Global labour Pay Gaps Widen Post-Pandemic: ILO

News Desk 

New York: The UN International Labour Organization (ILO) highlighted on Wednesday that the global trend of shrinking pay packets in heavily industrialized economies may be temporarily influenced by technological innovations such as automation and AI.

Celeste Drake, Deputy Director-General of the ILO, stated in Geneva, “The global labour income share—the proportion of total global income going to workers—is shrinking.”

She added, “Even though workers are contributing to a growing global economy, they are receiving a smaller share of that growth. This is exacerbating inequality, which will disproportionately affect working people.”

According to the ILO’s latest update on world employment, data from 36 countries shows that global labour income declined by 0.6 percentage points between 2019 and 2022 and has since remained stagnant.

This seemingly minor decline translates to an annual income shortfall of approximately $2.4 trillion, aligning with the longer-term decline of 1.6 percent from 2004 to 2024.

Notably, nearly 40 percent of this decline occurred during the COVID-19 pandemic between 2020 and 2022. The ILO also pointed out that while production output has risen over the past two decades, income growth has not kept pace.

From 2004 to 2024, global worker productivity per hour increased by 58 percent, but income grew by only 53 percent, creating a five-percentage-point gap between productivity growth and income growth.

The ILO’s report warns that without governmental policy intervention, advancements in generative AI could exert additional downward pressure on wages. The ILO emphasizes the need for countries to address these inequalities in alignment with the Sustainable Development Goals (SDGs), given the sluggish global economic outlook.

Steven Kapsos, Head of the Data Production and Analysis Unit at the ILO, pointed out that despite a decrease in inflation rates over the past two years, labour income has remained stagnant. “We haven’t seen a recovery in the share of income as inflation has come down,” he noted.

The ILO recommends that governments take steps to address rising inequality by 2030, including offering universal social protection, implementing a decent minimum wage, and promoting policies that support freedom of association and collective bargaining.

These measures would enable workers and employers to negotiate how to share productivity gains.

Additionally, the ILO report notes that global youth unemployment has only modestly decreased from 21.3 percent in 2015 to 20.4 percent this year.

Arab States have the highest percentage of unemployed young workers, with one in three unable to find a job, followed by Africa (nearly one in four), 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 Northern America (over one in ten).

Female youth unemployment remains significantly higher than that of male youth, with nearly one in three females unemployed compared to almost one in eight males.