Global employment landscape: Challenges persist despite recovery

Unemployment and job gap rates have fallen below pre-pandemic levels, and labor market participation has improved in recent years. However, the latest ILO World Employment and Social Outlook reveals that significant structural issues remain, including persistent inequality, rising working poverty, and slowing productivity growth.

According to IMF, one of the starkest contrasts in global employment is the disparity in unemployment rates among G20 nations. South Africa holds the highest unemployment rate, with nearly 50% of its youth population struggling to find work.

Deep-rooted inequality and limited access to formal labor markets fuel this crisis, making economic mobility difficult for many. In contrast, Japan has the lowest unemployment rate, but this comes with its challenges. An aging population and strict immigration policies have contributed to severe labor shortages, raising concerns about long-term workforce sustainability.

Income inequality remains a growing concern, with disposable incomes declining across most G20 economies. Inflation has led to a significant erosion of living standards, making it unlikely for many workers to recover financially in the short term.

According to the ILO, 1 million additional workers fell into extreme poverty in 2024, earning less than US$2.15 per day in Purchasing Power Parity (PPP) terms. An estimated 8.4 million more workers entered moderate poverty, earning less than US$3.65 per day per person in PPP terms. This decline in income security reflects broader economic pressures that disproportionately affect lower-income households.

The rise of informal work further complicates labor market stability. An estimated 58% of the global workforce remains in informal employment, meaning they lack job security, social protections, and stable incomes. While informal jobs provide livelihoods for millions, they often pay less and offer fewer benefits, exacerbating income inequality.

The reliance on informal work also contributes to sluggish productivity growth. The ILO notes that investment in low-productivity sectors, skills shortages, and digital monopolies have slowed productivity gains worldwide, hampering economic development.

Despite these challenges, opportunities for reform exist. Policymakers and businesses must focus on equitable labor policies, expanding access to quality education and job training, and fostering fair wages to ensure sustainable economic progress.

As employment landscapes shift, global economies must adapt by prioritizing inclusive workforce strategies, balancing innovation with social protection, and providing recovery efforts reach all workers.