Among policy-makers, ILO constituents and the general public alike, there is a growing consensus that the current trend of rising inequality is not only undesirable, but also unsustainable. Inequality is manifested in both opportunities and outcomes. From the ILO perspective, inequality of opportunity refers to obstacles workers face in gaining entry into decent jobs in the labour market. Inequality of outcomes refers to labour market outcomes, to earnings and benefits for workers and their families. Inequality is also manifested in broader dichotomies of workers: men and women, formal and informal, rural and urban, protected and unprotected, organized and unorganized.

Progressive taxation and cash transfers to low-income households are commonly used to counter inequality. But labour market institutions and related economic and social policies are also potentially powerful in countering inequality. Labour market institutions and policies impact inequality through their threefold function of matching labour supply and demand, improving the quality of the labour force and cultivating a sense of justice. Yet, the global debate on labour markets is dominated by the prescription that deregulated, flexible labour markets are “more efficient.” The financial crisis commencing in 2007 might interact with labour markets and lead to a further deterioration of wage distributions. Previous crises have often left behind persistent wage inequalities, including on gender earnings gaps.

The Policy Integration Department’s work programme on inequality includes:

• Research with the explicit objective to inform policy making, to provide our constituents with practical/usable knowledge on policy tools, and thus to contribute to more coherent policy-making. This research will endeavour to move beyond the deregulation versus regulation debates, focusing rather on the design and implementation of specific policies and what constitutes good and bad policy-making within countries- and time-specific contexts.