The ILO report, Employment and Social Trends 2026 notes that global labour markets have remained resilient despite high levels of economic and trade policy uncertainty, with the global unemployment rate projected to stay at 4.9% in 2026.
However, little progress has been made in reducing widespread decent work deficits, particularly in low-income countries where 68% of workers live in extreme or moderate poverty.
The global labour force is projected to expand by around 40 million annually to reach 3.8 billion in 2026, even as the global participation rate continues a structural decline toward 60.5% by 2027 due to ageing populations. While digital transitions and AI adoption offer productivity potential, they also introduce risks of job disruption for entry-level workers and those with advanced education.
Employment in India
India is highlighted as a primary driver of growth in the Asia-Pacific region, though it faces substantial structural hurdles.
Economic Growth: India is expected to exhibit among the highest growth rates in the region, keeping the overall GDP growth rate in Southern Asia elevated.
Informal Employment: Southern Asia, including India, has the highest informal employment rate in Asia-Pacific, estimated at 85% in 2025.
Manufacturing Share: In 2024, India accounted for approximately 3% of world manufacturing, significantly behind China (27%) and the United States (17%).
Green Job Progress: India is making significant progress in increasing renewable energy jobs and has launched its Long-Term Low-Carbon Development Strategy (2022) to foster sustainable development.
Impact of Trade Uncertainty on Employment
Trade policy uncertainty (TPU) acts as a significant drag on global labor markets by increasing costs and depressing business confidence.
Reduced Investment and Hiring: Rising uncertainty, particularly from protectionist measures or geopolitical tensions, prompts firms to scale back investment plans and adjust pricing strategies. Concerns about future demand often lead businesses to delay or reduce new projects, thereby limiting the creation of quality jobs.
Lower Returns to Labour: TPU increases trade-related costs, such as inventory and logistics, which negatively impacts real wages and returns to labor for both skilled and unskilled workers.
Regional Vulnerability: Regions deeply integrated into global supply chains, such as Southern Asia and South-Eastern Asia, are particularly exposed. Wages in these regions are projected to decline annually by more than 0.3% and 0.45%, respectively, due to rising trade costs.
Sectoral Disruptions: Manufacturing is especially vulnerable, with one-third of manufacturing workers in middle-income countries depending on foreign demand. Disruptions can lead to painful sectoral reallocations and job losses.
Trade and Employment Opportunities for Women
Trade serves as a critical “stepping stone” for women in many developing economies, although significant barriers to high-quality employment persist.
Inclusion in Trade-Linked Jobs: In low- and middle-income countries, where government-financed opportunities may be scarce, trade-related sectors provide essential access to the formal labor market for women.
Concentration in Low-Productivity Sectors: Women remain heavily concentrated in price-competitive, labor-intensive manufacturing sectors like textiles, garments, and food processing.
Risk of “Defeminization”: A troubling trend shows that as technological upgrades increase productivity in these export-driven sectors, the female share of employment often declines.
Decent Work Deficits: Women in lower-tier supply chain positions and export processing zones frequently face poor working conditions, low wages, and limited labor protections.
Impact of AI on Labor Markets
Artificial Intelligence introduces both productivity potential and new layers of labor market uncertainty.
Productivity and Augmentation: AI has the potential to enhance productivity by automating repetitive tasks and augmenting human capabilities. For instance, women in the Arab States are projected to benefit from a high augmentation potential of 22.7%.
Displacement Risks for High-Skilled Youth: Younger individuals (aged 15-24) with advanced education face a greater risk of automation than their less-educated counterparts, as they often occupy roles more exposed to AI.
Widening Regional Inequalities: High-income countries, with occupational structures more exposed to automation, may see more job displacement, while low-income countries may struggle to capture AI’s benefits due to weak digital infrastructure.
Global Trends and Outlook
Resilient Growth vs. Stalled Quality: Global GDP growth is expected to marginally decelerate to 3.1% in 2026, but the transition of workers toward sectors with higher formality has slowed by half over the last two decades.
High-Stakes Uncertainty: Economic policy uncertainty indices reached unprecedented levels in early 2025, causing firms to scale back investment plans and hiring due to concerns about future demand and supply chain disruptions.
Youth Stagnation: Global youth unemployment crept up to 12.4% in 2025, and 257 million young people are classified as NEET (not in employment, education, or training).
The Productivity Gap: Global labour productivity is projected to grow by 2.0% in 2026, but weak gains in low-income countries are preventing living standards from converging with advanced economies.
Employment and Social Trends by Region
Asia and the Pacific: Around 330 million people are employed in manufacturing (16.1% of the total), with India expected to exhibit among the highest growth in the region. However, nearly 1.3 billion workers remain in informal employment.
Africa: GDP growth is projected at 4.3% for 2026, yet nearly nine in ten workers in sub-Saharan Africa are informal, and 30.1% of youth in Northern Africa are NEET.
Americas: GDP growth slowed to 1.9% in 2025, with Northern America seeing cooling labour markets and rising unemployment rates in Canada and the US.
Europe and Central Asia: Ageing is a major constraint, with the old-age ratio projected to rise from 28 to 43 per 100 by 2050, requiring targeted policies to retain older workers.
Shifting Patterns of Trade and Employment
Trade-Linked Jobs: In 2024, 465 million jobs (15.3% of global employment) depended on foreign demand through exports and supply chains.
Impact of Trade Uncertainty: Rising uncertainty increases trade costs (inventory, logistics, compliance), reducing returns to labour and real wages; regions deeply integrated into global supply chains, such as South-Eastern and Southern Asia, are particularly vulnerable, with projected wage declines of up to 0.45% annually.
Women in Trade: While trade-related employment can be a stepping stone for women into the formal market in low- and middle-income countries, they are often concentrated in low-productivity, labour-intensive sectors like textiles, where technological upgrades often lead to declining female employment shares.
The Rise of Services: Market services now account for nearly half of all trade-linked employment (48.6% in 2022), reflecting the growing role of knowledge-intensive activities.
Policy Relevance
India is expected to exhibit among the highest GDP growth rates in the Asia-Pacific region, yet it faces a structural challenge with an 85% informal employment rate—the highest in Southern Asia.
Strategic Impact:
Harnessing AI Augmentation: India can leverage its 2.5x global AI skill penetration to benefit from AI’s augmentation potential in IT and digital services, though it must mitigate the displacement risk for young workers with advanced education who face a greater risk of automation.
Leading in Green Jobs: India is making significant progress in increasing renewable energy jobs, part of its broader efforts under the Long-Term Low-Carbon Development Strategy (2022) to transition toward a green economy.
Countering Wage Erosion: As a region deeply integrated into global supply chains, Southern Asia faces a projected 0.3% annual decline in returns to labour due to trade uncertainty, requiring India to bolster domestic tech-driven manufacturing.
Closing the 29.6% NEET Gender Gap: While trade-linked sectors provide a stepping stone for women into formality, India must address the concentration of women in low-productivity manufacturing to ensure technological upgrades don’t lead to “defeminization” of these roles.
Scaling Global Manufacturing Share: India currently accounts for only 3% of global manufacturing (compared to China’s 27%), necessitating the use of frameworks like ION-2030‘s sub-millisecond latency to modernize its industrial backbone and overcome cost disadvantages.
Follow the full news here: ILO: World of Work Trends 2026
