Global Unemployment and Its Impact on Youth and Women

Q: What does the ILO’s Employment and Social Trends 2026 report reveal about the global labour market?

The ILO’s Employment and Social Trends 2026 report presents a paradoxical picture of the global labour market. While the global unemployment rate is projected to remain at a historically low level of 4.9% (about 186 million people), this headline figure masks deeper structural problems related to job quality, informality and working poverty. The report highlights that 284 million workers continue to live in extreme poverty, earning less than $3 a day, and over 2.1 billion workers are engaged in informal employment. Importantly, the decline in working poverty between 2015 and 2025 has been far slower than in the previous decade, indicating stagnation in inclusive growth. Thus, the report underlines that low unemployment alone is an insufficient indicator of labour market health, shifting the policy focus towards quality, security and inclusiveness of employment .

Q: Why is the persistence of working poverty a serious concern despite low global unemployment?

Working poverty reflects a situation where employment does not translate into a dignified standard of living. The report shows that even with low unemployment, millions of workers remain trapped in low-paying, insecure jobs , especially in low-income countries. This undermines the assumption that job creation automatically leads to poverty reduction. A major reason is the dominance of informal employment , which lacks social protection, job security and labour rights. Workers may be employed, but without minimum wages, safe working conditions or income stability, their vulnerability persists. This has important implications for development policy: governments must move beyond job quantity to focus on decent work , productivity enhancement and social protection systems to break the cycle of working poverty.

Q: What explains the rise in informal employment globally after 2015?

The report notes that global informality increased by 0.3 percentage points between 2015 and 2025, reversing earlier gains. This rise is largely driven by the growing share of employment in regions such as Africa and Southern Asia , where informal work is structurally dominant. Rapid population growth, limited industrialisation, weak labour institutions and insufficient formal job creation have pushed workers into informal activities. Additionally, structural transformation and digitalisation have created new forms of non-standard work that often fall outside traditional labour regulations. As a result, informality is not merely a transitional phenomenon but a systemic feature of many developing economies, requiring targeted and region-specific policy responses.

Q: Critically analyse the impact of trade uncertainty and global structural changes on labour markets.

Trade uncertainty has emerged as a persistent feature of the global economy, affecting investment decisions and labour outcomes. According to ILO modelling, even a moderate increase in trade policy uncertainty can reduce real wages for both skilled and unskilled workers across sectors. Regions deeply integrated into global supply chains, such as South-Eastern Asia and Europe , are particularly vulnerable, facing income losses of up to 0.45%. This highlights how global shocks are transmitted unevenly across regions and social groups. While globalisation and digitalisation can create new opportunities, without adequate adjustment mechanisms, they may exacerbate inequality and insecurity. Hence, trade and industrial policies must be aligned with labour protection and reskilling strategies .

Q: Why do gender disparities remain a persistent challenge in the global labour market?

The report shows that women constitute only two-fifths of global employment and are significantly less likely than men to participate in the labour force. This gap reflects barriers such as unpaid care work, limited access to education and skills, and discriminatory social norms. Interestingly, the unemployment rate for women is only slightly higher than that of men, indicating that the primary challenge lies in accessing employment , not necessarily retaining it. Young women are also more likely to be NEET, missing opportunities for skill accumulation. These disparities have long-term implications for economic growth and social justice, making gender-responsive labour policies essential for inclusive development.

Q: How does the situation of youth unemployment and NEETs illustrate deeper labour market challenges?

In 2025, the global youth unemployment rate stood at 12.4% , while around 257 million young people were classified as NEET. This indicates a failure of education systems and labour markets to absorb young entrants, particularly in low-income countries. Youth NEET status represents lost opportunities for skill development, work experience and social mobility. Over time, this can lead to scarring effects such as lower lifetime earnings and higher social instability. The youth employment challenge underscores the need for integrated policies linking education, skill development, apprenticeships and job creation, rather than treating unemployment as an isolated issue.

Q: How can countries address the gap between employment generation and job quality highlighted by the ILO?

Addressing this gap requires shifting policy focus from headline unemployment rates to decent work indicators such as wages, security and social protection. Formalisation of employment through regulatory simplification, labour law enforcement and incentives for MSMEs is a key step. Investment in skills, productivity and industrial diversification can help workers move into higher-value jobs. Social protection floors, including health insurance and income support, are essential to reduce vulnerability in transitional phases. Ultimately, the ILO report suggests that sustainable labour market outcomes depend on coordinated economic, social and trade policies that place workers’ well-being at the centre of growth strategies.

ILO's report reveals persistent global unemployment and the alarming situation for youth and women in the labor market.

