Global jobs gap projected to stand at 11.7% in 2023: ILO

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This is more than double the employment count, and includes 191mn unemployed people and an additional 262mn who want employment but do not qualify as unemployed.

In 2023, the global jobs gap is projected to stand at 11.7%, representing 453mn people, more than double the employment count, according to the International Labour Organization's (ILO) monitor on the world of work - 11^th edition.

This figure, the ILO added, includes 191mn unemployed people and an additional 262mn who want employment but do not qualify as unemployed. Those without a job but not classified as unemployed include, for instance, people who are discouraged from searching and those currently unable to take up employment at short notice, such as persons with care responsibilities.

Among all nations studied, low-income nations seem to be seeing the highest rate of unmet demand for employment in the year. In particular, per a new indicator known as the jobs gap – which captures all persons who would like to work, but do not have a job, low-income nations face the largest jobs gap rate at 21.5%, making up the only country income group that has seen a long-term rise in the jobs gap rate (2005: 19.1%).

Meanwhile, the rate in lower-middle-income countries stands at 11.5%, while for upper-middle-income countries it stands at 11.2%, and high-income countries register the lowest rates (8.2%).

With the above data on hand, the findings indicate that overall, while only a few countries experience relatively low jobs gap rates, the rest of the world continues to face persistent employment deficits.

Are these gaps a decline or rise from previous years?

As identified on the monitor, the above-mentioned global jobs gap rate is projected to be 0.2 percentage points (pp) than previously recorded. However, it noted "considerable variations" between the different country income groups. Low-income countries, for instance, are projected to see little change in 2023 – which the ILO sees as a reflection that, for various reasons, these countries do not have enough new employment opportunities for the rapidly-growing, youthful populations. 

Looking at other income groups, the monitor showed:

• Lower-middle-income countries are projected to see almost no change in 2023 but have experienced a sizeable long-term decline.
• Uppermiddle-income countries are projected to see the largest decrease (0.5pp) in 2023.
• High-income countries have seen the largest long-term improvement in the jobs gap rate, with a 4pp decline since the aftermath of the 2008–09 global financial crisis and a drop of 0.3pp in 2023 alone.

Leveraging social protection

In further findings, the ILO monitor detailed the impact that social protection in different countries had on employment, citing it as "one key policy area that is constrained by the overall situation, limited fiscal space, and the associated lack of investment in such measures. At the same time, there is "robust evidence" that an investment in social protection will bring about broader economic, employment, and social benefits. 

While this is so, progress has been slow in improving access to such protection. For example, even though old-age pensions are the most prevalent form of social protection, large coverage gaps remain.: While 97.5% of older persons in high-income countries receive a pension, this is only the case for 38.6% and 23.2% of older persons in lower-middle-income and low-income countries, respectively.

In that vein, the ILO highlighted the deeper impact these pension systems had on people, apart from simply addressing the immediate needs of older persons:

• While low pension coverage is a worrying sign of underinvestment in social protection, it also presents an opportunity to foster sustainable development and social justice.
• The prospects of receiving a pension in old age can change younger people’s behaviour in the labour market and beyond (box 2), increasing economic growth and reducing income inequalities. This occurs – provided commitments to pensions are credible – even in countries where older persons account for a small share of the population, and so where achieving universal coverage is relatively easy. 
  • Several country-level studies have shown that old-age pensions lead to decreases in desired family size and, consequently, in fertility rates. As found, without guaranteed retirement income, people tend to have more children with the expectation that they will provide support in old age. A pension scheme, as such, reduces this need and hence decreases desired family sizes.

Putting in place proactive employment policies

In its roundup, among other takeaways, the ILO monitor stressed the need for countries to set in place proactive employment policies that make significant contributions not just in the short term, but also in the long term. It stated: "Countries need to ensure that recovery efforts and, in the case of conflict- and crisis-affected countries, reconstruction will foster employment growth and support long-term structural transformation."

Thus, policymakers will need to carefully balance the use of macroeconomic policies that aim to tame inflation and manage debt with the goal of protecting and promoting decent jobs. Given the centrality of employment in sustaining inclusive recoveries, ongoing assessments of labour markets are crucial not only to identify the impact of the ongoing multiple crises but also to assess the effects of macroeconomic policy adjustments.

In that regard, a more pro-employment approach to macroeconomic policies needs to consider not only narrow measures of unemployment but also broader indicators.

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Photo: ILO