Global labour market faces stagnation amid economic slowdown – ILO report
By Ukpono Ukpong
The International Labour Organization (ILO), report has revealed that the global economy is slowing down, and this is stalling labour market recovery.
This was contained in the latest World Employment and Social Outlook: Trends 2025 report by the International Labour Organization (ILO).
The findings highlight a concerning trend that demands urgent action to prevent further setbacks in achieving decent work and social justice worldwide.
In 2024, global employment grew at the same rate as the labour force, keeping the unemployment rate stable at 5 percent.
However, the report points out that youth unemployment remains a critical issue, with the global rate stagnant at a worrying 12.6 percent. Informal employment and working poverty have returned to pre-pandemic levels, while low-income countries continue to face significant barriers to creating sustainable jobs.
The report identifies several factors that are undermining labour market recovery. Geopolitical tensions, climate change-related costs, and unresolved debt issues are increasing pressure on global labour markets.
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Economic growth has also slowed, registering at 3.2 percent in 2024, down from 3.3 percent in 2023 and 3.6 percent in 2022. While a similar growth rate is expected for 2025, a gradual deceleration in economic activity is anticipated in the medium term.
Although inflation has shown signs of easing, it remains high in many regions, eroding workers’ purchasing power. Real wages have increased in a few advanced economies but have generally struggled to keep pace with inflation, leaving most nations grappling with the lingering effects of the COVID-19 pandemic and subsequent economic shocks.
Labour force participation rates have also shifted. Low-income countries have seen a decline in participation, while high-income nations have experienced increases, particularly among older workers and women. Despite this, gender disparities in workforce participation remain significant, with fewer women engaging in paid employment.
Alarmingly, the number of young men not in education, employment, or training (NEET) has risen sharply in low-income countries. NEET rates among young men in these regions have climbed by nearly 4 percentage points above pre-pandemic levels, reflecting growing economic vulnerability. Young women are even more affected, with global NEET rates for women nearly double those of young men.
In 2024, low-income countries reported 15.8 million NEET young men (20.4 percent) and 28.2 million NEET young women (37 percent), representing significant increases from the previous year. Globally, the total NEET population grew to 85.8 million young men and 173.3 million young women, underscoring the challenges of youth disengagement from labour markets.
The report also highlights the persistent global jobs gap, estimated at 402 million people in 2024. This figure includes 186 million unemployed individuals, 137 million temporarily unavailable to work, and 79 million discouraged workers who have ceased job-seeking. While the gap has been gradually narrowing since the pandemic, it is expected to stabilize over the next two years.
Amid these challenges, the report notes some areas of optimism. Green energy and digital technologies offer potential for job creation. Renewable energy employment has grown to 16.2 million jobs globally, driven by investments in solar and hydrogen power. However, the distribution of these jobs remains uneven, with nearly half located in East Asia.
Similarly, digital technologies hold promise, but many countries lack the infrastructure and workforce skills needed to capitalize on these opportunities fully. Without significant investments, these gaps may limit the broader benefits of technological advancements.
The ILO Director-General, Gilbert Houngbo, emphasized the need for urgent action. “Decent work and productive employment are essential for achieving social justice and the Sustainable Development Goals. To avoid exacerbating already strained social cohesion, escalating climate impacts, and surging debt, we must act now to tackle labour market challenges and create a fairer, more sustainable future,” he stated.
The ILO report offers several recommendations to address these issues. It calls for increased investment in skills training, education, and infrastructure to drive productivity and job creation. Expanding social protection, such as access to social security and safe working conditions, is also essential to reducing inequality.
Additionally, the report highlights the potential of private funds in supporting economic development, particularly in low-income countries. Harnessing remittances and diaspora funds effectively can help bolster local development and create more inclusive labour markets.
