Latest ILO Study Links AI to Decline in Labour Income

Latest ILO Study Links AI to Decline in Labour Income

Sub: Eco

Sec: Unemployment

• Global Decline in Labour Income:
  • A recent study by the International Labour Organisation (ILO) reveals a stagnation in labour income worldwide, contributing to a rise in inequality.
  • A significant factor behind this trend is the increasing use of Artificial Intelligence (AI), which has impacted the share of labour income.
• Impact of AI and Technological Innovations:
  • The ILO study, which analysed data from 36 countries over the last two decades, found that while technological innovations, including AI, have boosted productivity and output, they have also reduced the share of income earned by workers.
  • The report highlights that automation-based technological advancements are driving these effects.
• Warning from the ILO:
  • The ILO warns that, without stronger policy interventions, the labour income share could decline further.
  • Policy responses across a wide range of sectors are essential to mitigate the adverse impacts on inequality.
• Slow Progress on Sustainable Development Goals (SDGs):
  • The report indicates slow progress toward achieving key Sustainable Development Goals (SDGs) as the 2030 deadline approaches.
  • The global labour income share fell by 0.6 percentage points from 2019 to 2022, continuing a long-term downward trend.
  • If the labour income share had remained at 2004 levels, global labour income would have been $2.4 trillion larger in 2024.
• COVID-19 Pandemic’s Impact:
  • The report notes that the COVID-19 pandemic was a key factor in the decline, with 40% of the reduction in labour income share occurring between 2020 and 2022.
• Call for Action:
  • ILO Deputy Director-General, stressed the need for policies to counter the declining labour income share.
• Suggested policies include:

1. Promoting equitable distribution of economic benefits.
2. Supporting freedom of association and collective bargaining.
3. Strengthening labour administration for inclusive growth.

This study highlights the critical need for policy interventions to balance the benefits of AI and protect labour income globally.

Sustainable Development Goals (SDGs)

The Sustainable Development Goals (SDGs) are a set of 17 global goals established by the United Nations in 2015 to address major global challenges. These goals are designed to achieve a better and more sustainable future by 2030, focusing on eliminating poverty, protecting the planet, and ensuring that all people enjoy peace and prosperity.

Key Aspects of SDGs:

• Definition of Sustainable Development: Sustainable development is defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (Brundtland Commission, 1987). This concept is built on three core pillars:
  • Economic growth
  • Social inclusion
  • Environmental protection
• Core Elements of Sustainable Development:
  • Economic Sustainability: Equal growth that generates wealth for all without damaging the environment.
  • Social Sustainability: Inclusive development ensuring equality, quality education, healthcare, and community development.
  • Environmental Sustainability: Preservation and protection of natural resources through renewable energy, conservation, and innovative technologies.
  • Global and Regional Initiatives on Sustainable Development: Several international conventions and summits have shaped the global agenda for sustainability:
  • Stockholm Conference (1972): Raised global environmental awareness.
  • Earth Summit (1992): Led to conventions like UNFCCC, Convention on Biological Diversity, and Agenda 21.
  • Kyoto Protocol (1997) and Paris Agreement (2015): Climate change mitigation strategies.
  • Basel, Rotterdam, and Stockholm Conventions: Focus on chemical and waste management.
  • Regional frameworks like the SAARC Environment Action Plan and ASEAN’s environmental legal instruments.