Declining Labour Income Share Puts Inequality And SDG Targets At Risk, Says ILO

The International Labour Organisation (ILO) has released its World Employment and Social Outlook: September 2024 Update, highlighting growing inequality as labour income share stagnates. The report also points to slow progress on key Sustainable Development Goals (SDGs) with the 2030 deadline approaching.

The study shows that the global labour income share, representing workers' portion of total income, fell by 0.6 percentage points from 2019 to 2022 and has since remained flat. This decline is part of a long-term downward trend. If the share had stayed at its 2004 level, labour income would be US$2.4 trillion higher in 2024 alone.

Technological advancements, including automation, have contributed to this trend. While these innovations have increased productivity and output, workers have not equally benefited from these gains. The report warns that without comprehensive policies to ensure fair distribution of technological progress benefits, recent developments in artificial intelligence could worsen inequality and jeopardise SDG achievements.

The COVID-19 pandemic significantly impacted this decline, with nearly 40 percent of the reduction in labour income share occurring during the pandemic years of 2020-2022. The crisis worsened existing inequalities as capital income concentrated among the wealthiest, undermining progress towards SDG 10, which aims to reduce inequality within and among countries.

Drawing on the ILO’s recently published Global Employment Trends for Youth (GET Youth), the study identifies youth outside employment, education or training as a persistent concern. As GET Youth showed, the global rate of youth not in employment, education or training (NEET) decreased modestly from 21.3 percent in 2015 to 20.4 percent in 2024 and is expected to remain flat for the next two years.

Youth Employment Challenges

The female NEET rate stood at 28.2 percent in 2024, more than double that faced by young men, threatening SDG 8. "Countries must take action to counter the risk of declining labour income share," said Celeste Drake, ILO Deputy Director-General. "We need policies that promote an equitable distribution of economic benefits, including freedom of association, collective bargaining and effective labour administration."

The report underscores that without such measures, achieving inclusive growth and sustainable development for all remains challenging. It calls for urgent action to address these issues and ensure that technological advancements benefit everyone equitably.

In summary, the ILO's latest findings highlight significant challenges in achieving equitable economic growth and meeting SDGs by 2030. Addressing youth unemployment and ensuring fair distribution of technological gains are critical steps toward sustainable development.

With inputs from WAM