ILO Press conference: Launch of the “World Employment and Social Outlook” report

OK, I think we can start.

Good morning, everyone.

[Other language spoken]

Thank you for being with us today.

My name is Zain Awad and I am the Head of News and Multimedia for the International Labour Organisation.

I'm very pleased to have with us today.

I miss Celeste Drake, our Deputy Director General, as well as our colleagues, Steven Capsules, who's the Head of Data Production and Analysis Unit at the ILO.

And we're here to share with you the latest outlook, the September 2024 outlook for the World Employment Social Outlook findings.

So without further ado, I'll hand over to Celeste to do present the findings.

Over to you, Celeste.

[Other language spoken]

Good morning, everyone, and thank you for your interest in the ILOS World Employment and Social Outlook September 2024 Update.

We are pleased to launch the report and discuss it with you here today.

This report is part of our WESO series and follows the WESO Trends report launched in January and the WESO update published in May.

This report we're launching today highlights important trends in two key SDG labour market indicators.

And the first one that I will discuss is the labour share, the labour income share.

This indicator measures the proportion of total income in an economy that is earned by workers through wages and salaries and income from self-employment.

The share of income that goes to workers is often used as a key indicator of inequality.

The lower share for workers means a larger share of income is going to capital owners who are typically wealthier and thereby it indicates higher levels of income inequality.

This indicator is also used to measure progress towards SDG Goal 10 to reduce inequality between and within countries.

Our new report shows that there has been a long term global decline in the labour income share, which dropped 1.6 percentage points between 2004 and 2024 to 52.3%.

Although this decline might appear modest in terms of percentage points in 2024 alone, it means that workers are receiving 2.4 trillion less in purchasing power parity than they would have earned had the labour income share remained stable since 2004.

Significantly, nearly 40% of the decline in the labour income share observed over the past two decades occurred during the three years of the COVID-19 pandemic, and this reflects the severe effects the pandemic had on labour markets at the global level.

There has simply been no recovery in this indicator over the past two years.

In terms of why the labour income share is declining, the report investigates one potential factor, namely the role that technology could be playing.

What we find is that technology, technological innovation and specifically automation, while boosting productivity and output, has also contributed to the decline in labour income share during the last two decades.

This doesn't mean that innovation has made workers worse off.

To the contrary, technological advances tend to raise incomes and boost economies.

However, a declining labour income share is a signal that these changes are likely contributing to rising inequality in the world of work.

This outcome, however, is not set in stone.

It will depend on policy decisions, which is why it's crucial to guide artificial intelligence development to avoid increasing inequality and to make sure that its benefits are shared broadly.

This can be done, for example, through policies to create and strengthen universal social protections, minimum wages, freedom of association and social dialogue, including collective bargaining.

The second key indicator that's analysed in today's report is the share of youth not in employment, education or training, otherwise known as the NEAT rate.

This is another important Sustainable Development Goal indicator that is unlikely to be achieved by 2030 based on current trends.

Indeed, the latest data show that the world is also off track regarding the goal to reduce the NEAT rate.

The global NEAT rate has seen only a modest decline since 2015, falling from 21.3% to 20.4% in 2024.

The report also finds that large gender inequalities remain in young people's access to education and employment.

The female youth NEAT rate incidence is 28.2% in 2024, which is more than double the incidence among young men, which is 13.1%.

Our report stresses the need to increase efforts to provide decent work opportunities and to improve access to education and training, particularly in the regions where they have the highest incidence of NEAT in some.

This new update underscores significant shifts in the world of work, and it cautions that technological advancements, despite being an essential driver of economic growth, can also have important impacts on the distribution of income.

Additionally, the persistent **** NEAT rates among youth, particularly for young women, signal that the goal of reducing youth disengagement from employment and education is also at risk.

These trends suggest that without strategic policy interventions, the related Sustainable Development Goals to reduce inequality simply won't be met by 2030.

The findings emphasise the urgent need for policies to ensure inclusive growth and equitable access to opportunities in the rapidly evolving global labour market.

