The global decline in labour income has been attributed to artificial intelligence (AI).
This is according to insights from the International Labour Organisation’s (ILO) World Employment and Social Outlook: September 2024 Update report released recently.
The report revealed that inequality was on the rise globally, with the share of labour income stagnating and a significant proportion of young people remaining unemployed, uneducated, or lacking in training.
The ILO analysed the impact of technological innovations over the past two decades across 36 countries. While these innovations have led to sustained growth in labour productivity and output, the ILO noted that they can also contribute to a decline in the share of labour income.
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“This is consistent with automation-based technological innovations driving the aggregate effects,” the ILO stated, warning that the absence of a stronger policy response across a wide range of relevant domains could further push down the labour income share.
The report suggested that to mitigate the potential negative effects of inequality, the benefits of technological advancements should be distributed more equitably.
COVID-19 worsened inequalities
The report also highlighted slow progress towards key Sustainable Development Goals (SDGs) as the 2030 deadline approaches.
It also revealed that the global labour income share, which refers to the proportion of total income earned by workers, decreased by 0.6 percentage points between 2019 and 2022, and has remained stagnant ever since.
This decline has intensified a long-standing downward trend.
The report stated, “Had the labour income share remained at its 2004 level, workers’ income would have been $2.4 trillion higher in 2024 alone.”
It further added that the COVID-19 pandemic significantly contributed to this decline, with nearly 40 percent of the reduction in the labour income share occurring during the pandemic years from 2020 to 2022.
“The crisis exacerbated existing inequalities, particularly as capital income continues to concentrate among the wealthiest, undermining progress towards SDG 10, which aims to reduce inequality within and among countries,” it added.
Celeste Drake, the ILO deputy director-general, upon releasing the report, says, “Countries must take action to counter the risk of declining labour income share. We need policies that promote an equitable distribution of economic benefits, including freedom of association, collective bargaining, and effective labour administration, to achieve inclusive growth and build a path to sustainable development for all”.
