First-person perspectives on the world of work
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The Future of Work Podcast

Episode 31
World of work outlook

How can we protect the quality of jobs?

17 January 2023

Global labour markets are facing serious, interlinked challenges. Issues such as the growth in informality and working poverty, slowing employment growth, the effects of inflation on wages and purchasing power, come on top of longer-term structural challenges such as demographics, technology and climate change.

The new ILO report, World Employment and Social Outlook: Trends 2023 (WESO trends), raises particular concerns about inequality and the effects of the global economic slowdown on the quality of employment. It warns that, left unaddressed, the challenges facing the world of work threaten progress towards social justice.



Hello, and welcome to the ILO's Future of Work podcast.

In this programme, we'll be focusing on a key ILO report that looks

at recent developments in the world of work,

and projects where these might go next.

That's the ILO's World Employment and Social Outlook Trends 2023,

better known as WESO Trends.

It's a detailed and comprehensive report.

With me to unpick some of the findings, and the projections,

is Stefan Kühn,

who is Senior Economist and lead author of the WESO Trends.

Stefan, welcome, and thanks for joining us.

Thank you very much.

Let's start with the key points of the report.

It's a big report, there's a lot in it.

What do you think are

the most important takeaways and consents?

I think there are three key points

that we have to take away from this report.

Number one is that the global employment

growth is projected to decline significantly, so,

it's going to be at only 1.0%

which is less than half from what we had last year.

The big problem is that we, especially emerging and developing countries,

we're still suffering from the effects of the COVID-19 crisis,

and they have not yet recovered fully.

Now, we are seeing a slowdown,

and so they also will not be able to recover

from the impacts of the COVID-19 crisis

given this new slowdown.

Secondly, and it's a direct consequence of this economic slowdown,

is also that the quality of jobs is likely to decline.

Because in emerging and developing countries, in particular, people,

they often don't have an option, but to gain some kind of employment,

and when there's an economic slowdown and the possibilities

to have a good quality job are going down,

then they will have to settle for drop of worse quality.

In high-income countries,

as for the - what we're likely to see with the high inflation rates,

that the wages that have already been falling in 2022,

and the trend might continue next year as well.

That's also going to affect the quality.

The third point is related to global labour productivity growth,

which has been on a declining trend

since decades in high-income countries,

but we are now also observing a declining trend in emerging

and developing countries.

In low-income countries,

we can see, the report finds that actually there has been no

convergence at all in terms of labour productivity,

which means that the gap with respect to high-income countries

has remained just as high for the last three decades.

It's a problem in multiple dimensions.

I'm a bit confused by this issue of job quality,

because we see a lot of reports that employers

and businesses can't find the staff.

Now you would assume that if you are having

a problem with recruiting people,

one of the ways you get around that

is that you improve your job offer.

Be that in the level of the wages

or just general other aspects of the quality of the job.

What's going on here?

How come we have an issue with job quality, and, at the same time,

we have an apparent problem with people recruiting?

I think we have to be careful about the extent,

the scale of the problem of recruiting.

In most of the countries of the world,

and for most of the labour force in the world,

there's actually no problem.

There's a lack of jobs, lack of good quality jobs.

That's one thing.

It's, in emerging and developing countries, nobody's going to say, "No,

I'm going to wait for another job

that's going to be of flexible hours," and everything,

if you can't make ends meet. That's not going to happen.

In high-income countries, yes, in 2021 and 2022,

businesses have been struggling a lot.

Given the high inflation and the prospective monetary policy path

which intends on creating a recession,

there's going to be a turnaround in labour markets that, well,

there's going to be less job offers.

In that case, again, the workers,

they're not going to have the bargaining power anymore.

One of the topics that you spend quite a lot of time

on in the report is the issue of the informal sector.

What has happened to that?

Because that is traditionally associated with poor-quality jobs.

Indeed, the informal sector,

it's still the dominant form of employment in the world.

We have 2 billion workers are informal in the world.

The number, the share of informally employed

has come down between 2004 and 2019.

That was a positive trend.

With the recovery and COVID, that share has actually gone up again.

The incidence of informal employment has increased again.

Again, with the upcoming economic slowdown,

it's hard to see how that

should be declining again, significantly.

The trends we are seeing are way too slow to get anywhere

to get decent work for all in the very near future.

There hasn't been that much drop, as you said, in employment.

Unemployment hasn't actually risen that much.

What has happened to working poverty?

Because, if you take somebody out of unemployment

and then put them into a job on which they can't actually live on,

you haven't really solved the problem.

Indeed, working poverty is a major problem in the world,

especially also given that the sustainable development

goal number one directly states to get all people out of poverty.

Unfortunately, in low-income countries,

the number of workers that are living in extreme poverty has been rising,

not only during COVID but also before COVID as well,

and it's a very simple math.

If the number of people is going up, then you're not going to reach zero.

Sustainable development goal number one,

it doesn't look promising at the moment.

Not at all.

For ending world poverty by 2030?

Well, let's have a look at one of the key factors

in doing that in wage levels,

which is that one of the things we've seen is rising inflation.

If you are on a wage

and you cannot get a wage rise that matches inflation,

you are going to get poorer.

Is that a global factor that we are seeing?

Well, to some degree probably, we have to say that, globally,

45% of people are not wage workers, but they're self-employed.