Surya

•January 15, 2026•5 mins read

ILO report warns low unemployment masks rising informality and working poverty

1. Global Employment Context: Low Unemployment, Persistent Vulnerabilities

The ILO’s Employment and Social Trends 2026 report highlights a paradox in the global labour market: historically low unemployment coexisting with widespread job insecurity and poverty. The global unemployment rate is projected to remain at 4.9% in 2026, translating to 186 million unemployed persons, indicating quantitative stability in job availability.

However, low unemployment masks deeper structural issues. A large proportion of workers remain trapped in low-quality employment, characterised by informality, inadequate wages, and absence of social protection. Consequently, employment generation has not translated into inclusive or dignified livelihoods.

For governance, this signals that headline labour indicators are insufficient to assess labour market health. If ignored, policymakers may overestimate economic resilience and underinvest in job quality reforms.

This highlights that employment outcomes must be assessed not merely by job counts but by the quality, security, and income associated with work.

Key statistics:

Global unemployment rate (2026): 4.9%
Total unemployed globally: 186 million
Global jobs gap (labour underutilisation): 408 million

2. Working Poverty and Slow Progress in Income Security

Despite global economic growth, the decline in working poverty has significantly slowed. Between 2015–2025, the share of workers in extreme poverty declined by only 3.1 percentage points, compared to a 15 percentage point decline in the previous decade. As a result, 284 million workers still earn less than $3 per day.

This trend indicates weak income transmission from growth to labour, especially in low-income economies. Employment alone is no longer sufficient to lift workers out of poverty, reflecting stagnant real wages and low productivity sectors.

For development policy, persistent working poverty undermines human capital formation and consumption-led growth. Failure to address it risks entrenching intergenerational poverty despite rising employment.

The logic is clear: without wage growth and productivity enhancement, employment cannot serve as an effective poverty-reduction tool.

Key statistics:

Workers in extreme poverty: 284 million
Extreme poverty threshold: < $3/day
Share of working poor globally: 7.9%

3. Rising Informality and Job Quality Deficit

Global informality has re-emerged as a major challenge. After declining in the earlier decade, the share of informal employment increased by 0.3 percentage points between 2015–2025. By 2026, around 2.1 billion workers are projected to be informally employed.

Informal employment is closely associated with lower job quality, lack of social security, unsafe working conditions, and weak labour rights. The increase largely reflects employment growth in regions with structurally high informality, notably Africa and Southern Asia.

For governance systems, high informality constrains tax capacity, weakens labour regulation, and limits the reach of welfare policies. If unaddressed, it perpetuates vulnerable growth models.

Reducing informality is thus not only a labour market concern but a prerequisite for sustainable state capacity and inclusive development.

Implications:

Limited access to social protection
Weak enforcement of labour rights
Higher vulnerability during economic shocks

4. Gender Gaps in Labour Force Participation

The report underscores persistent gender inequalities in employment. In 2025, women accounted for only two-fifths of global employment. Women were 24.2 percentage points less likely than men to participate in the labour force.

Importantly, the global unemployment rate for women is only marginally higher than that of men, indicating that the primary barrier is access to work rather than job retention. Among youth, young women were 14.4 percentage points more likely than young men to be NEET (Not in Employment, Education or Training).

For social development, such exclusion limits economic growth, reinforces dependency, and weakens demographic dividends. Ignoring these gaps risks underutilisation of half the global workforce.

This shows that labour markets fail women at the entry stage, not merely in outcomes, demanding structural rather than cyclical interventions.

5. Youth Employment Stress and Future Workforce Risks

Youth labour market conditions remain fragile, particularly in low-income countries. In 2025, global youth unemployment rose to 12.4%, while the share of youth in NEET status increased to 20%, amounting to 257 million young people.

This reflects inadequate school-to-work transitions, skill mismatches, and limited job creation in productive sectors. Long-term disengagement from education and work erodes skills and employability.

For governance, youth exclusion poses risks of social unrest, reduced innovation, and long-term productivity losses. Failure to integrate youth effectively may weaken future labour markets.

Youth unemployment today translates into structural labour market weakness tomorrow.

6. Trade Uncertainty, Structural Change, and Labour Outcomes

The report identifies trade policy uncertainty as a persistent short-term feature of the global economy. Combined with digitalisation and structural transformation, it is reshaping global supply chains and production systems.

ILO modelling suggests that moderate increases in trade uncertainty reduce returns to labour and real wages across sectors. Income losses are highest in regions deeply integrated into global value chains, reaching up to 0.45% in South-Eastern Asia and 0.3% in Europe and Southern Asia.

