Hello, and welcome to this new Future of Work podcast. It is the start of 2025, and today's discussion is about employment trends for this year. The outlook is not very good. The ILO has recently issued its World Employment and Social Outlook Trends, and we have found that geopolitical tensions, the cost of climate change, and unsolved debt issues are putting labour markets under a lot of pressure. Now another finding is that real wages have only increased in certain advanced economies, but most countries
are still struggling to recover from the effects of COVID and inflation. Last but not least, labour market participation is falling, especially among young people. Now the report came out a few days before the world's most powerful and influential leaders started gathering at the World Economic Forum in Davos to discuss all of this and explore solutions to some of the very key issues that we've identified in our ILO report, including how to boost productivity and improve living standards in 2025. To discuss all of this,
I'm pleased to have with us today Ekkehard Ernst, the author of the report. Hello, Ekkehard, and thank you very much for joining us. Hello, thanks for having me. Now let's start with the big picture. Why is the recovery of the labour market losing momentum? What we actually see is that we see a lot of stability right now. The global unemployment rate is at 5%, same as the last two years, and we don't expect much change in that. Underneath what actually is happening is that a lot of heterogeneity is building up and a lot of low-income countries
are actually suffering from a lack of faster growth. What we actually see is not so much a slowdown. We do see a slowdown compared to the last years after the pandemic, but that is to be expected. What we really see is a stagnation with respect to the long-term perspective. If you look back at 2015, you see a lot of countries have not improved their situation in terms of informality, in terms of working poverty. Considering the uncertainty and the changes that we are seeing in the next few years, we don't expect any shifts to happen that would get us closer to the Sustainable Development Goals
for 2030. We see stagnation. We don't see improvements, and we see especially those countries who would benefit the most are not getting off the ground. Indeed. What are the reasons for this stagnation? What are the main challenges that are weighing down labour markets? A lot of these countries actually do not benefit from faster investment and faster structural change. Also, expected after the pandemic is the recovery path that would go beyond what we saw before 2020. What we actually did see
in the end was a slowdown in investment and in particular a slowdown in structural change. Structural change is when people moving out of low-productive sectors like agriculture and some traditional services into manufacturing and modern high-skilled services. We don't see that happening. What we actually see is a slowdown of that whole process. Up to the point in certain low-income countries, you see people moving back to agriculture. They're actually going back to low-productive services and low-productive agricultural jobs, which obviously then lowers
their living standards even further. Why is that happening? Most of these countries actually struggle to integrate their global economy properly. What we face right now is this global uncertainty with trade barriers being erected, maybe even further looking at the announcement that have been made for this year. A lot of these countries really do not benefit from a fully integration into global markets and cannot, in a sense, export their problems
to other countries. One of the things that you also mentioned in the report is the impact of geopolitical tensions and climate change. How are these two factors impacting global labour markets, especially in light of the countries that are suffering the most? Climate change is a very obvious one because over time that the damage that climate change is producing is going up. Most low-income countries do not have the capacity to protect themselves. They do not have the capacity to compensate for the damage
that is being caused. As these costs grow up, these countries suffer more and more. Their infrastructure gets deteriorated. All these factors that would help them to develop and grow are actually being undermined by climate change. Geopolitical tensions are a similar story, and it really links very closely to what I mentioned earlier in terms of trade barriers being erected, barriers to migration being erected. All this potential that these countries would have to grow and to develop are being shut off.
Another element that comes out clearly in the report is the situation of young people or young workers, and especially in low-income countries. In fact, we know from the report that young people in low-income countries are in an especially difficult and precarious situation. Their NEET rate, which is the rate of people or workers who are not in employment, in education or in training, is especially concerning. Why is that? Can you tell us more? Yes. Traditional youth unemployment rate is always higher than the one for adults.
You see that globally youth unemployment rate is around 12%, which is more than twice the global average unemployment rate. That's not something surprising because young people always have more difficulties to find stable jobs at the beginning of their career, et cetera. What is really concerning is that a lot of young people are then, once they face these challenges actually dropping out completely or becoming inactive, not even returning to education. As these problems build up, it becomes more and more difficult for them to actually get a stable job.
