The G7’s support in overcoming the challenges of unequal labour markets will help to bring about action and investments in decent work for all – and help to drive shared economic growth
Labour markets face enormous challenges. The ongoing effects of the Covid-19, cost-of-living and geopolitical crises weigh heavily on labour markets – while longer-term structural changes, such as climate change, population ageing and technological progress increasingly affect labour markets around the world as well.
Most countries have not yet returned to the levels of employment and hours worked seen at the end of 2019, before the outbreak of Covid-19. The global jobs gap, which consists of the 205 million unemployed and 268 million people who have an unmet need for employment but do not satisfy the criteria to be considered unemployed, was 473 million people in 2022, with 29.3 million in the G7 countries alone. As a share of people either employed or wanting a job, this corresponds to a jobs gap rate of 12.3%, with 7.2% for the G7 alone.
The jobs gap is particularly large for women. Although men and women currently face similar global unemployment rates, the global jobs gap rate for women is 15%, compared with 10.5% for men (see figure). Personal and family responsibilities, including unpaid care work, discouragement resulting from the lack of quality employment opportunities and scarcity of possibilities for (re)training can prevent many people from seeking employment or limit their availability to work at short notice.
Global employment is projected to expand by 1% in 2023, a significant deceleration from the 2.3% growth rate of 2022. The slowdown in employment growth means that the jobs gaps opened up by the Covid-19 crisis, globally, are not projected to close in the next two years. At the same time, global labour supply growth will likely continue to decelerate, which will contribute to substantial labour shortages, particularly in advanced economies.
Unequal labour market prospects
Women and young people fare significantly worse in labour markets, a fact indicative of large inequalities in the world of work in many countries. Globally, the labour force participation gap between men and women of 24.9 percentage points in 2022 means that for every economically inactive man there are two such women. This labour force participation gap stands at 13.8 percentage points in the G7.
People aged 15 to 24 face severe difficulties in securing decent work and have been hit particularly hard during the pandemic. Their employment rate was 34.5% in 2022, 0.7 percentage points below the level of 2019. Young workers also have different types of jobs from older workers, including a higher likelihood of a temporary contract. Their unemployment rate is three times as high as that of people aged 25 or more, the global youth unemployment rate being about 14% in 2022 and 9.3% in the G7. More than one in five young people – 23.5% – globally are not in education, employment or training (NEET). In the G7 that rate is 9.8%.
The distribution of real incomes is also becoming more unequal. High inflation rates are deepening inequalities within countries, as many workers are unable to increase their income in line with inflation and hence suffer real income losses. Even among low-wage service workers in advanced economies, who have seen the fastest increase in wages in decades owing to a shortage of labour, wage growth is barely keeping pace with inflation. The ILO’s Global Wage Report 2022–23 shows that global real wages are estimated to have declined by 0.9% in 2022.
What can be done to overcome these challenges?
Accelerated progress in reducing the global jobs gap, strengthening the quality of employment and protecting real incomes will entail:
Investing in people’s capabilities to increase the labour force participation of women, people with disabilities and older workers, and to facilitate workers’ transitions to alternative sectors or occupations throughout their working lives;
Closing the gender pay gap through higher minimum wages, more extensive and inclusive collective bargaining, measures to address the undervaluation of women’s work and extending obligations of employers to promote gender equality;
Reaching out to the NEET youth through programmes offering a package of services, such as training, income support, counselling and intermediation;
Addressing the decline of unionisation rates and collective bargaining coverage, so as to enhance the potential of social dialogue to achieve a fair sharing of the cost of inflation.
Furthermore, the G7’s support for initiatives, such as the UN’s Global Accelerator on Jobs and Social Protection for Just Transitions and the Global Coalition for Social Justice that the ILO is launching in 2023, would strengthen global solidarity and improve policy coherence to bring about action and investments in decent work and broadly shared economic growth.