The International Labour Organization (ILO) has released its latest World Employment and Social Outlook: September 2024 Update, highlighting what it describes as “upward pressure on inequality” due to the stagnation of the global labour income share.
According to the ILO’s latest estimates, the global labour income share fell by 0.6 percentage points between 2019 and 2022, and this decline has not yet recovered as of 2024. Over the longer term, between 2004 and 2024, the labour income share dropped by a total of 1.6 percentage points.
In simple terms, the labour income share tells us how much of a country’s economic output goes to workers, compared to how much is earned by those who own capital. A lower labour income share means that a larger portion of national income is going to capital owners. On a global scale, this measure provides a snapshot of how income is distributed across economies and is a key indicator for tracking progress towards Sustainable Development Goal 10 (SDG 10) – “Reduce inequality within and among countries”.
As of 2024, the labour income share is highest in the Americas (54.7%) and Europe and Central Asia (54%), according to the ILO estimates. It is lowest in the Arab States, where the share stands at 33%.
Since 2004, Africa and the Arab States have seen long-term gains in their labour income shares; however, both regions show a lower labour income share in 2024 compared to 2019. In Africa, the share declined from 48.5% in 2019 to 47.3% in 2024, and in the Arab States, it fell from 34.2% to 33% over the same period. Other regions, such as the Americas, Asia and the Pacific, and Europe and Central Asia, also experienced lower shares in 2024 compared to 2019.
The ILO report highlights the role of technological advancements, particularly automation, in reducing the labour income share. While innovations such as artificial intelligence (AI) and automation have driven productivity and output growth, the report notes that these benefits are not being evenly distributed. Without policies that ensure the gains from technology are shared, future developments could lead to further declines in workers’ earnings, potentially worsening global inequality.