The International Labour Organisation (ILO) has warned that economic growth is failing to translate into better jobs and higher incomes for millions of workers, calling for stronger collective bargaining, adequate minimum wages and improved protection of workers’ rights.

The ILO Director-General, Gilbert Houngbo, warned the joint World Bank-International Monetary Fund (IMF) Development Committee that productivity gains were not reaching workers equitably, particularly in low-income countries.

He said labour market stability was masking deeper problems, as economic shocks increasingly affected workers through weaker recruitment, falling real wages, persistent informal employment and deteriorating working conditions.

According to Houngbo, about 2.1 billion workers, representing 58 per cent of the global workforce, remained in informal employment, while progress in reducing informality has stalled.
He said the disconnect between productivity growth and workers’ incomes remained a major concern, warning that limited bargaining power, weak collective bargaining coverage and labour market imbalances were constraining wage growth, particularly for women, young people and rural workers.

The ILO chief also identified the concentration of economic activity and capital among a relatively small number of large companies as a factor that could prevent workers and smaller businesses from sharing fully in productivity gains.

He noted that small and medium-sized enterprises, which account for a substantial share of employment, continued to face barriers to accessing finance, technology and markets, limiting their productivity and capacity to create better jobs.

On artificial intelligence, Houngbo warned that technological change could widen existing inequalities if productivity benefits were concentrated among a few companies and countries while workers and smaller enterprises bore the costs of adjustment.

He said about one-quarter of global employment was in occupations exposed to generative artificial intelligence, adding that in many developing countries, the technology’s pressures could emerge before its productivity benefits were fully realised.

The ILO director-general said low-paying, low-productivity jobs could constrain skills development, domestic demand and the tax base, leaving households more vulnerable to economic shocks.

He stressed that workers were more likely to invest in new skills when these were rewarded with better pay, job security and career prospects, noting that the quality of first jobs could shape young people’s expectations about their future.

To address these challenges, Houngbo called for respect for international labour standards and workers’ rights, along with collective bargaining and adequate minimum wages set through evidence-based processes and social dialogue.

He also advocated competition policies that expand workers’ employment options, as well as improved access to finance, skills and technology for small and medium-sized enterprises.

On social protection, he urged governments to maintain investment in social protection, skills development, and active labour market policies, despite fiscal constraints from high public debt and economic shocks.