ILO sees structural imbalances in global labour market

Global unemployment rate is set to increase in 2024 while growing social inequalities remain a concern, said the International Labour Organisation’s (ILO) World Employment and Social Outlook: Trends 2024 report released in Vienna on Thursday.

Global unemployment rate is set to increase in 2024 while growing social inequalities remain a concern, said the International Labour Organisation’s (ILO) World Employment and Social Outlook: Trends 2024 report released in Vienna on Wednesday. Joblessness and the jobs gap have both fallen below pre-pandemic levels but global unemployment will rise in 2024, the report noted and maintained that growing inequalities and stagnant productivity are causes for concern. In India, real wages are “positive” compared to other G20 countries, according to the report.

The report said the macroeconomic environment deteriorated significantly over 2023. “Ongoing geopolitical tensions as well as persistent and broadening inflation triggered frequent and aggressive moves by central banks,” it said. Monetary authorities in advanced and emerging economies implemented the fastest increase in interest rates since the 1980s, with significant global repercussions, it said. China, Türkiye and Brazil slowed down considerably, causing adverse impact on global industrial activity, investment and trade.

On a positive note, the report said, despite the economic slowdown, global growth in 2023 was modestly higher than anticipated, and labour markets showed surprising resilience. “On the back of strong jobs growth, both the unemployment rate and the jobs gap have declined below pre-pandemic values. The global unemployment rate in 2023 was 5.1%, a modest improvement on 2022. The global jobs gap also saw improvements in 2023, but, at close to 435 million, remained elevated,” the report said. The labour market participation rates had largely also recovered from their pandemic lows. “Although the imbalances eased somewhat in 2023, concerns are rising that these labour market imbalances are structural, rather than cyclical, in nature,” it warned.

Real wages declined in the majority of G20 countries as wage increases failed to keep pace with inflation, the report noted. “Moreover, in 2023, the numbers of workers living in extreme poverty – earning less than US$2.15 per day per person in purchasing power parity (PPP) terms – grew by about one million globally,” it said. “Only China, the Russian Federation and Mexico enjoyed positive real wage growth in 2023. The strongest wages gains were in China and the Russian Federation, where labour productivity growth was among the highest in G20 countries in 2023. Real wage growth in India and Türkiye was also positive, but the available data refer to 2022 relative to 2021,” the report said.

“As the cyclical factors impacting on labour markets have slowly been absorbed, structural issues in labour market adjustment have become more pressing. Job retention schemes – such as those put in place in many advanced economies – proved essential to prevent firms and workers losing valuable experience and skills,” the report said.

ILO Director-General, Gilbert F. Houngbo said falling living standards and weak productivity combined with persistent inflation create the conditions for greater inequality and undermine efforts to achieve social justice. “We do expect the share of informal jobs to decline a little in 2024. We remain deeply concerned however about the low quality of many of those jobs because good quality, decent work is a pre-requisite for sustainable development and building social justice,” he added.