▶ Outlook Social and of Employment in the World

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Faced with the enormous challenges in the world of work, includingpersistent inequalities and exclusion, has never been more vital thannow set up a clear picture of employment and social trendsworldwide. To cope with the problems and difficulties with whichpolicies stumble, critical reflection is needed on thesuitability of our methods and concepts, and introduce innovations whenare necessary. We must ask, for example, whether the unemployment rateit is the most reliable measure of the poor functioning of the labor market. 

Haveto understand whether or not people of working age can develop allyour potential at work. Measurement also becomes crucial to assessthe growing perception that labor markets are not distributingadequately the fruits of economic growth. While the testsshow that countries are not experiencing convergence torise in employment opportunities and income increases, we needunderstand more precisely which groups of workers are winningand which ones are losing. 

The compelling answers to these questionscan contribute directly to the design of economic and social policiesthat enable sustainable and inclusive development.This report aims to rise to this challenge by offering evidence andnovel insights that enhance our understanding of how it worksof the labor market around the world, as well as presenting the mostrecent events that characterize the difficulties the market is going throughpersistently working. It presents four fundamental messages:

▶ First, it is very likely that the decline in growth projected economic and lack of inclusion will harm the capacity oflower-income countries to reduce poverty and improve living conditions work .

▶ Second, a more comprehensive measure of the underutilization ofpeople of working age reveal important gaps in access to work;the rate of «total underutilization of the labor force» tends to increase andfar exceeds that of unemployment.

▶ Third, even when people have a job, they are stillthere are significant deficiencies in the quality of work . Decent workhas to do with the adequacy of wages or earnings from workself-employed, with the right to job security and a place ofsafe and healthy work, access to social protection, opportunityto express their own opinions and concerns through a union,an employers’ organization or other representative body, as well aswith other fundamental rights such as non-discrimination. Deficits indecent work matters are especially pronounced in the economyinformal, which has the highest rates of poverty among workersand a high percentage of people who are self-employed or self-employedcontributing family workers who lack adequate protection.

▶ Fourth, significant inequalities in access to work prevailand in the quality of it . Among them are the main linessegmentation among workers, according to their geographical location(between countries and between workers in urban and rural areas), sex and age.In addition, the new ILO data on earned income (for allworkers, including the self-employed) demonstrate that the inequality ofincome is much higher than previously thought.

Inequalities and widespread decent work deficits not onlylead to economic inefficiency, but can also undermine thesocial cohesion within countries. It is significant that in 2019 therethe incidence of protests has grown in seven of the eleven subregions of the world,which indicates that dissatisfaction with the social, economic or political situationis increasing. As a whole, the whole message of this report is that thegoals of achieving full employment and raising living standards around the world areas essential today as ever. Governments, workers andEmployers must continue to prioritize labor market policiesthat pursue these objectives.

The rate and type of economic growth in the countrieslow income jeopardizes efforts to reducepoverty and improve working conditions

Across all low-income countries, the average GDP per capita in 2018 wasof around US $ 1,700 (using exchange ratesof Purchasing Power Parity (PPP) 2011), which translates into an incomeper capita daily less than $ 5. In the last eighteen years, the growthAverage per capita has been only 1.8 percent in low-income countriesand the gap with lower-middle and middle-income countries has widened.high. Regarding the type of growth, a transformation would be neededstructural, a technological update and a diversification to displace theemployment of activities with low added value to those with higher added value. WithoutHowever, progress in this area remains too limited in thelow-income countries. 

For example, between 2000 and 2018, the share of employmentin agricultural and elementary occupations it decreased only 6 percentage pointsin low-income countries (up to 69 percent), while it decreased10 percentage points (up to 49 percent) in middle-income countries-low and 15 percentage points (up to 32 percent) in income countriesmedium-high. Therefore, a key first message is that the pace and type ofgrowth not only hinders poverty reduction in low-income countriesincome, but also hamper potential job improvementsdecent.

Total underutilization of the labor forceis more than twice that of unemployment, and affects more than 470 million people worldwide …

The second key message of this report is that the mismatch between supply anddemand for labor extends well beyond 188 millionunemployed worldwide in 2019. Another 165 million people. They are employed but want to work more paid hours. Also, around120 million people are not classified as unemployed, but aremarginally linked to the labor market and could find employment ina near future. 

These people report that they are not looking for a jobalthough they would be available to work, or that they are looking for it but notthey now have the availability to accept it. In other words, morethan 470 million people worldwide lack adequate access topaid work as such or denied the opportunity to work the numberhours desired. These conclusions show the value of an understanding anda more complete measurement of underutilization in the labor market, in additionof the traditional measurement of the unemployment rate.


