Ukraine conflict, inflation stagnate labour market: ILO

The report said excessive policy tightening was causing undue damage to jobs and income in both advanced and developing countries

The global labour market will deteriorate further due to the conflict between Ukraine and Russia and other crises such as the impact of the pandemic and the economic slowdown, according to the tenth edition of the International Labour Organisation (ILO) Monitor on the world of work released in Geneva on Monday. The report warned that unemployment and inequality were set to rise because of multiple and overlapping economic and political crises and urged the governments to adopt comprehensive, integrated and balanced policies to address not only inflation but also its “broader implications” for employment, enterprises and poverty.

The monitor said excessive policy tightening was causing undue damage to jobs and income in both advanced and developing countries. “The set of policy tools to combat multiple crises needs to be widened through social dialogue, which would include: (a) interventions in setting prices for public goods; (b) rechannelling windfall profits; (c) strengthening income security through social protection; (d) increasing income support to maintain the purchasing power of labour income; and (e) targeting support to the most vulnerable people and enterprises,” the ILO suggested.

It also demanded a continued focus on decent jobs and social protection to support the labour markets in Ukraine and other countries affected by the ongoing conflict. “Labour market integration measures for Ukrainian refugees also need to be strengthened. In order to respond at a global level to multiple economic and geographical crises, internal solidarity and coordination is even more critical, and policy coherence is key, which are also principal aims of the UN Global Accelerator on Jobs and Social Protection for Just Transitions,” the report said.

The report said inflation, which was already increasing in 2021 due to COVID-19-related supply-side disruptions and increasing demand as lockdown measures were lifted, accelerated due to the Ukraine war. “High and persistent inflation is creating enormous pressures on labour income and workers are struggling to maintain their purchasing power, raising the risk of increased poverty and inequality,” the report said.

The report also found that worsening labour market conditions were affecting both employment creation and the quality of jobs, pointing out that “there were already data suggesting a sharp labour market slowdown.” “Labour market inequalities are likely to increase, contributing to a continued divergence between developed and developing economies,” the report noted.

The report added that 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, jeopardising the 15-year trend towards formalisation. The situation worsened over the course of the year and in the third quarter of 2022 ILO estimates were that the level of hours worked was 1.5% below pre-pandemic levels, amounting to a deficit of 40 million full-time jobs,” the ILO said in a release.