Hello and welcome to the ILO Future of Work podcast. The space where we explore the stories and trends shaping the world of work. In this first episode of the year, we take a close look at a brand new report from the ILO. The report's message is clear. Global labour markets look stable, but that stability hides deeper problems. What's holding back job quality? How are demographic shifts and rapid technological change, including AI, transforming
work across regions? And how are evolving trade dynamics reshaping employment and prospects? These are some of the central questions explored in the Employment and Social Trends 2026 report. Stay with us as we unpack the report's key findings, hear from leading experts, and explore what these insights mean for workers, employers, and policy makers, and what leaders should be thinking about next. Joining me today are Stefan Kühn,
Senior economist in the Macroeconomic policy and labour market trends unit and the lead author of the Employment and Social Trends 2026 report. and Marva Corley, Senior economist and trade expert at the ILO. Welcome to you both and thank you for being here. Thank you. Thank you. Stefan, let me start with you. The Employment and Social Trends 2026 report is being released at a time of deep changes and uncertainty. Can you walk us through the core message of the report? The core message
of the report is that despite those uncertainties and large changes, global labour markets look stable. The global unemployment rate is projected at 4.9% in 2026, the same as it has been since 2023. That's quite remarkable. So the labour markets in terms of employment creation and also the economic growth show great resilience in face of all of those uncertainties. But a second core message is that stable labour markets are not necessarily healthy labour markets. There are major challenges underneath which need to be addressed and where progress is too slow.
Indeed, the report reveals that progress towards decent job is stalling. What does this mean for social justice? Decent work is fundamental for social justice, because it's about, it's not only about having employment but it's also about having a decent income, having access to social protection and having rights at work. And when progress is stalling, when we mean progress is stalling, it means that really the key indicators such as informality and working poverty, that progress has slowed down markedly over the past years compared to what we have
seen before that. And just as an example, so today we have 284 million workers who live in extreme poverty, meaning less than $3 per day. And because they just don't earn enough through work to get themselves out of poverty. And in low-income countries, half of all workers are in extreme poverty. And the number of working poor in low-income countries is rising because of the severe lack of progress in abolishing working poverty. And that's just one example
that really is a major problem for social justice, becau se poverty does not equal social justice. The report also talks about informality. How widespread is informal work today? Globally 57.7% of workers are in informal employment. Just to give a ballpark number, that's around 2.1 billion workers. So it's the majority of workers are informally employed. And as I said before the trend has stalled the improvements have stalled and we have been looking underneath why
the improvements have stalled and it's, a major reason is that the transformation of economies towards more productive sectors with better working conditions has slowed down markedly over the past decade, compared to what we have seen in the past and that's problematic. And another thing what we can also see is that progress within sectors to improve informality is also very slow. Another major theme is productivity. Why is weak productivity growth such a concern for decent work?
There's a saying that productivity is not everything but in the long run it's almost everything. Productivity growth is fundamental to provide income growth. Without productivity growth, you cannot have income growth. But of course, it's not the only thing. You also need the labour market institutions in place, that the productivity growth will actually attribute to the workers, to the broader society and not just end up in the pockets of a few people. But productivity growth is, we can see in the data, productivity growth is fundamental to lower working poverty, to
improve working conditions, to raise standards of living across the board. Let's talk about youth now. The report shows that young people continue to struggle. Why are they still having such a hard time finding decent jobs? Young people are struggling today, but they have always struggled in the past as well. Young people have limited experience and therefore they have a harder time entering the labour market than people who are already in the labour market. It's just hard to find your first job. So that's why they have a higher unemployment rate. What we are very
concerned about is not only the unemployment rate but the share of youth not in employment, education and training which stands at one in five youth who are that. So 260 million young people are not gaining valuable experience that they need to succeed later in the labour market and that's really a major concern and the share of youth not in employment, education or training so-called NEET it's also stabilizing so it's not improving further even though, for example
the Sustainable Development Goals were aiming for a substantial reduction in the share of NEET and that's not happening. We mentioned at the beginning we are living at a time of deep technological changes. What's the impact of AI on jobs? Well, currently the impact of AI seems to be rather limited as we can also see with the stable labour market situation. In the medium-term that might change a bit, but one also needs to see that in the context of the demographic change. In high-income countries, we can already see now that labour force growth is flat at zero, and the labour
force is going to shrink in the future. So there might be a risk of running out of workers of having severe labour shortages. So AI could help in in that sense, but the only question is whether we're going to run out of jobs or run out of workers, but we don't really know that. In low-income countries, the situation is quite different because there's a large number of young people entering the labour market who are unable to find decent work and who are therefore stuck with low-quality employment. Another important theme is gender gaps. Inequality still shapes
