David T. Nudelman is partner & CEO at Scandinavian Capital Markets, a Swedish STP Brokerage for foreign exchange and CFDs.
On the first Friday of every month, we in the financial services industry are glued to our terminals waiting for the latest data from Washington in the form of the U.S. non-farm payroll and unemployment reports. These figures are usually the biggest market movers as they guide the U.S. Federal Reserve’s monetary policy, which in turn affects everything from currencies and precious metals to equities and stock indices. These short-term statistics, of course, are not the end of the story by any means.
Besides the U.S. Fed, there are a variety of organizations monitoring the worldwide employment situation. These organizations and their reports may not be driving global markets on a month-to-month basis as the NFPs do, but the data they produce is critical for all economies, big and small. The Geneva-based International Labour Organization, for example, optimistically announced that they are predicting a global unemployment rate for 2024/2025 of 4.9% after 2023’s 5%.
This is just one statistic, of course, and there are myriad others—some negative and some positive. However, it is important to keep in mind that the world of statistics was turned upside down during the global pandemic, the subsequent geopolitical conflicts and the earth-shattering inflation that followed.
Specific Issues Affecting Global Employment
The jobs gap is another way of looking at the global situation. This concept was recently developed by the ILO and includes all employable individuals who are desiring a job. The figures are quite remote from the global unemployment of around 5%, as the ILO reported in 2023 that the global jobs gap for men was 10.5% and the same figure for women was higher at 15%.
Additionally, the gig economy still flourishes. As we all know, some industries were hit harder than others during the pandemic, such as hospitality and travel. As a result, the number of informal workers rose above 2 billion in 2023, according to ILO estimates, destabilizing the global employment picture. While the number of temporary employment contracts may skew the figures today, the bigger problem is the long-term financial stability of the contractor, especially when it comes time to retire, with no real income or pension to self-sustain.
Furthermore, artificial intelligence is being monitored by the Organisation for Economic Co-operation and Development. The OECD has a huge stake in monitoring the global employment situation, and their reports are positive about the impact of AI on the worldwide workforce. Their 2023 “The impact of AI on the workplace” report shows that the majority of employees trust their employers when it comes to implementing AI strategies and not simply eliminating jobs around AI.
Established Vs. Developing Economies
As mentioned above, the jobs gap displays the discrepancy between genders when it comes to employment, but the gap is far greater in developing economies. The figures are quite stark with higher-income countries showing a men/women jobs gap ratio of 7.3%/9.7%, while the same stats in low-income economies read 15.3%/22.8%.
Also, as mentioned above, the gig economy is very common in developing nations with informal work accounting for the majority of the workforce. Often, these economies function with wages as low as less than $4 per day, creating “working poverty” and an aging workforce with no hope of stability. On the other hand, even with higher-quality jobs in more affluent economies, some regions including Japan and Europe are in danger of labor shortages with their own aging workforces.
Who Is Watching And Why?
Both the ILO and OECD are regarded as the most significant when it comes to shaping global employment standards for working conditions. I’ve found that the OECD generally produces the most detailed reports on labor market strategies.
Two other groups—the World Bank and the International Monetary Fund—are key players when it comes to labor market recommendations and economic policies for developing nations.
And yet, two more—the World Economic Forum and the McKinsey Global Institute—lead the way in looking at the future of the labor markets and how AI, automation and new technologies will redefine global employment trends.
Conclusion
The overall picture on global employment is pessimistic, but we know one thing for certain: Statistics don’t always show us the true picture, especially during times of high geopolitical uncertainty. But what is lacking to drive the pessimism back into optimism and real results? Investment. Investment in training, reskilling and technology. Investment in developing economies.
However, what is the one thing that investors hate? Uncertainty, especially the uncertainty caused by geopolitical conflicts and political instability. If the world can see its way fit to find some stability in 2025, perhaps the global employment situation will follow.
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