World Employment and Social Outlook: Trends 2024

World Employment and Social Outlook: Trends 2024

Context:

Inequality is increasing globally as labour income has stagnated, and a significant portion of youth remain outside employment, education, or training, according to the International Labour Organisation’s (ILO) World Employment and Social Outlook: September 2024 Update.

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• The report identifies artificial intelligence (AI) as a key factor contributing to the decline in labour income.
• The report also highlighted slow progress on key Sustainable Development Goals (SDGs) as the 2030 deadline approaches.
• Additionally, the report identified the COVID-19 pandemic as a major factor in this decline, with nearly 40% of the reduction in labour income occurring between 2020 and 2022.
• The progress in reducing the not in employment, education, or training (NEET)  rate globally has been slow, with only modest reductions in the gender gap. 

Implications of AI on labour income

• Global Employment Exposure: According to Gita Gopinath, IMF Deputy Managing Director, in advanced economies, about 60% of jobs may be affected, while exposure in emerging markets and low-income countries is lower, estimated at 40% and 26%, respectively. 
• Automation of Low-Skilled Jobs: The automation of routine tasks can lead to job displacement, particularly for workers with limited skills or education, exacerbating existing inequalities and contributing to stagnation in labour income for these groups.
• Widening Income Disparities: AI’s integration into labour markets may worsen income inequality within and between countries. 
• Risk of Exclusion: The hollowing out of the labour market in developing countries means that low-skilled jobs are increasingly at risk, leading to potential exclusion from economic opportunities. 

Youth NEET and its relations with inequality

• Global NEET Rates: As of 2023, approximately 20.4% of young people globally are classified as NEET, with young women disproportionately affected—28.1% of young women compared to 13.1% of young men. 
• Regional Variations: NEET rates are notably higher in lower-middle-income countries, where economic challenges and limited access to education exacerbate the situation.
• Economic Disparities: Without access to employment or education, these individuals lack the skills and resources necessary to improve their economic situation, perpetuating a cycle of poverty across generations.
• Impact on Labour Markets: High NEET rates can lead to a surplus of unskilled labour in the market, driving down wages and limiting opportunities for those who are employed. 

Impact on SDGs

• Impact on Poverty Reduction (SDG 1): As labour income stagnates, the ability of individuals and families to escape poverty diminishes. Increasing income inequality exacerbates multidimensional poverty, affecting access to essential services such as education, health, and sanitation. 
• Worsening Inequality (SDG 10): The richest 10% capturing a disproportionate share of global income (40% of total income) while the poorest earn only 2-7% highlights the stark disparities that persist.
• Health and Well-Being (SDG 3): Economic disparities can lead to unequal access to health services, particularly for low-income populations. This undermines efforts to ensure healthy lives and promote well-being for all (Target 3.8), as those with lower incomes may not afford necessary healthcare.
• Education and Gender Equality (SDG 4 and SDG 5): Rising inequality often correlates with unequal access to quality education and gender Disparities.

International Labour Organization (ILO) 

It is a specialised agency of the United Nations, established in 1919 as part of the Treaty of Versailles. Headquartered in Geneva, Switzerland, the ILO has 187 member states, making it one of the largest international organisations.

Major Publications: World Employment and Social Outlook (WESO), Global Wage Report, Social Dialogue Report.

Way Forward

Promoting Equitable Distribution of Economic Benefits:

• • • Strengthening Social Protection: Implementing universal social protection systems can help address inequalities by providing a safety net for the most vulnerable populations.
    • Pradhan Mantri Shram Yogi Maan-Dhan Yojana (PM-SYM) aims to provide a minimum pension of ₹3,000 per month to workers in the unorganised sector after they reach the age of 60.
    • Fair Minimum Wage Policies: Establishing and enforcing fair minimum wage policies can ensure that workers receive a living wage, helping to lift them out of poverty and reduce income inequality.
    • Collective Bargaining Rights: Strengthening the rights of workers to engage in collective bargaining can help ensure that they receive a fair share of productivity gains.
    • e-Shram Portal aims to expand social security coverage and provide access to various welfare schemes, thereby improving the geographic coverage of social protection.

Investing in Education and Skills Development:

• Expanding Access to Quality Education: Investing in education, particularly in developing countries, is crucial for equipping young people with the skills needed to participate in the labour market and reduce NEET rates.
• The National Education Policy (NEP) 2020 is a comprehensive framework for education in India, aimed at transforming the country’s education system by 2030. 
• Vocational Training Programs: Promoting vocational training programs can help workers, especially those in low-skilled jobs, acquire the skills necessary to adapt to technological changes and secure better employment opportunities.
• Skill India Mission was launched to equip youth with skills relevant to the job market.

Targeted Policies for Developing Countries:

• • • Addressing Skill Gaps: Developing countries should focus on addressing skill gaps by aligning educational systems with labour market needs and investing in STEM (Science, Technology, Engineering, and Mathematics) education.
    • Supporting SMEs: Promoting the growth of small and medium enterprises (SMEs) can create jobs and stimulate local economies in developing countries, contributing to more equitable income distribution.
    • Attracting Foreign Direct Investment (FDI): Developing countries can attract FDI in labour-intensive industries to create employment opportunities and foster economic growth.

Fostering Inclusive Growth:

• • • Promoting Gender Equality: Implementing policies that specifically address barriers faced by women in the labour market can help close gender gaps in employment and income, contributing to SDG 5 on gender equality.
    • The Women’s Reservation Bill 2023 aims to reserve one-third of the total seats in the Lok Sabha and state legislative assemblies for women.
    • Investing in Green Jobs: Promoting sustainable development and investing in green jobs can create employment opportunities while addressing environmental challenges.

Collaboration and Policy Coherence:

• • • Partnerships: Cooperation between governments, employers, workers’ organisations, and civil society is vital for creating policies to address inequality and encourage inclusive growth.
    • Policy Coherence: Aligning policies across sectors like education, labour, and social protection is essential for tackling inequality and promoting sustainable development.