August 15, 2023

ILO Monitor on the world of work. Eleventh edition

A global employment divide: low-income countries will be left further behind without action on jobs and social protection

Various global shocks and risks are holding back labour market recovery, especially in low- and middle-income countries. In developing countries, responding to the current multiple crises
(or “polycrisis”) is constrained by a combination of high inflation and high interest rates, along with a growing risk of debt distress.

The ILO projects that low-income countries, Africa and the Arab States are unlikely to recover to pre-pandemic levels of unemployment this year. While the global unemployment rate is
expected to fall below the pandemic level in 2023, this reflects stronger-than-expected resilience in high-income countries rather than a generalized recovery.

In 2023, the global jobs gap is projected to stand at 453 million people (or 11.7 per cent1 ), more than double the level of unemployment. The real scale of employment challenges is encapsulated
by the ILO’s jobs gap indicator which includes all persons who would like to work but do not have a job. The jobs gap is much higher among women (14.5 per cent) than men (9.8 per cent).
X Differences in the jobs gap reflect a global employment divide. Low-income countries face the largest jobs gap rate at 21.5 per cent, while the rate in middle-income countries stands slightly
above 11 per cent. High-income countries register the lowest rates, at 8.2 per cent. Low-income countries are the only country income group that has seen a long-term rise in the jobs gap rate, from
19.1 per cent in 2005 to 21.5 per cent in 2023.

Low-income countries in debt distress face a jobs gap of 25.7 per cent in 2023. In low-income countries that are in debt distress, the jobs gap is significantly higher than in developing countries at
low risk of debt distress, at 25.7 per cent compared with 11 per cent. This reflects the fact that financial and fiscal constraints are hampering their policy responses, further worsening labour market
conditions.

Some countries are facing particularly complex and cascading crises, which interact with broader global challenges and exacerbate labour market impacts. They range from natural disasters (e.g. the earthquakes in Türkiye and Syrian Arab Republic) to multiple economic shocks (e.g. in Sri Lanka), which have come on top of the lingering effects of the COVID-19 pandemic and the global cost-of-living crisis.

Significant social protection policy gaps remain in developing countries, especially in low-income countries, including in regard to old-age pensions. Only 38.6 per cent of older persons in lowermiddle-income and 23.2 per cent in low-income countries receive an old-age pension. Investing in national social protection systems based on equitable and sustainable financing from taxes
and social contributions and complemented by international support where needed, is necessary and will bring economic, social and employment benefits.

The ILO’s new estimates confirm that building a national social protection floor, for example, through expanding basic old-age pensions in developing countries would increase GDP per capita in low- and lower-middle-income countries by 14.8 per cent within 10 years. Such basic old-age pensions in developing countries would also reduce the share of the population living below the US$2.15 PPP poverty line by 6 percentage points and increase the income share of the bottom 40 per cent of the income distribution by 2.5 percentage points. Furthermore, the induced effects of basic pensions would reduce the gender gap in labour income by 3.6 percentage points, equivalent to the global progress registered in the last 15 years.

Source: ILO Monitor on the world of work. Eleventh edition
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.