The International Labour Organization has reported a significant decline in the global labour income share, exacerbating inequality and hampering progress towards sustainable development goals (SDGs). The ILO’s “World Employment and Social Outlook: September 2024 update,” on Wednesday 4 September, show that the labour income share dropped by 0.6 percentage points from 2019 to 2022 and has since levelled off, continuing a longstanding downward trend.
The report highlights that, had the labour income share remained at 2004 levels, workers worldwide would have collectively earned an additional $2.4trn in 2024. The ILO attributes much of this decline to the covid-19 pandemic, which alone accounted for nearly 40% of the reduction in labour income share during 2020-2022. The pandemic intensified existing inequalities, particularly as capital income became increasingly concentrated among the wealthiest, undermining efforts to meet SDG 10, which focuses on reducing inequality within and among countries.
Regionally, Europe and Central Asia experienced a decline of 1.0 percentage points in labour income share from 2019 to 2024. This region saw its lowest point in 2022 with a 1.8 percentage point decrease, followed by a recovery in 2023 and 2024. In contrast, technological advancements and automation, while boosting productivity, have not led to equitable gains for workers. The report cautions that without robust policies to distribute the benefits of technological progress more fairly, the rise of artificial intelligence could further widen income inequality, placing additional strain on achieving the SDGs.
Celeste Drake, ILO deputy director general, stressed in the press statement the urgency of addressing the decline in labour income share. “Countries must take action to counter the risk of declining labour income share. We need policies that promote an equitable distribution of economic benefits, including freedom of association, collective bargaining and effective labour administration, to achieve inclusive growth, and build a path to sustainable development for all,” Drake said.
The report also draws attention to the persistent issue of youth not engaged in employment, education or training (Neet). The global Neet rate for youth has only slightly decreased from 21.3% in 2015 to 20.4% in 2024 and is expected to remain stable over the next two years. The Neet rate for young women, at 28.2% in 2024, is more than double that of young men, jeopardising progress towards SDG 8, which aims to promote decent work and economic growth.
The lowest youth Neet rates are found in Europe and Central Asia, and Northern America, at 13% and 11.3% respectively, notes ILO, with these regions also exhibiting the least gender disparity.
As of 2023, Luxembourg’s Neet rate was 8%, according to Eurostat, the European statistics agency.