Growing disparities in labour markets

Foresight

LEGS AND BAG OF A BUSINESS MAN WALKING ON ZEBRA LINES — (© Photo by Ryoji Iwata on Unsplash)

Trend: Growing disparities in labour markets

A trend indicates a direction of change in values and needs which is driven by forces and manifests itself already in various ways within certain groups in society

Labour markets are transforming, and the pandemic is increasing the speed of some of these changes. Work-related inequalities persist and if not adequately addressed, they could be further exacerbated by the effects of the crisis too.

The adoption of automation and the response to COVID-19 will play a key role in shaping levels of inequality in future labour markets. New job opportunities may emerge, related to adaptation to the pandemic and the momentum for new technologies and activities to reduce carbon emissions. There is an overlap between jobs at risk due to automation and job losses due to COVID-19. Certain groups of workers (such as young people and women and those working in wholesale and retail) are more exposed to these risks than others. Investment in their adaptability and resilience will be key to prevent growing labour-market inequalities.

This Trend is part of the Megatrend Widening inequalities

Manifestations

Developments happening in certain groups in society that indicate examples of change.

The effects of the pandemic can speed up the transformation of labour markets

Technology keeps driving changes in the labour market by making some jobs that were previously carried out by humans redundant, while creating new jobs that were unthinkable just a few years ago. Although it is a shock rather than a trend, COVID-19 is likely to have long-lasting effects on the adoption of technology at work, with implications for social inequality. It has accelerated existing trends in remote work, e-commerce and automation. Some of the behavioural changes generated by the adaptation to the pandemic will become the new normal. Only some workers will benefit from these changes. The proportion of workers who will need to switch occupations will increase in the aftermath of the pandemic. This can generate new opportunities, but can also lead to growing disparities and imbalances.

Signals of change: McKinsey, OECD, JRC

Labour-market inequalities persist and may increase

Young people, women and migrant workers have been among those disproportionately hit by the employment effects of the COVID-19 pandemic both in terms of job losses and in terms of exposure to COVID-19-related risks due to the nature of their work (e.g. nurses or retail workers). The crisis also heightened existing labour market inequalities with regard to access to full-time and indefinite contracts. It revealed the painful consequences of the growing prevalence of temporary and part-time contracts and self-employment, where higher levels of job insecurity go hand in hand with lower wages and sometimes also greater exposure to health risks. These trends have a territorial dimension: some regions are attracting people and investment while others are de-populating. In the EU, both the fastest-growing and the fastest-declining occupations are concentrated in certain territories, further increasing differences between the dynamic and declining regions.

Signals of change: JRC, EUROFOUND, ILO, OECD, IZA institute

Remote working is not for everyone

The possibility to work from home is unequally distributed and tends to amplify existing inequalities by gender, race, education and income, as well as by country due to the global digital divide. For example, it is estimated that less than one in ten workers in Ghana and the Lao People’s Democratic Republic are in jobs that can be performed from home, compared to around one in three workers in Luxembourg, Sweden and the United Kingdom. In general, remote work worsens inequality by mostly helping high-income earners. See also the 'Changing Nature of Work Megatrend.

Signals of change: ILO

Social security collapse

About 40% of the world’s population has no access to health insurance. Some 800 million people spend at least 10% of their household budget on health care each year, and 100 million people fall into poverty because of medical expenses. The poorest and most vulnerable workers – especially those in informal employment, the self-employed and those in temporary employment – are facing even more precarious situations. The existing gap in social protection does not impact only this segment of the population but threatens the wellbeing of the entire global community.