And the job shortage is expectedwork continue in the near future

The global unemployment rate stood at 5.4 percent in 2019 and is forecastthat it does not change essentially in the next two years. This means that thegradual decrease in the unemployment rate observed between 2009 and 2018 seemshave stopped. In addition, the combined rate of underutilization is expected toof the workforce stabilizes slightly above 13 percent.The underlying reduction in employment growth is related to aslowdown in world economic activity, especially in the sectormanufacturer. 

Given the high level of uncertainty about howthe commercial and geopolitical tensions of the coming years will influence thetrust of businesses and consumers and, consequently, in the creationof employment, it is difficult to predict how the various measures ofunderutilization of the workforce.The recent decline in the global unemployment rate has been drivenmainly by high-income countries. Job growth inthese countries has been surprisingly energetic, considering their lowaverage level of economic growth over the last decade. 

This canserve to refute claims that technological change is leadingto massive job losses. However, job growth inhigh-income countries came at the cost of reducing the growth oflabor productivity, as jobs were created mainlyin the services sector, where the average value added per worker isrelatively low. In contrast, several middle-income countries that havesuffered economic crises in recent years continue to have unemployment rateselevated; it is unlikely that they will again achieve strong growth in theemployment in the near future, in view of the bleak prospects for theWorld economy.

Access to paid work is not a guarantee of decent work …The third key message of this report corroborates what we already know, namely,that having a paid job does not imply a guarantee of conditions ofdecent jobs or adequate income for many of the 3.3 billionemployees worldwide in 2019.

Too often, the lack ofincome or other means of financial support obliges workers toperform jobs that are informal, poorly paid, and providelittle or no access to social protection and labor rights. This isespecially the case of the 1.4 billion self-employed workers andcontributing family workers in low- and middle-income countries, whoare often informally employed, work in vulnerable conditionsand with much lower income than those who have a salaried job. 

Even inhigh-income countries, a growing number of self-employed workersown has to deal with poor working conditions, a situation thatis partly reflected in the fact that the relative difference ofIncome from the work of the latter with respect to that of wage earners. However,employees themselves are frequently subject to uncertain contracts, lowincome and informality. In total, around 2 billion workers ineveryone is informally employed, representing 61 percentpercent of the world’s workforce.

And more than 630 million workers worldwidecontinue to live in extreme or moderate poverty

Poor working conditions are also manifested in low income. On2019, more than 630 million workers worldwide – that is, almost one ofevery five, or 19 percent of all employees – haven’t earned enoughto lift themselves and their families out of extreme or moderate poverty, whichdefined as the situation in which workers earn less than $ 3.20of the United States up to date in purchasing power parity terms. Yes OKthe rate of working poor has been declining globally, progressconducted in low-income countries have been very limited. The elevatedexpected job growth in these countries, driven mainly bythe creation of low-quality jobs, means that the number ofworking poor increase in 2020-2021. As a consequence of all this,the goal of eradicating extreme poverty everywhere by 2030–Goal 1 of the Sustainable Development Goals– will be even more difficult toreach. 

Insufficient per capita economic growth is one of the reasonsfor which it has not yet been possible to tangibly improve livelihoodsof so many workers in low-income countries, who are becominglagging behind in this respect compared to middle-income countries.

The world’s labor markets are characterizeddue to great inequalities, such as the considerablegeographic disparities in access to decent work …

The fourth key message of this report is that inequalities prevailsubstantial in the labor market. To start with, the geographical locationof a person largely determines their probability of finding agood quality paid work. Low-income countries have thehigher employment-to-population ratio (68 percent), as many workersvulnerable are forced to accept any job regardless ofits quality. In fact, workers in these countries are also the mostare likely to be subjected to poor working conditions and to livepoverty (the combined rate of extreme and moderate poverty is 66 percent)hundred). 

Among the eleven subregions of the world, the highest unemployment rateoccurs in Northern Africa (12 percent) and in Central and Western Asia(9 percent), while the lowest rates are observed in Southeast Asiaand the Pacific (3 percent) and in North America (4 percent). Underemployment byinsufficient working hours affects only about 1 percent of allworkers in both North America and Eastern Europe, but it affects8 percent of employees in Latin America and the Caribbean and up to 13 percent ofpercent in low-income countries around the world.

Geographic disparities within countries are also relevant. TheNew ILO data allow studying differences in access to employmentdepending on whether you live in rural or urban areas. Globally, the employment rate ofthe working-age population living in rural areas (59 percent) ishigher than in urban areas (56 percent). On the other hand, underemployment byinsufficient working hours in rural areas (6 percent) is higher than inurban areas (4 percent). These divisions are more accentuated in the countrieslow income. 

