Skills demand

Shifting sands in labour markets mean greater inequalities

Listen to ILO economist Christian Viegelahn explain how the hollowing out of middle-skilled jobs is changing the labour landscape around the world and how education is one of the tools to tackle rising income inequalities.

Audio | 19 March 2015

The world of work is witnessing major shifts in the demand for skills.

According to the International Labour Organization’s World Employment and Social Outlook (trends 2015), middle-skilled jobs like accounting and clerical work are declining. That’s because, in our globalized economies, many of these jobs can now be done by computers. So where are the jobs now?

ILO Economist Christian Viegelahn explains that many jobs can now be found at opposite ends of the skills ladder:

“Particularly in developed economies, the share of low-skilled, non-routine jobs, such as security personnel and some personal care workers, and high-skilled non-routine cognitive jobs, such as lawyers and software engineers, has increased.”

With the loss of many middle-skilled jobs, workers, especially in the developed world, find themselves competing for jobs at the lower end, which usually don’t pay well. This has led to larger income inequalities.

Says Viegelahn:

“Yes indeed this can lead to more income inequality and that’s a problem because income inequalities lead to a negative effect for medium-term economic growth prospects and job creation.”

So in developing countries -- how are people faring when it comes to finding a job?

Viegelahn says that depends, often, on a person’s education:

“Globally, with the shift in demand to either lower or higher skilled-jobs, the high-skilled jobs, like lawyer or engineer, are not easily accessible to workers without higher education.”

Related to the hollowing out of middle skilled jobs is the risk that some countries are moving away from an economy based on manufacturing too quickly to one based on services.

This so-called early de-industrialization worries economists like Viegelahn:

“Well, it can be a concern because for some workers, the manufacturing sector was always actually an important sector for workers to escape poverty because they used to find relatively well paid, high productivity jobs but now, if for example the services sector becomes more important it remains to be seen whether the services sector can really take over the role of manufacturing and lead to less poverty.”

Reporting for the ILO, this is Carla Drysdale