The outlook for global labour markets has worsened in recent months and on current trends job vacancies will decline and global employment growth will deteriorate significantly in the final quarter of 2022, according to a new ILO report.
The 10th edition of ILO Monitor on the World of Work finds that worsening labour market conditions are affecting both employment creation and the quality of jobs, pointing out that "there are already data suggesting a sharp labour market slowdown."
Labour market inequalities are likely to increase, contributing to a continued divergence between developed and developing economies, reads an ILO press release.
According to the Monitor, "a set of multiple and overlapping crises, compounded by the Ukraine war and subsequent negative spillover effects, have materialized over 2022 which are deeply impacting the world of work". The effects are being felt through food and energy inflation, declining real wages, growing inequality, shrinking policy options and higher debt in developing countries.
A slowdown in economic growth and aggregate demand will also reduce demand for workers as uncertainty and worsening expectations affect hiring. Besides, rising inflation is causing real wages to fall in many countries. This comes on top of significant declines in income during the COVID-19 crisis, which in many countries affected low-income groups most.
ILO Director-General Gilbert F. Houngbo said, "Tackling this deeply worrying global employment situation, and preventing a significant global labour market downturn, will require comprehensive, integrated and balanced policies both nationally and globally."
"We need the implementation of a broad set of policy tools, including interventions in the prices of public goods; the rechannelling of windfall profits; strengthening income security through social protection; increasing income support; and targeted measures to assist the most vulnerable people and enterprises," he added.
He further added, "We need a strong commitment to initiatives such as the UN Global Accelerator on Jobs and Social Protection, which would create 400 million jobs and extend social protection to the four billion people who are currently unprotected."
The report has made calls for social dialogue to be used to create the policies necessary to counter the labour market downturn. These should not just react to inflation but focus on the broader implications for employment, enterprises, and poverty.
It also warned against excessive policy tightening which could cause "undue damage to jobs and incomes in both advanced and developing countries."
At the beginning of 2022 the number of global hours worked was recovering strongly, notably in higher-skilled occupations and among women. However, this was driven by an increase in informal jobs, jeopardizing the 15-year trend towards formalization. The situation worsened over the course of the year and in the third quarter of 2022 ILO estimates are that the level of hours worked was 1.5 per cent below pre-pandemic levels, amounting to a deficit of 40 million full-time jobs.