who gets access to work. Absolutely. Gender gaps are a global phenomenon. We estimate that only two out of five workers are women, even though they make up half of the population. But gender gaps are also quite regionally different, which depends a lot on the social norm. So in some countries or in some regions gender gaps for instance in terms of unemployment rates are very large. In other regions they are non-existent, showing that there can be gender discrimination in terms of getting a job but it might also in other regions is not the case. But the major problem,
the major gender gap is in the access towards the labour market, getting onto the labour market or being unable to do so. You mentioned high income countries and low-income countries. I wonder if you can talk a little bit more about the the market situation and how these trends are divergent and what the impact of this can be in the long term. In terms of unemployment rates, the trends globally are quite similar. Even though there are some regions, for instance, in Latin America where we see somewhat decreasing unemployment rates, while in other regions such as
Northern America for instance, where there's slightly increasing unemployment rates. But of course going beyond that, going beyond unemployment rates the realities in the labour markets are fundamentally different across the world, in terms of informality rates, working poverty, working conditions, the extent of decent work, but also in terms of demographics. What's the labour force composition? Do we have a lot of young people? Do we have a lot of older workers? Just another example in terms of when we're talking about improvements in work quality.
In Asia – so the major improvements in work quality over the past decades have been driven by Asia, by China, now India, and that's still the case. The continent is still responsible for the improvements in work quality. But the improvements are slowing down. While in Africa, work quality is, well, is almost receding, because of the large growth of the workforce and since Africa is increasing in its share in the global labour force that has an impact
on the global aggregates as well, which leads, also contributes to the stagnation in global work quality progress. Indeed, as you said earlier stable labour markets are not necessarily healthy labour markets. I would like now to bring Marva into the conversation. Marva, how are trade dynamics and global risks shaping the employment outlook? I think in short it's really about what the report finds and a lot of what's underlying what Stefan said is really the issue of uncertainty. Macroeconomic certainty has become a really key defining feature in the short
term and trade policy uncertainty is a big part of that. Trade policy uncertainty, it includes, you know, we can think about trade restrictions is probably what's on everyone's mind, but also geopolitical tensions, conflicts, as well as any sort of big disruptions on global supply chains. And this makes it, this uncertainty makes it harder for firms to sort of plan, makes it harder for them to invest and hire workers. And this has a large impact in terms of the labour market.
Our analysis shows that when trade policy uncertainty rises, even moderately, it can put downward pressure on wages across the board. And the effects are really strongest in those economies with sort of deep integration in supply chains. Think about, for example, Southeast Asia, Southern Asia, but also Europe and Central Asia where real changes in terms of wages could fall between say almost a half a per cent per year. And that might not seem like a lot, but if you
look at it over time, it really is. Let's talk a bit about trade. Why does trade still matter for job quality? Trade matters for job qualities in a number of ways. First, let me let me take a step back. I mean, the report not only looks at short-term volatility in terms of trade, but it also looks at some longer term trends. And if you allow me, I'd like to talk about a couple of those longerterm trends. One is that the composition of trade has been changing. So, if you look at trade, we're moving to a world in terms of more trade in services rather than trade in goods.
And that has some implications in terms of the types of jobs that are being created by trade. So we look now and we see that nearly half of the jobs that are created by trade – that's 465 million jobs worldwide are created by trade. Half of those jobs are actually linked to services. And this is particularly relevant for some regions more than others. Not only are the type of jobs related to trade changing, but also trade patterns are changing. So you have more trade between middle-
income countries, for example, now than you do between high-income countries. And this means a lot in terms of the types of jobs that are created that are linked to trade regionally as opposed to those jobs that are linked to trade outside the region. We see some movement towards trade like regionalization of trade and because some regions are left out such as southern America, you can think of Africa where most of trade takes place outside the region, this has implications in
terms of how these regions are able to get sort of get a tow hold into global supply chains and impacts on job creation. Now in terms of the quality of these jobs, we know that from findings outside the report and from our findings in the report that jobs linked to trade tend to be better quality jobs than those jobs with less links to trade. Particularly in lower income and middle income economies. They are better jobs in terms of being in the formal sector. They're better jobs
in terms of pay. They're better jobs in terms of just having a formal employment relationship. And this is particularly important for some of the trends that Stefan talked about: reducing informality, as well as increasing the number of women and young people who get their first job in the labour market. In many low and middle-income countries, these jobs tend to be in trade oriented sectors. So it has a potentially very important impact for the types of jobs that are created.