Thanks for your attention and we'll have we will be happy to answer your questions.

Thank you very much, Celeste, for your presentation.

So we now open the floor to questions.

I would like to ask you to introduce yourself and your outlet once you have the floor, please.

[Other language spoken]

My name is Chris Vogt, I work for Agence France.

[Other language spoken]

I was just wondering if you, so you told about the very heavy impact of COVID after three years of COVID on the numbers.

But could you give us a sense of what are the other key factors that that are play where, when in terms of revenue for employees that the share goes down?

What other engines of this trend are there?

[Other language spoken]

So this trend is caused by multiple factors including globalisation, the make up of global labour markets, technological advances, certainly COVID.

I was just discussing with Steven that the rapid inflation that was a result of of COVID has some factor and it's not possible to suss out exactly what percentage contribution all of these different trends make.

But the one thing that this report analyses is the impact of rapidly developing technological deployment.

So we we didn't address specifically all of the other factors.

And I don't know Steven, if you have anything you want to add there.

Sure, Thanks Celeste.

I mean when we when we focused in on the role of technology, the analysis was constrained to 36 countries, mainly **** income countries because it's a very data intensive exercise.

But what we found was that when you have a positive technological shock, especially something that helps automate tasks that used to be done manually, what you see is an increase in output per hour worked labour productivity.

So you see that and it's a sustained increase.

So beyond four years we see that productivity remains higher and the growth rate remains higher.

You see a boost to economic growth.

So these are very good factors.

You also see a negative impact on employment and on hours worked.

But very importantly it's a short term negative impact and employment and hours work recover within a couple of years.

But the interesting thing that we found is that similar to the the increases in productivity and growth, when you have a positive technological shift, it lowers the labour income share.

And that effect is persistent even beyond four years.

So what that's basically showing us is that when we have a positive technological shock, it's good for the economy as a whole, but not everyone is is sharing equally from that.

Thank you for this briefing.

[Other language spoken]

This is a follow up on the Christopher questions.

You are saying that the inflation due to the COVID was one of the main reasons.

So can we expect that this trend will continue?

Because the inflations after the sanctions against Russia make a lot of inflation, especially in **** income countries.

So do we have to expect that this trend will continue?

So again, I'll start in, in my give it to Steven for some more detail.

But these are long term trends.

So for example, the the specific 20 year rate decline that we gave here was 1.6 percentage points.

They are, they can't, they are not inevitable.

So whether it's technological advancement, whether it's the fact that we had an inflation shock during COVID, other factors, they can be changed by policy decisions.

And So what we are saying is, regardless of the specific cause of the decline in labour income share, if countries are committed to achieving the Sustainable Development Goals, if they are committed to advancing social justice and addressing inequality, they can change these trends.

And they can do that through specific policies designed to promote greater equality and a greater labour income share.

And those things include universal social protections.

We know those work to address inequalities, good minimum wage policies, policies that advance freedom of association and the effective recognition of collective bargaining so that workers and employers can negotiate how to share those productivity gains that Steven just addressed.

And also effective labour administration so that the policies in place for minimum wages and the right to freedom of association and collective bargaining and all of these other things, those laws are effectively implemented.

They're effectively enforced, and they really set guardrails around labour markets so that workers can share fairly from the gains that they are helping to create.

So I don't know Steven, if you want to add anything specific to to that you, you covered it perfectly.

Celeste, I would just add that over the last two years when we've seen inflation rates come down, the labour income share has stagnated.

So we haven't seen a recovery, you know, an increase in the share as inflation has come down.

We don't have projections for this indicator beyond that horizon.

So we can't, I can't give you a forecast this morning, but in terms of what we, what we've seen over the last two years, we haven't seen a recovery in, in the labour income share even though the the price pressures have been moderating over that.

[Other language spoken]

Phoenix TV from Hong Kong, simple question in your report.

Well, it's a rule of the self-employment is emphasised especially in the developing countries.

So the method for estimating their incomes is based on the imputation or proxies.

