The global labor market registered a positive performance last year, with several of the key indicators already recovered from the impact of the pandemic. However, inflation keeps wages under pressure, with a deterioration in purchasing power in most economies, according to a new ILO report.
According to the report World Employment and Social Outlook: Trends 2024, released by the group this Wednesday, inflation was once again the main headache for workers at the general level last year, who saw their income purchasing power diminished despite a better performance of the labor market.
“Despite the reduction in unemployment and the positive growth of employment, in countries with available data, real wages have decreased. Most of the G-20 countries saw a real drop in wages in 2023, meaning that wage increases failed to counteract the rise in inflation. Only China, Russia and Mexico achieved real wage growth in 2023,” the organization pointed out.
The highest real wage growth in the year was recorded in Russia, at an approximate level of 8%, followed by China (5%) and Mexico (4%). At the other end, within the economies that make up the G-20, the ILO pointed out, the largest falls in remuneration due to the impact of the rise in consumer prices were recorded in Brazil, Italy, Indonesia and Japan
In the case of the Mexican market, according to the latest available data from the National Survey of Occupation and Employment (ENOE), the adjustments to the minimum wage in recent years, which have driven a 110% growth in real terms between 2018 and 2024 in this reference, have reduced the number of workers in labor precariousness.
When compared with equivalent wages, in the third quarter of 2023, the rate of critical conditions of occupation (TCCO) was 30.3%, the best level recorded in 12 years. In the second quarter of 2020, the one with the greatest impact on the labor market due to the Covid-19 pandemic, the working population in precarious labor conditions reached 37.2 percent.
Meanwhile, according to research by the National Commission of Minimum Wages (Conasami), the increases in this reference have had an impact on an improvement in labor income, which have grown 21.3% due to the accumulated increases in the six-year term.
At the global level, the ILO report states, both unemployment and the labor gap, which covers the broader need for employment in the market, had a positive performance in 2023 and have already returned to the levels prior to those recorded before the health emergency due to Covid-19.
“Despite the economic slowdown, global growth in 2023 was slightly higher than expected and labor markets showed surprising resilience. Thanks to the intense growth of employment, both the unemployment rate and the employment deficit have fallen below the pre-pandemic values. The global unemployment rate in 2023 was 5.1%, after a modest rebound from 2022,” the agency said.
Despite the positive data in the balance of the labor market in 2023, for this year, the ILO estimates that after the recovery from the impact of the pandemic, the world of work will face a new deterioration due to the prevalence of several crises at the global level. “Beneath the main figures, a fragility begins to emerge,” he added.
It is projected that the number of people in search of employment will increase by two million over the course of 2024, which would raise the unemployment rate from 5.1 to 5.2 percent. In addition, there will continue to be pressure on labor income due to the inflationary impact on the cost of living.
“The process of devaluation of real wages and the consequent decline in living standards, caused by high and persistent inflation rates and the increase in housing costs, will not be compensated in the short term,” the document states.
In addition to these elements, the organization highlights that the recovery of labor participation rates after the impact of the pandemic has been uneven, as although female employment has had a positive performance, there is still a significant gender gap. The same occurs by age groups, where job creation for younger people has advanced at a slower pace.
Meanwhile, after a brief post-pandemic boost, labor productivity continued to slow down, reaching the levels observed a decade ago, this, the agency explained, despite the investment of companies for technological transformation and digitalization. This phenomenon, he pointed out, has been exacerbated by the shortage of skilled labor and the dominance of large digital monopolies.
“This report looks beyond the main figures of the labor market and what it reveals should be a cause for great concern. It is beginning to look like these imbalances are not simply part of the pandemic recovery, but structural,” said Gilbert F. Houngbo, director general of the ILO.
“The decline in living standards and low productivity, combined with persistent inflation, create the conditions for greater inequality and undermine efforts to achieve social justice. And without greater social justice we will never have a sustainable recovery,” he added.
Source: El Economista
