Global Labour Markets Struggle Amid Slowing Economy, Rising Challenges Highlighted in ILO's 2025 Trends Report

Economic growth slowed to 3.2% in 2024, down from 3.3% in 2023 and 3.6% in 2022, and is projected to further decelerate.

The International Labour Organization (ILO) has released its World Employment and Social Outlook: Trends 2025, revealing troubling signs for global labour markets amidst a slowing global economy. Despite steady unemployment rates, deep-seated challenges such as youth unemployment, informal work, and rising inequality persist, complicating recovery efforts.

In 2024, global employment matched the growth of the labour force, keeping the unemployment rate steady at 5%. However, youth unemployment showed little improvement, staying at a high 12.6%, while informal work and working poverty returned to pre-pandemic levels. The effects were most severe in low-income countries, where creating decent jobs remains a significant hurdle.

Economic Deceleration and Labour Market Pressure

Economic growth slowed to 3.2% in 2024, down from 3.3% in 2023 and 3.6% in 2022, and is projected to further decelerate. Inflation, though declining, remains high and continues to erode wages. Real wage growth has only been achieved in some advanced economies, while most countries are still grappling with post-pandemic and inflationary pressures.

Declining Labour Force Participation, Particularly Among Youth

The report highlights a troubling decline in labour force participation, especially in low-income countries, where NEET (Not in Education, Employment, or Training) rates among youth have spiked:

• NEET rates for young men in low-income countries increased by nearly 4 percentage points above pre-pandemic levels, reaching 15.8 million (20.4%) in 2024.
• Young women in these countries experienced a similar rise, with 28.2 million (37%) classified as NEET, an increase of 700,000 compared to 2023.

Globally, NEET numbers reached 259.1 million in 2024, with women accounting for 173.3 million (28.2%) and men 85.8 million (13.1%).

Persistent Global Jobs Gap

The global jobs gap – encompassing unemployed individuals, those unavailable for work, and discouraged workers – reached 402 million in 2024, including:

• 186 million unemployed people
• 137 million temporarily unavailable workers
• 79 million discouraged workers

Although narrowing since the pandemic, the gap is expected to stabilize in the next two years.

Opportunities in Green and Digital Economies

Despite challenges, new opportunities have emerged in green energy and digital technologies:

• Jobs in renewable energy surged to 16.2 million, fueled by investments in solar and hydrogen power, with nearly half of these positions located in East Asia.
• Digital technologies also present job growth potential, though many nations lack the necessary infrastructure and workforce skills to leverage them fully.

ILO Recommendations for Addressing Labour Market Challenges

ILO Director-General Gilbert F. Houngbo emphasized the urgency of addressing these challenges: “Decent work and productive employment are essential for achieving social justice and the Sustainable Development Goals. Action is critical to ensure social cohesion, mitigate climate impacts, and address economic disparities.”

To tackle current labour market issues, the report recommends:

1. Boosting Productivity: Invest in skills training, education, and infrastructure to stimulate economic growth and job creation.
2. Expanding Social Protection: Provide access to social security and safe working conditions to reduce inequality.
3. Harnessing Private Funds: Encourage the effective use of remittances and diaspora funds in low-income countries to support local development.
4. Promoting Digital Equity: Improve access to digital technologies and skills, particularly in under-resourced regions, to unlock new economic opportunities.

The Path Ahead

The ILO report underscores the critical need for global collaboration to tackle the interconnected issues of labour market instability, climate change, and economic inequality. With strategic investment in green energy, technology, and social safety nets, nations have an opportunity to build a more inclusive and resilient global economy.