Published on 16th January 2024
Productivity under pressure, moderate investment growth, lower purchasing power… the overall economic outlook for 2024 is far from bright. According to the International Labour Organisation (ILO), labour markets are in for a rocky 2024. In its latest World Employment & Social Outlook (WESO) report, the global organisation raises concerns about increasing unemployment, lower labour market participation, persistent working poverty, and acute labour shortages.
Desperately Seeking Workers
Slowing GDP growth looks to be finally catching up on labour markets in 2024. The ILO anticipates job postings to drop, while an ageing workforce leaves roles unfilled. According to the WESO report, global unemployment will creep up to 5.1%, leaving the global labour market faced with a gap of 435 million jobs. Informality rates are also predicted to remain high, reaching 58% of global employment. Although the rates of informality returned to near pre-pandemic levels, there are now 2 billion informal workers because of growing global labour force.
Part-Time is the New Full-Time
Apart from the doom and gloom, the ILO is observing a rise in part-time employment. Total working hours grew faster than the average working hours meaning that people are not back to full-time employment. The report identifies workers’ preferences in response to working conditions as one reason why employees find it difficult to return to full-time work. It also finds that once people opted for part-time employment post-pandemic, they haven’t looked back. Unfortunately, for those who left the labour market during the pandemic, the report shows they have yet to return.
Youth Left Out in the Cold
The trend shows that labour market participation is declining, especially among young people. The WESO report states that youth dropped out of the labour markets en masse during the pandemic and have not pursued any training since, leaving many without the skills to re-enter the market. Overall, the rate of people not being trained, educated, or employed remains high across all income levels and labour market participation rates for both men and women are set to drop across most income groups.
Technology at a Standstill
As a result, 77% of employers are challenged to find workers with the right skill set. Ten years ago, the figure was only 35%. The skills gap is particularly harmful in the context of the digital transition, the ILO says. Contrary to pro-tech voices, digital innovation has not improved living standards and productivity growth. Companies are struggling to find skilled people to move the digital transition along. Tech transfer between countries is also facing geopolitical barriers, leaving cross-border sharing behind the curve.
Rising Fragility Erodes Social Justice
The WESO report also flags persistent working poverty. Despite increases in many countries, real wages declined, and inflation has eaten into citizens’ purchasing power. “Falling living standards and weak productivity combined with persistent inflation create the conditions for greater inequality and undermine efforts to achieve social justice. And without greater social justice we will never have a sustainable recovery”, warns ILO Director-General, Gilbert F. Houngbo. Working conditions are also deteriorating, causing low demand in certain sectors and therefore aggravating labour shortages (care, transportation, retail work, manufacturing, construction and ICT). The ILO hopes that its recently launched Global Coalition for Social Justice will help address growing social inequalities.
What Work Do We Want?
In such a challenging context, labour market intermediation is needed more than ever. HR services companies can help provide better transitioning, career management and re/up-skilling services to help people shut out of the labour force find new pathways to employment to maintain their living standards. An important mobilisation of resources is required for skilling and Vocational Education and Training (VET). Bipartite schemes such as those already existing in the agency work sector provide an interesting blueprint in this respect.
Conclusions from the WESO report make clear that the dodging of discussions on improving labour conditions must stop. Workers’ expectations have changed. As the ILO report demonstrates, a one-size-fits-all approach no longer works to meet the needs of different types of workers, providing an opportunity for the HR services industry to help provide the work people want. Throughout the year, the World Employment Confederation and its members are set to address these topics and invite the broader employment community to join the conversations as we collectively build labour markets that work for all.