So how confident can we be in the accuracies of those estimations?

And for Steven, what impact could potential inaccuracies have on global distribution analyzers and also specifically in the countries who has a **** self-employment rates?

[Other language spoken]

I'm going to let Steven take this question because it's very much about our statistical analysis.

So thank you for your question.

You're, you're absolutely right that our labour income share estimates include the income of both employees and the income of the self-employed.

What I can say is that before the ILO started estimating labour income share, providing those data, the data that existed around the world only covered the compensation of employees.

And what we did at the ILO over the last 6-7 years is we've built up a, a major repository.

It's actually the world's leading repository of national labour force surveys.

We have 170 countries that are sharing their labour force survey data with the ILO and that enables us to actually produce a very credible estimate of the impact of this, the income of the self-employed, which is very important, particularly in developing countries where there's a, you know, self-employment can can be the majority of the workers.

So we have, we've, we have published methodological papers, reviewed papers that detail the methodology.

I am very confident that the Ilo's labour income share estimates are the, are the best estimates that we have out there.

Of course with any estimate there is a degree of uncertainty, but what we're putting out today is based on the latest available information that we have.

Now I, I have to apologise, I didn't catch the second part of your question.

Could you please repeat that?

The second part is you answered is that how could you analyse this to do that if it's impact, if it's not stable, I mean this is not stable of the incomes analyzers, how could you, how could you phase two this income series, I think we're still not completely understanding your question.

Are you asking for how the impact I thought I heard you how the impact would be different on countries that have a greater share of self-employed in there.

Is that the question?

[Other language spoken]

So the if you if you have to estimate the impact or the, the, the income of the self-employed, whereas the the data for employees comes from UNSD, the system of national accounts.

We get compensation of employees and then we estimate self-employment income based on the characteristics of the workers who are self-employed.

And, and we have a we have a, a robust methodology for that.

If you have a higher share, a very **** share of self-employment, more of the labour income share estimate that we produce is is estimated rather than taken from real data.

Go ahead everybody not direct answer.

I think the early this year we will put the same questions on this somewhere with DG Breakfast probable.

So it doesn't get any good answer directly.

So what is so how could you analysing if it's not stable incomes share.

Do you mind just raising your voice a little bit because we're having a hard time.

Sorry hearing you early of this year.

We have the but we have had a breakfast with DG and you probable we will put the same question.

[Other language spoken]

I didn't get a correct answer or direct answer from how could you are analysing this if this potential currencies have have on this global income and how could you face to that if face to the not stable incoming with imputation and proxies.

Oh well, it's not correct, but it's not evidence.

So a purple base better I can interview you later.

[Other language spoken]

I think we had a hand over here.

Over to you, Sir Bobby Singles on a freelancer.

Indeed, most of the question I had in mind when raising my hand first have been asked by my colleagues.

So I will ask a more general question before we ask question.

What I got from your presentation is that any hike in the labour share of revenue was a step forward towards just social justice and that the ultimate paradise would be 100 of income to the labour and that anything across this way was a RIP off by greedy shareholder to buy more caveat then we ask question and you were a little bit more, let's say down to earth.

So my question is considering also that over the years ILO had to admit that it represents only that four wage workers represented at ILO are in fact about one out of 10 workers actually worldwide.

So can you tell us more about the real cause and the real good and evils of this drop in the labour share?

The labour share in big corporation has been around 2/3 for generations now.

It's a little bit less, but marginally less.

So can you elaborate a little bit more on that, on sectorial differences, on SMEs and on this poor ignore forgotten workers?

To whom I belong as a freelancer, which are not for wage workers and not in your, let's say focus of interest.

So, so thanks for that question.

And I think the discussion that we were just having regarding the self-employed are exactly the folks that you were talking about freelancers who are self-employed.

And and I don't think that's the the message of our of what we're saying on, on labour income share.

It's not to have 100% for either side, but it is one measure, not the only measure of inequality.

And we can look at the country level or we can look at the global level.