Disparities between rural and urban areas canbe exacerbated in the future by the transformations that come with thetechnological change. In Asia and the Pacific, for example, technological progress andPolicies designed to foster innovation appear to be creating jobs andincome at a disproportionately higher level in urban areas.

Geographic disparities in labor market outcomes oftenthey incite workers to migrate in search of better opportunities. It is estimatedthat the proportion of the world’s working-age population living in areasurban has registered an increase, going from 50 percent in 2005 to 55 percentpercent in 2019, which indicates that there has been a significant migration of thecountryside to urban centers. 

This migration has been more intense in the countries ofupper-middle income, where it is estimated that two-thirds of the elderly populationfrom working in 2019 will live in urban areas, which represents an increase of more10 percentage points since 2005. Meanwhile, international migrationposes additional problems for affected migrant workers, which are veryoften do not enjoy the same rights as the national population of the country ofdestination.

And women and youth face obstaclesadditional for your participation in the labor market

Contemporary labor markets also continue to be characterized by thegender inequality. In 2019, the female participation rate in the forceof work was only 47 percent, 27 percentage points below the rateof man (74 percent). There is strong regional variation in disparitiesgender in access to employment. Gender stereotypes that emphasizein the role of women as the main caregiver and in that of men asmain breadwinner remain deeply rooted in someregions. 

The underutilization of female labor is very pronouncedin North Africa and the Arab States, affecting about 40 percentpercent of women in the expanded workforce in both subregions (incompared to just 20 and 12 percent of men, respectively).In addition to access to employment, gender disparities also persistin relation to the quality of work. This is true even in regions wherewomen have made significant strides in the labor market. In AmericaIn Latin America and the Caribbean, for example, the average level of education of women exceedscurrently that of men, but women in the subregion continue to gain17 percent less per hour worked than men.

Age is another indicative characteristic of labor market inequalities. A staggering 267 million young people ages 15-24 across the worldworld (or 22 percent of that age group) are unemployed and uneducatedor training. In addition, many of the young people who have paid jobsthey have to overcome obstacles to get a decent job. 

In Africa, for example,informality affects 95 percent of young workers. Since it isexpected to increase considerably, in absolute terms, the population of theage group 15-24 in Africa, creating a sufficient number ofdecent work opportunities is one of the most pressing issues facingface that region. In Europe and Central Asia, young workers are alsoface considerable challenges in the labor market: the quality ofjobs available to young workers has been affected by thegrowing incidence of temporary employment in that region.

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New ILO data show that participationof earned income in global GDPit is decreasing…

Finally, unequal access to decent work translates intohigh and persistent income inequalities. A key dimension ofIncome inequality is income from work, which isfundamental to the livelihood of some 3.3 billion workers inall the world. However, until recently no estimates were availablereliable and internationally comparable labor income forthe vast majority of countries due to lack of reliable income dataself-employed workers, who make up almost halfof the world’s workforce. Thanks to intensive data collection andmodeling, the ILO has been able to fill this gap and shed new lighton the main trends in income inequality.

The share of earned income – as opposed to the share ofnational income that goes to the owners of capital – decreased to the levelfrom 54 percent in 2004 to 51 percent in 2017. The decline hasbeen most pronounced in Europe and Central Asia and in America. In the countries ofhigh incomes, the decrease in the labor income of workers due toown account, compared to employees, is a key factor inthe aggregate decrease. 

Taking this factor into account, the ILO concludes thatthe share of earned income has declined more than suggested byestimates previously available. This finding is consistent with ascenario in which new forms of work are eroding power purchasing power of the self-employed.

And global income inequality is higherthan previous estimates suggest

The new data set available shows that the distribution of incomeglobal labor market is highly unequal. In 2017, a worker belonging to the deciletop of the world distribution of labor income earned an averageof US $ 7,400 per month, while a workerthe bottom decile earned only $ 22 a month (both figures in termspurchasing power parity). Although the inequality of income from work toglobal level has declined in the last fifteen years – as a result of theeconomic convergence driven by countries such as India and China, which haveenjoyed an increase in average labor income -, inequality withinof countries has stagnated over the same period.

The new data on earned income also indicates that studiesPreviously, the true extent of theinequality in low-income countries, due to their dependence onhousehold expenditures as a proxy for total income. For example, the combined share of income corresponding to the classesmedium and medium-high, which was previously thought to be similar in allcountries, it is actually much lower in low-income countries, whilethe proportion corresponding to the upper class is higher in these same countries.

Overall, global income inequality is therefore more pronounced than previously thought.

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