So we're seeing different patterns based on different regions of the world. What implications does that have for the future? For the future, one really has to think about with, like I said, this sort of change in patterns of trade towards more service-oriented jobs – think about your market services, logistics, digitally delivered services, business services. One has to think about what type of skills are needed for these jobs. Are these the same type of skills that are needed for jobs more linked to the manufacturing sector? And with these changing sort of patterns
of trade across regions, one also has to think about if those jobs that are being created are also decent and productive jobs. Are they jobs that are able to provide a living wage? Are there jobs in terms of you know security, as well as, you know, formal relationships? Are there jobs that give voice to workers? So I think these things are very important to consider for the future. I would now like to bring both of you and put a question to you. We have spoken about risks. So let's talk now about opportunities. What opportunities do these changes we have
been discussing create for improving living standards? As I mentioned while there are real risks, these changes also open up you can imagine some important opportunities for improving living standards for workers. First of all, if you think about the shifts as I talked about, in trade patterns, it can provide opportunities for countries to access new markets, to have entry points into new global and regional supply chains. It also can create a space, and I think this is very important, sort of rethink trade policy and the link to the labour
market from the very beginning, learning from some of the lessons of the past about how to make trade more important, how to bring in workers who were left out, sort of, in the first wave of globalization. And I think there's some, we see some evidence of that already happening. If you think about the way that trade agreements are actually including more linkages to the labour markets in terms of labour provisions that already incorporate labour standards,
put emphasis on living wages and create space for social dialogue between workers and employers. In the regional section for Europe and Central Asia, the report looks at the implications of ageing for long-term viability of maintaining standards of living in the context of shrinking labour forces and it shows that we need to accelerate productivity growth quite dramatically. And here AI even though it could be a threat to many jobs but it also holds the promise of enabling that
productivity growth, of avoiding the labour, that the labour shortages really become a major constraint for maintaining standards of living. So that's clearly an opportunity, but it relies on that labour markets, the jobs that remain, remain decent jobs that are not fundamentally transformed in that sense by AI, and also that the the benefits of AI can attribute to society at large and not only to a few monopolized corporations. And finally, from the ILO's perspective, what needs to happen next?
The report calls for coordinated action and stronger institutions to advance decent work and social justice. But in practical terms, what does that look like? We need to strengthen social dialogue, to get everyone together to discuss what needs to be done to deal with the challenges of the future. I just want to give you one example, there's a major concern right now that AI threatens entry- level jobs. So how do young people gain the experience that they need in order to be able to productively work with AI? Because today a lot of young people when they
start jobs, they do, let's say more menial tasks, which nevertheless give them important experience and enterprises just as workers and governments have an interest to figure out okay how can we get workers to gather the experience that they need to be productive workers with AI when we are replacing the task we gave them before through AI. So there's a clear need for social dialogue to discuss such issues. And if I could add to that, I think it's really important for policy makers
to think of issues that are related to work, not only from a social perspective, but also from an economic perspective. When workers have increased wages, when workers have security, when workers, you know, are able to work in conditions of freedom, this increases their productivity. And these productivity benefits have impacts way beyond social benefits. They have benefits in terms of improving firms' profit and improving the overall economic resilience of societies. So I think that, you know, advancing decent work and promoting decent work is
actually the surefire way to improve economic progress overall. Indeed. And that's it for today's episode. We've been speaking with Stefan Kühn, author of the Employment and Social Trends 2026 report, and Marva Corley, Senior researcher and trade expert at the ILO. In the coming weeks, we'll continue exploring the forces reshaping the world of work. Follow us on LinkedIn, YouTube, Instagram, and X, and now also on Blue Sky and Threads under our official channels. For now,
goodbye and see you very soon for another episode of the ILO Future of Work podcast.