And what we are saying is as we are moving toward 20-30 and looking at progress on the Sustainable Development Goals, we do need to take into consideration the labour income share as these economies are growing, whether again at the country level or at the global level.

And it we can say here's how much of the growth there was, how much are working people, including the self-employed sharing in that growth.

And if we want to become more equitable, we want to make sure that that labour income share isn't falling, that they're not getting a smaller and smaller share of all of the gains.

That's our basic point.

Not that there is some perfect measure of how income should be distributed, but certainly when you have the level of poverty, unemployment, neat the inequality in the world, when you have decent work deficits, when you have a lack of social justice, these things of trying to increase equalities and achieve the SD GS are quite important.

And that's really our, that's really our goal here.

And to say that when we have labour income share that's declining, that's not inevitable.

And as we have concerns about it, policy makers have choices to try and make sure that that labour income share share isn't declining and they can put in place policies to counteract what is happening in the markets.

And as we said, there are many factors.

It's it's, there's not, you can't say there's one input and it leads to the output of a decreasing labour income share.

There are many factors.

This report that we're releasing today really looks at the technological factor, but there are other factors around globalisation, the operation of markets, as we said, inflation.

I don't know Steven, if you want to add anything to that.

[Other language spoken]

Question suggested by you and reply.

You refer to the SDGS, a question I never dare asking.

You are the first to be have the privilege.

Are all UN agencies committed to support the SDGS?

Because me as a self-employed person I have at least one freedom is not to think like you and to be free to think I'll of the LCGS and all the silly things I consider they contain.

Do you have that freedom?

Does your boss have that freedom and if not, Are you sure that it is got good and socially advanced not to have that freedom?

So I would say we are one UN system and the UN system is committed to achieving the SDGS.

[Other language spoken]

I think we've got a couple of questions online, but I think I saw a hand, so we'll yeah, please go ahead.

Thank you for taking my question.

[Other language spoken]

I'd like to ask about the productivity, the increase of productivity and decrease of income share, Labour income share as Stevenson might have mentioned already, but you know, the increase of active productivity thanks to development of technology and the decrease of labour income share.

You know these two relationship, you know, it's like it seems jumping in logic to me.

So could you elaborate a little bit more the the relationship between productivity increasing and labour income share decreasing?

[Other language spoken]

So, so I'll start now.

I'll hand it off to my statistical expert.

I think I want to be clear that what we're saying is we are reporting on trends that are happening right now, not absolute identities.

So it's not the case that every time productivity goes up, labour income share has to decline.

What we're saying is this is what we're reporting.

[Other language spoken]

It's something that we can measure as a trend for the last 20 years.

If you look into the report, you will see the charts and graphs that tell you how it's actually bounced around.

But there is a trend that Labour is not keeping up.

This can be counteracted by policies.

It's not a given that this is an outcome.

And it's not that the ILO is saying it's a problem when productivity increases.

In fact, we work to increase productivity because that does create the gains that allow job creation, economic growth, more dynamic economies that can create decent work and social justice.

But these are not given outcomes.

They are outcomes that must be directed by appropriate policies to advance decent work and social justice.

So now I'll have Steven give you the ******** statistical answer.

Thank you, Celeste.

So we have on Page 3 in the report actually going directly to your question, over the period from 2004 to 2024, output per hour worked.

So labour productivity measured is output per hour worked globally increased by 58%.

That's a very positive trend.

That's, that's a, a big boost in, in how much output each hour of work generates.

And that's in real terms over the same.

Labour income, real labour income per hour worked grew by 53%.

So there's a, there's a wedge there of of five percentage points between how much productivity grew over that.

And how much labour income grew over that.

And that's leading to this decline in the, in the labour income share.

I hope that helps.

[Other language spoken]

OK, I don't see any more hands in here.

So in the room.

So we'll go to our participants online, and I'd like to give the floor to Laurence Ciero, please.

Yeah, thanks for all.

