The global share of labour income has declined significantly over the past two decades, widening inequality, the International Labour Organization (ILO) said on Wednesday. In a new report, the ILO warns of a growing gap between income from labour and capital. The report shows that the global share of labour income, that is, the share of total income earned by workers, has declined by 1.6 percentage points since 2004 and by 0.6 percentage points since 2019.
“While the decline seems modest in percentage points, it represents a $2.4 trillion shortfall in 2024 alone.” for workers, the ILO stressed. The study highlights that the Covid-19 pandemic has been a determining factor in this decline, with almost 40% of the decline in the share of labour income occurring during the pandemic years, from 2020 to 2022. This crisis has exacerbated existing inequalities, particularly due to the concentration of capital income among the richest, according to the ILO.
“Countries must act to counter the decline in the share of labor income”said Celeste Drake, ILO deputy director-general, in the statement. “We need policies that promote a fair distribution of economic benefits, including freedom of association, collective bargaining and effective labour administration to achieve inclusive growth and pave the way for sustainable development for all.”she added.
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Artificial intelligence and inequalities
Technological advances, including automation, have also contributed to this trend, according to the ILO. “Although these innovations have boosted productivity and economic growth, workers have not benefited equitably from the resulting gains.”notes the Geneva-based organization. The report warns that without comprehensive policies to ensure that the benefits of technological progress are shared fairly, recent developments in artificial intelligence risk widening inequality by putting further downward pressure on the labor share of income.
According to the ILO, the global share of labor income stands at 52.3%, a statistic that is used to measure inequality between labor and capital income. This rate thus shows “insufficient progress” towards the Sustainable Development Goals (SDGs) adopted by UN Member States in 2015 “to achieve a better and more sustainable future for all” by 2030.
The report also highlights that a large proportion of young people remain neither in employment, education nor training, known as NEET, with their share decreasing only slightly in recent years, from 21.3 per cent in 2015 to 20.4 per cent this year. But there are significant regional disparities: one third of young people in the Arab States and almost a quarter in Africa are NEET. In a previous report published in August, the ILO also highlighted that one in five young people fall into this category, and that two out of three of these young people are women.