That's one thing already for a major part

of the global population workforce.

They don't have a wage.

Yes, inflation has been rising a lot over the last two years,

and it has come as a surprise, to some degree,

especially in high-income countries that have been used to low inflation.

The institutions to adjust wages to those rising inflation,

they have essentially disappeared because, for 20 years,

you had low inflation, then that doesn't happen.

Workers have lost out a lot in terms of real wages.

Businesses are going to lose out, aren't they?

Because, if real wages are lower,

people buy less, that reduces demand.

Reduction in demand affects businesses,

and so you have a downward spiral.

How do we break that?

What do we do?

How do we deal with that?

It's true.

It's one of the reasons why we are likely going to see

an economic slowdown or even recession in quite a few countries.

One is that the real wages are falling, which takes out bargaining power.

The second part is as well that central banks are likely going

to raise interest rates quite a lot again to depress economic activity.

How do we get out of that?

It's very complicated.

Policy is about protecting people, and most of what we have been seeing

now is that there was a shock to inflation, push to inflation,

which came from supply side factors.

Business affairs have increased their prices as far as they could.

Not all of them could,

especially small and medium enterprises often could not.

Corporate profits have been going up,

but workers are losing out in terms of real incomes.

The policy solution to rising inflation should not be to tell workers,

"Please do not raise your wages,

so that we can lower inflation rates faster,"

because it's not policy for people, it's policy for businesses, in that sense.

We need social dialogue so that we can figure out

how to equally share the burden

of the rising inflation so that we can, well, get

inflation rates down again and--

Spread the pain a little.

Spread the pain a little.

Because, at the moment, the pain is very much concentrated

not only on the workers but also,

actually, as I understand it, on the poorer or more developing countries

because inflation affects poorer people more.

Is that correct?

Yes. It depends on where we have the inflation,

but we had a lot of inflation on energy prices, and on food prices,

and those poor people,

it's the bulk of what they're spending their money, their income on,

is on those, so it does affect them a lot more.

There's a lot of talk in the report about productivity,

and the fact that productivity has been actually slowing

over the last couple of decades.

Fallen productivity is not, in itself, new,

but the fallen productivity seems to be

spreading from the advanced

and developed economies into the more developing economies.

How has that happened, and what are the consequences?

Indeed, we are seeing that major and emerging economies have experiencing

declining productivity growth.

It's hard to pinpoint the reasons.

There are probably a lot of factors, could be related to technology,

investment, reducing returns on capital, a lot of factors.

The key for emerging and developing countries, in general,

but for the world overall is to obtain sustained productivity growth.

To get sustained productivity growth, it requires both technological,

economic transformation, but also societal transformation.

Well, it's about systems of learning, of education,

of, that society is ready to advance the progress and to generate.

Of course, that's a long-term thing.

If you invest in somebody's education today,

you may not get payback for like 10 years or 15 years even.

I think the other thing that stuck out in this report

is that it mentions a number of times the issue of uncertainty.

The uncertainty of both the political

and the economic environment.

Of course, that discourages people from making the technological investment,

doesn't it?


Businesses, if they want to make investment,

the most important thing they calculate is,

"What's the return that I'm going to have?"

When there's uncertainty,

the return becomes less because the risk factor then becomes higher.

They're going to be a lot less likely to make certain investments

that they would make in a more certain world.

Uncertainty comes from a lot of factors,

but we have to try to reduce the uncertainty then as far as we can.

An important part of reducing uncertainty

is much more international cooperation

and also to resolve those geopolitical conflicts

that are driving uncertainty.

Do you think we should take a lesson from COVID here,

where it was said that one country

cannot recover from COVID unless all recover?

Would you say that there's a similar situation here

with the economic problems we see at the moment?


We live in a globalized world.

Economies are highly integrated,

and we cannot progress

in respect of decent work focusing only on one country.

It's an international endeavor and we have to tackle it together.

It's a very concerning picture, in this report,

and I don't like to leave people feeling too depressed.

Give us something positive that we can pull out of this

and look forward to.

What surprised me quite a bit was actually that the projected

increase in unemployment that we have is fairly small.

We are saying it's around 3 million,

which does sound like quite a few people.

If you compare that, for instance,

to the global financial crisis of 2008/2009,

global unemployment went up by 20 million.

During COVID, still a lot more, more than 30 million.

It's much less.

The reason is, in high-income countries,

that, well, businesses are currently still trying to find workers.

That's probably going to change

because there will be some impact on unemployment,

but businesses are not going to let go to the degree, the workers

that they have struggled so much to find

now during these years of recovery just when demand falls.

Employers are going to think twice about getting rid of workers.

They may be looking at some more form of flexible employment instead.

I suppose that's an advance.

Yes. I think the second thing is, with the COVID,

a lot of countries implemented some sort of employment retention schemes,

so the institutions exist now

and they will continue to function in the future as well.

Well, that's really something positive to end on,

and we need to leave it there.

It's a huge report. There's a lot in it,

so if you are interested in finding out more,

you can find it on the ILO's website.

For the moment, that's all we have time for in this podcast today.

My thanks very much to Stefan Kühn,

who is lead author of the WESO Trends Report.

For now, it's goodbye from me and the team.

Please join us again soon for another edition

of the ILO's Future of Work podcast.