Pressure on inequality is rising as the labor income share stagnates and a large share of youth remains out of employment, education or training, stated the International Labor Organisation (ILO) in its latest ‘World Employment and Social Outlook: September 2024 Update’. The report indicates slow progress on key sustainable development goals (SDGs) as the 2030 deadline approaches.
The study reveals that the global labor income share, which represents the portion of total income earned by workers, fell by 0.6 percentage points from 2019 to 2022. Since then, the rate has remained flat, compounding a long-running downward trend. If the share had remained at the same level as in 2004, labor income would be larger by $2.4 trillion in 2024 alone.
COVID-19 accelerates decline
The ILO said that the COVID-19 pandemic was a key driver of this decline. Nearly 40 percent of the reduction in the labor income share occurred during the pandemic years of 2020-2022. The crisis exacerbated existing inequalities, particularly as capital income continues to concentrate among the wealthiest. This further undermined progress towards SDG 10, which aims to reduce inequality within and among countries.
Technological advances place additional pressure
Technological advances, including automation, have played a role in the decline of the global labor income share. While innovations have boosted productivity and output, the ILO suggests that workers are not sharing equitably from the resulting gains.
The report warns that without comprehensive policies to ensure that the benefits of technological progress are broadly shared, recent developments in the field of artificial intelligence could deepen inequality, placing SDG targets at greater risk.
“Countries must take action to counter the risk of declining labor income share. We need policies that promote an equitable distribution of economic benefits, including freedom of association, collective bargaining, and effective labor administration, to achieve inclusive growth, and build a path to sustainable development for all,” said Celeste Drake, ILO deputy director-general.
Youth employment marginally declines
Drawing on the ILO’s recent Global Employment Trends for Youth (GET Youth) report, the study also identifies the large share of youth outside employment, education, and training as a persistent area of concern.
Earlier, GET Youth revealed that the global rate of youth outside of employment, education, or training (NEET) saw only a modest decrease from 21.3 percent in 2015 to 20.4 percent in 2024. Moreover, the rate will likely remain flat for the next two years.
The female NEET rate, which stood at 28.2 percent in 2024, is more than double that of young men, significantly impacting SDG 8.
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