2023 could be the year of low global unemployment

2023 may become the year of minimum global unemployment (5.1% after 5.3% in 2022), and in 2024 it may increase to 5.2%, according to a global report published yesterday by the International Labor Organization (ILO). employment forecast. The reasons for this dynamics are the slowdown in global labor productivity growth, the increase in real costs of companies for hiring workers following the slowdown in inflation, and the generally slow adaptation of the labor market to changes in the global situation. Due to its isolation from most large economies, as well as neighboring countries participating in its adaptation to new conditions, these effects will not spread to Russia: unlike most G20 countries, these states demonstrate minimal levels of unemployment, growth in real wages and labor demand – which, however, along with inflation, will slow down their economies in 2024.

Global unemployment is moving from a multi-year decline to growth – after reaching a minimum of 5.1% in 2023, it could rise to 5.2% in 2024 (plus 2 million unemployed worldwide), the ILO suggests in the report “World Employment and Social Outlook (WESO). The reversal of the trend is the result of the continuation of processes recorded in last year’s ILO report (see “Kommersant” dated January 17, 2023): the expansion of hiring by companies in the context of soaring inflation, which allowed them last year to reduce real labor costs, following a decrease The rate of growth in consumer prices should have caused an increase in these costs – and initiated the “clearing” of ineffective employees from the staff.

The central themes of WESO-2024 are therefore issues of labor productivity, the dynamics of real wages (they are falling in most developed countries), as well as issues of local employment imbalances that threaten the least protected segments of the population. Thus, the ILO records that in comparison with 2019, the actual number of hours worked by one employee is falling in the world – this is a general global trend. The largest reduction (about two hours per week) was recorded in middle- and low-income countries, with a slight increase only for working women in low-income countries. After the post-Covid recovery, the growth of labor productivity slowed down again – despite the fact that in the last decade its low rates were recorded with faster growth in wages.

As a result, in the context of slowing global growth, the decline in real wages in 2023 affected almost the entire world, except for Mexico, China and Russia—the anti-records among the G20 countries were in Brazil (minus 6.9%), Italy and Indonesia (minus 3.5 each). %). The process of declining labor income, the ILO notes, is predictably unevenly distributed both around the world and across categories of workers – for example, while employment in poor countries increased in 2023, the number of workers living in extreme poverty (less than $2. 15 per day at purchasing power parity), the number of workers with incomes of less than $3.65 per day increased by 8.4 million.

It should be noted that the situation of the labor market in the Russian Federation and neighboring countries (including Central Asia), which differs significantly from the global one due to their isolation against the backdrop of the Russian military operation in Ukraine, has been highlighted by the ILO as a separate topic. In addition to a significant (about 7%) increase in real wages and historically low unemployment in Russia itself, the spread of this effect to neighboring states is recorded. It, according to WESO, is ensured both by the departure of foreign companies from the Russian Federation and the replacement of some relocants by migrants, and by the growth of economic activity in trade, the hospitality and real estate sectors in countries neighboring the Russian Federation due to the growth of their transit role in replacing supplies from developed countries. The ILO sees labor shortages and demand for migrant labor in this part of the world as long-term – however, according to forecasts, the slowdown in economic growth and labor productivity growth in 2024 will probably not bypass Russia.

Oleg Sapozhkov