The International Labour Organisation has urged the International Monetary Fund and the World Bank to give greater priority to job quality, workers’ incomes and labour market conditions in economic policy advice and reform programmes, warning that productivity gains are not being shared widely enough to support inclusive growth.
In a note uploaded on its website to the Development Committee and the International Monetary and Financial Committee at the 2026 Annual Meetings, ILO Director-General, Gilbert Houngbo, said economic stability and social justice were closely linked, calling for policies that translate productivity growth, including gains generated by artificial intelligence, into better wages, improved working conditions and stronger social protection.
The ILO said headline labour market indicators had remained broadly stable, but this masked growing vulnerabilities, including weaker hiring, declining real incomes, persistent informal employment and deteriorating working conditions.
“Productivity growth is the foundation of rising living standards, but its benefits depend on where productivity gains occur and on how they are distributed between capital and labour, among enterprises, and among workers,” Houngbo wrote.
The warning comes amid mounting global economic pressures, including higher energy, food and fertiliser prices linked to the spillovers from the conflict in the Middle East, shipping disruptions, renewed inflationary pressures and high public debt.
According to the ILO, these shocks are affecting workers and businesses through channels beyond unemployment, with low-income households, informal and migrant workers, young people and micro, small and medium-sized enterprises particularly exposed.
About 2.1 billion workers, representing 58 per cent of the global workforce, remain in informal employment, while progress in reducing informality has stalled, the organisation said.
The ILO argued that the distribution of productivity gains, changes in market concentration and the quality of jobs should feature more prominently in the IMF’s macroeconomic analysis, policy recommendations and, where relevant, programme design.
It also called for stronger collaboration between the ILO and the World Bank Group to improve how employment outcomes are measured, including the integration of job quality into development indicators.
The organisation said the World Bank Group’s renewed focus on jobs offered an opportunity to support employment that improves productivity, raises incomes, builds skills and gives workers a stronger voice.
AI, wage inequality
The ILO warned that the growing concentration of economic activity and capital among a relatively small number of large companies, particularly in the technology sector, could make it harder for workers and smaller businesses to benefit from productivity improvements.
Artificial intelligence could reinforce these disparities if its gains remain concentrated among a limited number of firms and countries, while workers in developing economies face disruption without adequate access to digital infrastructure, skills and technology.
Around one-quarter of global employment is in occupations exposed to generative AI, with exposure higher among women in high-income countries, according to the ILO.
The organisation said available evidence suggested that AI was more likely to transform tasks and jobs than eliminate them on a large scale, although the benefits and adjustment costs would be unevenly distributed.
In lower-income countries, the pressure could emerge before workers and businesses fully realise AI’s productivity benefits. Many workers whose jobs could benefit from the technology lack regular access to computers and reliable internet connectivity, while smaller businesses face constraints in accessing finance, digital infrastructure and skills.
The ILO said these gaps could widen inequalities within and between countries unless governments and businesses took steps to broaden access to the technology and its benefits.
Labour protections
Beyond technology, the organisation identified weak worker bargaining power, limited collective bargaining coverage and labour market concentration as factors that could constrain wage growth.
It called for respect for workers’ rights, stronger collective bargaining, adequately set minimum wages and competition policies that expand employment options and help workers secure a fairer share of productivity gains.
The ILO also urged governments to improve small businesses’ access to finance, technology, skills and digital platforms, noting that smaller enterprises account for a substantial share of employment but often face persistent productivity disadvantages.
It said investment in skills development and lifelong learning would be necessary to help workers adapt to technological change but added that training alone would not be sufficient without policies that encourage investment, raise productivity and create decent jobs at scale.
The organisation further called for sustainable financing of social protection, arguing that fiscal frameworks should preserve investment in social protection, skills and active labour market policies even when high debt and economic shocks constrain public spending.
Fair and progressive taxation, formalisation of employment and international tax cooperation were identified as measures that could broaden the revenue base and help sustain social protection as digitalisation and AI reshape economic activity.
The ILO warned that persistent low-pay, low-productivity employment could constrain skills development, weaken domestic demand and narrow the tax base, leaving households more vulnerable to economic shocks.
It added that when the benefits of economic growth were not widely shared, public trust and social cohesion could come under pressure, making economic reforms more difficult to sustain.
“Productivity growth that translates into better incomes, jobs that allow people to learn and advance, and institutions that give workers and enterprises a voice are not secondary to economic growth and stability,” Houngbo said. “They are among the important foundations of resilient economies and inclusive societies.”