Future of Work - Major trends

Tackling income inequality is key to ensure equitable and prosperous societies

One of the most daunting challenges for future of work will be to reduce income inequality. Income inequality, as measured by the Gini index, remains extremely high in much of the developed and emerging world. For instance, in Latin America and the Caribbean it remains pervasive with an average Gini index close to 50. Meanwhile, high income disparities continues to hamper efforts towards poverty eradication in Africa and parts of Asia and the Pacific, where substantial economic gains from the past decade were unevenly distributed. In the higher-income regions of Northern America and Europe and Central Asia, income inequality is close to historical highs and does not show signs of abatement.

Figure: Average Gini index by region, latest year available

Source: ILO based on All the Ginis database (version November 2014).
High levels of income inequality can have adverse effects on the social contract and undermine social cohesion and the well-functioning of democratic societies. In addition, high income inequality appears to be one of the root causes of the weak aggregate demand in recent years, which risks giving rise to a self-reinforcing cycle of low productivity and stagnant economic growth. Adequate policy actions are required to ensure that the social contract encompasses the most vulnerable groups in society and engages all actors, including those operating across national borders. Particular attention needs to be paid on a more equal and fair distribution of resources in the society.