Ukraine conflict, other crises spur decline in global labor markets: ILO report

By Peter Kenny

GENEVA (AA) – The outlook for global labor markets has worsened in recent months, and on current trends, job vacancies will fall and global employment growth will decline substantially in 2022’s final quarter, the International Labor Organization (ILO) said on Monday.

Rising inflation is causing real wages to fall in many countries, Gilbert Houngbo, the new head of the ILO, told journalists at a press conference.

The inflation comes in addition to significant declines in income during the COVID-19 crisis, which affected low-income groups most in many countries, he said.

According to the ILO Monitor on the World of Work report, worsening labor market conditions are affecting both employment creation and the quality of jobs, pointing out that “there are already data suggesting a sharp labor market slowdown.”

“Tackling this deeply worrying global employment situation, and preventing a significant global labor market downturn, will require comprehensive, integrated, and balanced policies nationally and globally,” Houngbo said.

Labor market inequalities will likely increase, contributing to a continued divergence between developed and developing economies, he added.

- Overlapping crises

“A set of multiple and overlapping crises, compounded by the Ukraine war and subsequent negative spillover effects, have materialized over 2022 which are deeply impacting the world of work,” according to the report.

The effects are being felt through food and energy inflation, declining real wages, growing inequality, shrinking policy options, and higher debt in developing countries.

A slowdown in economic growth and aggregate demand will also reduce demand for workers as uncertainty and worsening expectations affect hiring, said the report.

“We need a strong commitment to initiatives such as the UN Global Accelerator on Jobs and Social Protection, which would create 400 million jobs and extend social protection to the 4 billion people who are currently unprotected,” said Houngbo.

At the beginning of 2022, the number of global hours worked was recovering strongly, notably in higher-skilled occupations and among women.

However, this was driven by an increase in informal jobs, jeopardizing the 15-year trend toward formalization.

The situation worsened during the year, and in the third quarter of 2022, ILO estimates that the hours worked were 1.5% below pre-pandemic levels, amounting to a deficit of 40 million full-time jobs.

- War in Ukraine

In addition to the terrible humanitarian cost, the war in Ukraine has dramatically impacted the country’s economy and labor market.

The ILO estimates that employment in 2022 will be 15.5% (2.4 million jobs) below the 2021 pre-conflict level.

This projection is not as low as the ILO’s estimate in April that 4.8 million jobs would be lost.

The positive change is a consequence of the reduction in the number of areas of Ukraine under occupation or with active hostilities.

However, the report said this partial labor market recovery is modest and highly fragile.

The large number of internally displaced persons (IDPs) and refugees looking for jobs in Ukraine and elsewhere is likely to create downward pressure on wages.

The report estimates that 10.4% of the country’s total pre-war workforce are now refugees in other countries.

This group of 1.6 million is overwhelmingly women, with many having worked previously in the education, health, and social care sectors.

A recent survey found that some 28% of Ukrainian refugees surveyed had so far found waged or self-employment in their host countries.