ILO: Labour market recovery goes into reverse

MULTIPLE global crises are causing a marked deterioration in the global labour market recovery, with increasing inequalities within and between countries, according to a new report from the International Labour Organisation (ILO).

The ninth edition of the ILO Monitor on the World of Work finds that after significant gains during the last quarter of 2021, the number of hours worked globally dropped in the first quarter of 2022 to 3.8 per cent below the pre-crisis benchmark (fourth quarter of 2019). This is equivalent to a deficit of 112 million full-time jobs.

This represents a significant downgrading of figures published by the ILO in January 2022.

Multiple new and interconnected global crises, including inflation (especially in energy and food prices), financial turbulence, potential debt distress, and global supply chain disruption – exacerbated by war in Ukraine – means there is a growing risk of a further deterioration in hours worked in 2022, as well as a broader impact on global labour markets in the months to come.

The Russia aggression against Ukraine  is already affecting labour markets in Ukraine and beyond, as detailed in a recent ILO brief.

The report also finds that a great and growing divergence between richer and poorer economies continues to characterise the recovery. While high-income countries experienced a recovery in hours worked, low- and lower-middle-income economies suffered setbacks in the first quarter of the year with a 3.6 and 5.7 per cent gap, respectively when compared to the pre-crisis benchmark. These diverging trends are likely to worsen in the second quarter of 2022.

In some developing countries, governments are increasingly constrained by the lack of fiscal space and debt sustainability challenges, while enterprises face economic and financial uncertainties and workers continue to be left without sufficient access to social protection.

More than two years after the start of the pandemic, many in the world of work are still suffering from the impact on labour markets.

The report said labour incomes have not yet recovered for the majority of workers. In 2021, three in five workers lived in countries where labour incomes had not returned to the level seen in the fourth quarter of 2019.

It said the gender gap in hours worked also grew during the pandemic. In the first quarter of 2022, the global gender gap in hours worked was 0.7 percentage points greater than the pre-crisis benchmark (fourth quarter of 2019) when a large gender gap was already present. Women in informal employment have been worst affected. And in terms of income groups, low and middle-income countries saw the largest increase of the gender gap.

The sharp rise in job vacancies in advanced economies at the end of 2021 and beginning of 2022 has led to a tightening of labour markets with a growing number of jobs available relative to job seekers. But overall, there is no strong evidence that labour markets are generally overheated, given the considerable pool of unemployed and underutilized labour in many countries, the report said.

Driven by disruptions in production and trade exacerbated by the Ukraine crisis, the increase in food and commodity prices is badly hurting poor households and small businesses, especially those in the informal economy, it added.

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