data Production and Analysis Unit at the UN agency, the output per hour of workers increased by 58 percent globally between 2004 and 2024.
“That’s a very positive trend, that’s a lot of production,” he said, but over the same period income rose only 53 percent. “So there is a five percentage point wedge between the rate at which productivity grew in that period and the rate at which labor income grew in that period. That leads to this decline in the labor income share.”
In light of these findings, the ILO’s latest World Employment and Social Outlook report stated that without policy intervention by governments, Breakthroughs in generative AI “could put further downward pressure” on salaries.
It is crucial that countries strive to reduce such inequalities in line with internationally agreed Sustainable Development Goals (SDGs), ILO’s Mr Kapsos stressed, pointing to the weak outlook for the global economy.
“Over the last two years, when we saw inflation coming down, labor income has stagnated so we haven’t seen a recovery… a rise in the stock because inflation has fallen“, he told reporters in Geneva.
ILO recommendations to governments to overcome this trend of rising inequality by 2030, in line with the SDGs, include providing universal social
protection of workers and a decent minimum wage. In addition, countries should seek to promote policies that support freedom of association and recognition of collective bargaining, “so that workers and employers can negotiate how to share those productivity gains,” ILO Deputy Director-General Ms Drake stressed.
Youth unemployment snapshot
Other key elements of the ILO report include the finding that the percentage of young people without jobs globally has declined only slightly, from 21.3 percent globally in 2015 to 20.4 percent this year.
Arab countries have the highest percentage of young workers unable to find jobs: one in three, followed by Africa (nearly one in four, a figure unchanged in twenty years), 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).
Youth unemployment among women (almost one in three) is still more than twice as high as among men (almost one in eight).
