The 2024 employment and social outlook

Our key takeaway: The ILO’s annual report on employment and socioeconomic trends uses the phrase “crisis vortex” to explain the many colliding global challenges we face as we head into 2024. The report finds that many economic indicators appear to be on the upswing, including overall economic growth and decreasing unemployment rates. However, the ILO cautions that these rosy figures conceal deeper challenges, from income and gender inequality, to increasing poverty and decreasing real wages, to overall “economic fragility” of already vulnerable markets in lower-income countries. It also finds that these issues may prove to be structural rather than cyclic, and therefore more difficult to address with quick policy changes. For companies, there is a key role to play for their own workforce to advance equity and improve worker well-being. They can complement national policies and regulations to spur equitable growth by implementing their own initiatives to increase wages, improve pay parity between men and women, improve working conditions, and upskill workers to meet technological advances and improve their earning potential.

The ILO published its 2024 World Employment and Social Outlook Trends (January 2024):

• Labour market imbalances are growing, even while overall economic indicators appear positive: The report found that many economic indicators, including those on growth and unemployment, look robust as 2024 kicks off: “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.” Labour market participation rates have largely recovered from their pandemic lows, especially among lower-middle-income and high-income countries. However, these positive indicators don’t show the whole picture. The report identified that real wages have “declined in the majority of G20 countries as wage increases failed to keep pace with inflation.” In addition, “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 1 million globally. A stronger pattern emerges when one looks at moderate working poverty, that is, earning less than US$3.65 per day per person in PPP terms. The number of workers living in moderate poverty increased by about 8.4 million in 2023.”
  

• Economic inequality will undermine social justice: The report states that “the post-pandemic economic and social recovery remains incomplete and new vulnerabilities are eroding progress in social justice.” The ILO identified increasing inequalities between populations within countries and between countries. For example, “[t]he recovery in labour force participation rates to pre-pandemic levels has been uneven and has not benefited all labour market groups the same way. Female participation rates have recovered faster than expected but the gender participation gap remains large, especially in emerging and developing countries.” Likewise, employment rates for youth remain low and many who dropped out of the workforce during the pandemic “are not pursuing any form of training and continue to face significant obstacles to returning to work.” There is also a “further widening” of within-country income inequality. Compounding these inequalities, lower-income countries will continue to drift further from higher-income countries. Economic “fragility has started to emerge that is likely to first hit countries that were already struggling before the pandemic. Highly indebted developing countries are particularly at risk of quickly running into financial distress as global financial conditions tighten, with significant repercussions for jobs, working conditions and wage growth.” This may be worsened as higher-income countries and their companies continue to invest in technological innovation like artificial intelligence, making it difficult for less-developed markets to compete in the global economy.
  

• Collaborative approaches will be needed, with a distinct role for the private sector: The report concludes that we need “coordinated and mutually reinforcing” policies and actions, “at both country and multilateral levels.” Governments, central banks and international financial bodies will be responsible for the policies, regulatory changes and incentives to invest in innovation that is needed to rebalance inequalities, but the private sector has an important role to play. One key action is ensuring better wages and better working conditions that will encourage people to return to the workforce: “Data show that labour shortages are more dire and more difficult to relieve in sectors with challenging working conditions; quit rates are particularly high in these sectors. Better pay, better recognition and better working conditions could turn around this trend.” In addition, the report indicates that “sectors with labour shortages tend to be more segregated with respect to gender: at the lower end of the pay scale, sectors tend to be more female dominated.” By working to improve pay equity and diversity, companies can not only help employers fill open roles but also have ripple effects on inclusion and equality in their communities more broadly.