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

OK, I think we can, uh, start.

Good morning, everyone. Bonjo,

thank you for being with us today.

My name is Zain Award and I am the head

of news and multimedia for the International Labour Organisation.

I'm, uh, very pleased to have, uh, with us today.

Uh MC Drake, our deputy director general

as well as our colleague Steven Kapos,

who's the head of data production and analysis unit at the I.

And we're here to share with you the, uh,

latest outlook the September 2024 outlook for the World employment social

um outlook findings.

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

Celeste.

Thank you so much. Good morning, everyone.

And thank you for your interest in the IL OS 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 wiso

series and follows the WEO

trends Report launched in January

and the WEO 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.

The syndicators 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% points between

2004 and 2024

to 5. 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 incidents is 28.2% in 2024

which is more than double the incident 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 meat

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 high 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 ha! We will be happy to answer your questions.

Thank you very much. Uh, Celeste, uh, for your presentation.

So we now open the floor to questions.

Uh, I would like to ask you to, um, introduce yourself and your outlet, uh,

once you have the floor,

please.

Good morning. My name is Chris Vogt.

I work for a

France pa.

Uh, I was just wondering if you so,

uh, you told about the, um, 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 at play where when in terms of,

uh, revenue for employees that

the share goes down? Uh, what what other

engines of this trend are there?

Absolutely. So this trend is caused by multiple factors,

including globalisation.

Uh, the makeup of global labour markets.

Uh, technological advances? Certainly covid.

Um I was just discussing with Steven,

um, 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, uh, focused in on the role of technology,

Um, the analysis was constrained to 36 countries, uh,

mainly high income countries, because it's a very data intensive exercise.

Uh, 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,

uh, an increase in

output per hour worked labour productivity.

So you see that and it's a 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

uh, equally from that.

Thank you for this briefing

from

R. No,

this is a follow up on the Christoph 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

inflation after the sanctions against Russia make a lot of inflation,

especially in high income countries.

So do we have to expect that this trend will continue

so again I'll start and and might 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% 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, um 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, um, good minimum wage policies, um,

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

affect 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 wanna add anything specific to that

You You covered it perfectly, Celeste.

Um, I would just add that over the last two years, when we've seen, uh,

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.

Um, we don't have projections, uh, for this indicator beyond that horizon,

so we can't I.

I can't give you a forecast this morning.

Um, 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 period,

Thank you for next TV from Hong Kong.

Uh, simple question in your report.

well,

as the role of the self, employment is emphasised, Uh,

especially in the developing countries.

So, um,

the method for estimating their incomes is based on the importation, um

or, uh, poxes.

So, uh, how confident

can we be in the

aquis

of those estimations?

And for, um, uh, Steven,

what impact could the potential in our curies have on global,

uh, dis

distribution analysis

and also specifically in the countries who has a high self-employment rate.

Thank you.

OK, I'm gonna let Steven take this question,

because it's very much about our statistical analysis.

So, um, thank you for your question.

You're You're absolutely right that our labour income share estimates include,

um, the income of both uh, employees, uh, and the income of the self-employed.

Um, what I can say is that before the ILO started estimating, uh, uh,

labour income share, uh, providing those data.

The data that existed around the world only covered the compensation of employees

and what we did at the ILO over, uh,

the last 67 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 100 and 70 countries that are sharing

their labour force survey data with the ILO.

And that enables us to actually

produce a very credible, uh, estimate of the impact of this, uh,

the income of the self-employed, which is very important,

particularly in developing countries where there's, uh a you know,

self-employment can can be the majority of the workers.

Um, so we have me.

We've we have published, uh, methodological papers, uh, reviewed papers,

Uh, that detail the methodology.

I am very confident that the IL OS 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.

Um, but what we're putting out today, uh,

is based on the latest available information that we have.

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

Could you please repeat that?

The same part is you answered. Is that how could you analyse this

to do that if it, uh uh, impact

uh, if it's not,

uh,

stable.

My maintenance is not

stable. Uh, of, uh, the incomes analyses. How could you,

um

how could you face to this, uh um

uh, income series

the

I think we're still not completely understanding your question.

Are you asking for, um

how the impact

I thought I heard you ask how the impact would be different

on countries that have a greater

share of self-employed

in there. Is that the question?

OK, so, um,

the if you if you

have to estimate the impact or the, um the the income of the self-employed,

Whereas the the data for, uh,

employees comes from UN SD the system of national accounts,

we get compensation of employees and then we estimate self-employment, uh,

income based on the characteristics of the workers who are self-employed.

and and we have A We have a, uh, robust methodology for that.

If you have a higher share of a very high 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.

But

no direct answer.

I think the ear early this year, um,

we will put the same questions on this somewhere with DG.

Uh, breakfast Probable.

Uh, so it doesn't get any good answer directly. So what is, um

um

So how could you analyse? And if it's not stable incomes? Uh

uh,

share.

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

Sorry. Hearing you

and earlier of this year, we have the we have had a breakfast with DJ and you prob,

um, we will put the same question, uh, with

today, I didn't get a correct answer or direct answer from, uh,

how could you are analysing this?

Um, if,

um, this potential occurrences have, um,

uh, have owned this global income.

And how could you face to that if, um,

face to the

not stable incoming with, uh, imputation and proxies?

Oh, well, it's not correct, but

it's not evidence.

So,

um, purple

is better.

I can interview you later.

OK, We can take it up later, then. No problem.

I think we had a hand over here over to you, Sir

Boris

Elson, a freelancer.

Indeed, most of the questions I had in mind when raising my hand

first have been asked by my colleague. So I will ask a more general question

before we ask the question.

What I got from your presentation is that any hike

in the labour share of revenue was a step forward towards

social justice and that the ultimate paradise would be 100 of income

to labour and that anything across this way was a rip off by greedy

shareholder

to buy more caviar.

Then we ask questions and you were a little bit more. Let's say down to us.

So

my question is

considering also that over the years I

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 two thirds for generations.

Now it's a little bit less, but marginally less so. Can you elaborate a little bit