From 2019 to 2022, the global labor income share fell by 0.6 percentage points. The decline in the global labor income share is driving inequality Economic development
The gap between labor income and capital returns continues to widen, while a large share of the world’s youth remains unemployed, out of education and training, warns the authors of the International Labor Organization (ILO) World Employment and Social Prospects: September 2024 Update.
The paper also notes slow progress towards key Sustainable Development Goals (SDGs) as we approach 2030.
The role of the pandemic
From 2019 to 2022, the global labor income share fell by 0.6 percentage points and has remained stable since then. The study highlights that the COVID-19 pandemic remains a key driver of this decline, with nearly 40 percent of the decline in the labor income share occurring in the pandemic years.
Rising inequality
The crisis has exacerbated existing inequalities, particularly as capital gains continue to be concentrated among the richest, undermining progress towards SDG 10, which aims to reduce inequality within and among countries.
Innovation Doesn’t Help
Technological advances, including automation, have played a significant role in fuelling this trend. While innovation has increased productivity, evidence suggests that not everyone can reap the benefits. The report warns that without inclusive policies to ensure that the benefits of technological progress are widely shared, recent developments in artificial intelligence could further exacerbate inequality, jeopardizing the achievement of the SDGs.
“Countries must take action to counter the risk of declining labour income shares,” said ILO Deputy Director-General Celeste Drake. – We need policies that promote a fair distribution of economic benefits to ensure inclusive growth and pave the way for sustainable development for all.”
Youth Issues
The study findings also indicate that a significant proportion of young people are not employed, educated or trained, and this trend is becoming a chronic problem.