ILO says tech progress, automation, AI cut workers’ share of wealth

By Anjali Sharma
UNITED NATIONS, 5th Sept. International Labour Organization on Wednesday said that the global trend of cutting pay packets in heavily industrialized economies could be driven by tech innovations in the workplace such as automation and AI

Celeste Drake, Deputy Director-General of ILO said “Global labour income share, which is the proportion of total global income that goes to workers, is shrinking”.

“This means that even as workers contribute to a growing global economy, they’re taking home a smaller share of that growth. This needs to be changed, because it’s increasing inequality, which will have a disproportionate effect on working people”.

ILO on world employment update cited data from 36 countries indicated that total income declined globally by 0.6 percentage points between 2019 and 2022 “and has since remained flat”.

The agency stated that the modest decline in income represents an annual shortfall in income of some $2.4 trillion which is in line with the longer-term decline of 1.6 per cent between 2004 and 2024.

ILO said that over 40 per cent of this decline happened during the three years of the COVID-19 pandemic from 2020 to 2022.

It pointed to the data which showed that while production output has increased over the last two decades, income has not kept up.

Steven Kapsos Head of the Data Production and Analysis Unit at the ILO said that from 2004 to 2024, workers’ output per hour increased globally by 58%.

“That’s a very positive trend, that’s a big output,” he said, but over the same period, income increased by only 53 per cent.

“So, there’s a wedge of five percentage points between how much productivity grew over that period and how much labour income grew over that period and that’s leading to this decline in the labour income share.”

ILO’s latest World Employment and Social Outlook report maintained that without policy intervention by governments, breakthroughs in generative AI “could exert further downward pressure” on pay packets.

It is crucial that countries strive to reduce such inequalities in line with the international agreed SDGs Mr. Kapsos insisted.

He pointed to the sluggish global economic outlook.

“Over the last two years when we’ve seen inflation rates come down, the labour income has stagnated, so we haven’t seen a recovery an increase in the share as inflation has come down,” he told.

ILO recommended to governments to overcome this trend for rising inequality by 2030 in line with the SDGs include offering universal social

Ms. Drake said protection to workers and a decent minimum wage.

She stressed that countries should seek to promote policies in support of freedom of association and recognition of collective bargaining, “so that workers and employers can negotiate how to share those productivity gains”.

The key elements in ILO report included the finding that the level of youth not employed around the world has declined only modestly from 21.3 per cent globally in 2015 to 20.4 per cent this year.

Arab States have the highest percentage of young workers unable to find a job one in three followed by Africa (1 in 4 a figure that has not changed in two decades), Asia and the Pacific (one in five), Latin America and the Caribbean (nearly one in five), Europe and Central Asia (more than one in six) and Northern America (over one in 10).

Female youth unemployment (1 in 3) remains more than double men’s one in eight), the data concluded.