0 Swiss News Agency, thanks for the press conference.

In the report, you mentioned that two regions, Europe and Central Asia, have been doing better since 2023 and that there has been a recovery in these two regions where it was, whereas it wasn't the case in the other ones.

So how do you explain that?

Are the reasons the same in both regions or are there particular reasons in each of them?

[Other language spoken]

So we didn't in the report go into thank you for the question, but we didn't go into the the factors.

This is, you know, it's a brief, it's, it's meant to provide the latest figures.

There are a large number of potential explanations.

You know, 11 factor is specifically when we're looking at Europe, a lot of the types of policies that our DDG has been talking about in terms of freedom of association, right to collective bargaining, you know, stronger labour unions, you know, in within the European region.

It scores quite **** on on all of those in, in many European countries.

So that could be part of the resilience, but we we did not in in this brief go into that.

[Other language spoken]

I don't see any other hands online or in the.

[Other language spoken]

Some people think that in spite of all analysis, we are on the what do you call a step door of a major global economic crisis where all social narratives will be obsolete?

Do you study at least this as a hypothesis, as a scenario that is not at all covered in in this report?

And I don't, I mean I think to to look at our most in depth work on world employment and social outlook, you would look not at the this brief update, but our longer we so trends report which comes out annually and the next one will be in next January.

So I think that's the best answer we have to that question.

[Other language spoken]

There is actually one more question online in the chat and it's from Jigish, A journalist with The Hindu newspaper in India.

And two questions.

Rather, the report flags the role of AI in the decrease in labour income and suggests that any benefits of AI are widely distributed.

What did the sample survey in 36 countries find?

Is there any monopolisation on this emerging tech?

The second question, what is the specific impact of this on Asia that supplies a large number of workers around the world in almost all sectors.

So with regard to the first part of the question, the the 36 countries, sorry, can you repeat?

Could you please repeat the Yeah, OK, I'll repeat the first question.

The report flags the role of AI in the decrease in labour income and suggests that any benefits of AI are widely distributed.

What did the sample survey in 36 countries find?

Is there any monopolisation of this emerging tech?

[Other language spoken]

So the actually the analysis on 36 countries covers the period from 2003 to 2019.

So it's pre COVID, but it's also pre generative AI in terms of use in in the real world.

So we can't say from the analysis what is happening due to AI right now.

But what we can say is that if the technological advancements that were that we're seeing from generative AI behave in a similar way as previous positive technology shocks that we saw between 2003 and 2019, we would expect, based on the earlier relationship to see a decline in the labour income share from these technologies.

And can you repeat the second part of the question as well, Of course, what is the specific impact of this on Asia that supplies a large number of workers around the world in almost all sectors.

Unfortunately, we don't have a, a regional breakdown of, you know, of, of this analysis.

So I, I don't think I can answer it specifically for Asia.

What I, what I would say in Asia is that obviously there's, you know, large what, what happens in Asia will matter a lot for the world given the, the, the, the size, given the size of Asia, it's already waiting a lot within our, our current estimates.

So, you know, the, the takeaways would be very similar, I think to what we're what, what our DDG has presented at the, at the global level.

And I think unfortunately that's as detailed as we can get for Asia, aside from the figures that we've presented in the various charts in the report.

[Other language spoken]

And yeah, and I'll just sum up by saying again, since it's, it's our global recommendations, what we would recommend for Asia specifically would be the same that as new technological innovations are rolled out in the economy, we expect them to increase productivity.

And if we're looking to offset any projected reductions in labour income share, that specific policies to counteract that, to promote equalities rather than inequalities can help.

And those policies include promoting universal social protections, promoting minimum wages, promoting freedom of association, social dialogue and including collective bargaining.

These together with effective labour administrations to implement the regulations and laws and to make sure that they're enforced, those can help offset any trends that would further decrease the labour income share.

[Other language spoken]

Thank you very much.

[Other language spoken]

So just before we close, a reminder that the embargo lifts at 11:30 Central Eastern Time, which is in about 25 minutes from now.

Thank you to our panellists and thank you all for being with us today.

[Other language spoken]