Especially in low-income countries, that has been a particular problem. You see really with the pandemic, that problem has multiplied in particular in these countries because of the disconnect that these countries face. Young people specifically have been facing major barriers to go back. This NEET rate that you mentioned actually has shot up in these countries and hasn't come down yet. In many other countries it has stabilized, but in low-income countries, because of the lack of these countries to grow and to provide opportunities for young people to enter successfully, the labour market has been shut down.
As these problems multiply, you continue seeing that you create this vicious circle of young people not entering the labour market, firms not investing because they don't see any potential to hire people. The economic activity slowing down. You see that circle preventing these countries to take off properly. Of course, at the same time, these same young people are not even able to upskill. They're not able to be in education or training at the same time. -Yes. Plus often,
there's not enough capacity at the educational system to actually provide them with the proper training. A lot of young people, even at the very early age, cannot attend properly school, primary school, and even in many countries you have to pay for it, which means that, a lot of parents decide maybe to only send one or two children instead of all of them. You already start your life with a disadvantage, and that builds up over time. You mentioned earlier the SDG, Sustainable Development Goals, 2030,
and you've just made me think of that in what you just said, because it sounds to me that young people in some of these countries are stuck in a bit of a negative loop where one thing reinforces the other. What I would like to ask you, Ekkehard, is what would you say is the main change that you would like to see in order to break the cycle and get these young people jobs, get the labour markets going in developing countries and edge us a little bit closer to the SDGs? Yes, so I think there are three elements to that question.
One is that obviously within countries, especially within low-income countries, you need to provide more opportunities for growth, for employment. Now we see one of the key aspects or key findings of the report is that in a lot of countries, economic activity is very highly concentrated in specific hubs. You see certain cities be extremely being dynamic and providing jobs, but a lot of other regions in, within each country are not benefiting from that. The economic success of certain cities or certain regions do not spread
across the country. That is partly related to the fact that countries do not have the capacity to provide infrastructure, to provide schools, et cetera, for these people. That's the first element. The second one is, as I mentioned at the beginning, economic integration or integration in the world economy is really important for these countries. They need to be able to export, even if they have very basic commodities or so, to be able to successfully grow. If that's not happening and it's increasingly challenging for these countries to make that happen, these countries will suffer enormously
from a lack of growth. The third element, and I think that's something where, especially on the labour market collaboration or cooperation between countries can come in, is we need to provide opportunities for young people in particular to migrate to other countries and to successfully integrate labour markets in other countries. We have a huge labour market shortage in many advanced economies that could potentially being filled by people with the right skills, with the right language skills, et cetera.
There are programmes where countries are trying to do that at the bilateral level, but these programmes are too small to make a difference. I think that using some of these examples and targeting specifically those countries where we see these shortages with countries where there's a lot of labour supply surplus, I think would be beneficial for both receiving and sending countries. Many of the issues that you raise and that are really raised in the report, like for example, economic growth,
better jobs, quality jobs, market integration, investing in skills and training to help people through the green transition as we move into a low carbon economy, many of these issues are also on the agenda at the World Economic Forum. If you had the chance to speak to the leaders who are in attendance and gathered in Davos, what would you say to them? What advice or recommendation would you give them? I think the first advice I would really put on the table is that make sure that you don't put any further barriers to the global economy.
I think that what we are currently seeing is going exactly in the wrong direction. It will not only damage the prospects for low-income countries, it will damage the prospects for the global economy. I think that's obvious. The second point is, as I said, I think on migration, there is really a potential to have. It obviously requires a proper legal framework. These migrants need to be protected. They need to be skilled. They need to be trained. But there are, as I said, frameworks available. There are agreements that have been already been signed.
I think it's taking some of these examples and scale them up. Davos is an ideal place to share this type of information inside. I think that would be this other one. The third one is the green transition is really an opportunity, especially for low-income countries to decarbonize and to de-connect themselves from, international oil price cycles, et cetera. Having a more autonomous way of development by using their own indigenous resources for employment and energy
would actually be helpful. Some countries are actually exploring that opportunity to their benefit. Very interesting and topical. I'm afraid we have to leave it here. Thank you so much, Ekkehard. This does bring us to the end of our podcast. Thank you for joining us. To our listeners, thank you for tuning in. You can also follow us on social media. We're on LinkedIn, YouTube, Instagram, and X. Now we're also on Blue Sky and threads under the name of ILO. For now, it's goodbye from us. We look forward to seeing you again soon for another episode of our podcast.
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