For economic governance, this underscores the labour sensitivity of trade policy. Ignoring these dynamics may exacerbate wage stagnation even without rising unemployment.

Stable trade regimes are thus critical not only for growth but for protecting labour incomes.

Conclusion

The ILO’s Employment and Social Trends 2026 report reveals that global labour markets face a quality crisis rather than a quantity crisis. Persisting informality, working poverty, gender exclusion, and youth unemployment weaken the developmental impact of employment. Addressing these challenges requires shifting policy focus from job creation alone to job quality, inclusiveness, and resilience, which are essential for long-term economic stability and social cohesion.

Quick Q&A

Everything you need to know

The ILO’s Employment and Social Trends 2026 report presents a paradoxical picture of the global labour market. While the global unemployment rate is projected to remain at a historically low level of 4.9% (about 186 million people), this headline figure masks deeper structural problems related to job quality, informality and working poverty.

The report highlights that 284 million workers continue to live in extreme poverty, earning less than $3 a day, and over 2.1 billion workers are engaged in informal employment. Importantly, the decline in working poverty between 2015 and 2025 has been far slower than in the previous decade, indicating stagnation in inclusive growth.

Thus, the report underlines that low unemployment alone is an insufficient indicator of labour market health, shifting the policy focus towards quality, security and inclusiveness of employment.

Working poverty reflects a situation where employment does not translate into a dignified standard of living. The report shows that even with low unemployment, millions of workers remain trapped in low-paying, insecure jobs, especially in low-income countries. This undermines the assumption that job creation automatically leads to poverty reduction.

A major reason is the dominance of informal employment, which lacks social protection, job security and labour rights. Workers may be employed, but without minimum wages, safe working conditions or income stability, their vulnerability persists.

This has important implications for development policy: governments must move beyond job quantity to focus on decent work, productivity enhancement and social protection systems to break the cycle of working poverty.

The report notes that global informality increased by 0.3 percentage points between 2015 and 2025, reversing earlier gains. This rise is largely driven by the growing share of employment in regions such as Africa and Southern Asia, where informal work is structurally dominant.

Rapid population growth, limited industrialisation, weak labour institutions and insufficient formal job creation have pushed workers into informal activities. Additionally, structural transformation and digitalisation have created new forms of non-standard work that often fall outside traditional labour regulations.

As a result, informality is not merely a transitional phenomenon but a systemic feature of many developing economies, requiring targeted and region-specific policy responses.

Trade uncertainty has emerged as a persistent feature of the global economy, affecting investment decisions and labour outcomes. According to ILO modelling, even a moderate increase in trade policy uncertainty can reduce real wages for both skilled and unskilled workers across sectors.

Regions deeply integrated into global supply chains, such as South-Eastern Asia and Europe, are particularly vulnerable, facing income losses of up to 0.45%. This highlights how global shocks are transmitted unevenly across regions and social groups.

While globalisation and digitalisation can create new opportunities, without adequate adjustment mechanisms, they may exacerbate inequality and insecurity. Hence, trade and industrial policies must be aligned with labour protection and reskilling strategies.

The report shows that women constitute only two-fifths of global employment and are significantly less likely than men to participate in the labour force. This gap reflects barriers such as unpaid care work, limited access to education and skills, and discriminatory social norms.

Interestingly, the unemployment rate for women is only slightly higher than that of men, indicating that the primary challenge lies in accessing employment, not necessarily retaining it. Young women are also more likely to be NEET, missing opportunities for skill accumulation.

These disparities have long-term implications for economic growth and social justice, making gender-responsive labour policies essential for inclusive development.

In 2025, the global youth unemployment rate stood at 12.4%, while around 257 million young people were classified as NEET. This indicates a failure of education systems and labour markets to absorb young entrants, particularly in low-income countries.

Youth NEET status represents lost opportunities for skill development, work experience and social mobility. Over time, this can lead to scarring effects such as lower lifetime earnings and higher social instability.

The youth employment challenge underscores the need for integrated policies linking education, skill development, apprenticeships and job creation, rather than treating unemployment as an isolated issue.

Addressing this gap requires shifting policy focus from headline unemployment rates to decent work indicators such as wages, security and social protection. Formalisation of employment through regulatory simplification, labour law enforcement and incentives for MSMEs is a key step.

Investment in skills, productivity and industrial diversification can help workers move into higher-value jobs. Social protection floors, including health insurance and income support, are essential to reduce vulnerability in transitional phases.

Ultimately, the ILO report suggests that sustainable labour market outcomes depend on coordinated economic, social and trade policies that place workers’ well-being at the centre of growth strategies.