Are permanent jobs getting the pink slip?

Full-time stable employment may be getting a pink slip, with less secure working relationships set to drive weaker economic growth, data from the International Labour Organization (ILO) show.

Only an estimated quarter of the world’s workers have a stable employment relationship, according to the ILO’s World Employment and Social Outlook.

The remainder are employed on temporary or short-term contracts, in uncontracted informal jobs, in self-employed arrangements or in unpaid family jobs, the ILO, a specialized United Nations agency, said.

“The standard employment model is less and less representative of today’s world of work,” the report said.

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There is some variation globally. In high-income countries, more than three-quarters of workers are on permanent contracts, although less than two-thirds of those are full time, the ILO said. But in middle-income countries, nearly 72 percent of workers are employed without a contract and in 13 low-income countries with available data, only 5.7 percent of workers had a permanent contract, the ILO said.

“In some cases, non-standard forms of work can help people get a foothold into the job market. But these emerging trends are also a reflection of the widespread insecurity,” Guy Ryder, ILO’s director-general, said in a statement.

The type of employment is closely tied to income, with permanent workers earning “significantly more” than non-permanent ones, the ILO said.
Temporary workers in advanced economies sometimes earn between 15-55 percent less than their permanent counterparts, the ILO said. In emerging and developing economies, informal employees’ wages can be between 43-65 percent less than formal employees’, the ILO said, citing data from the Philippines and Uruguay.

“The shift we’re seeing from the traditional employment relationship to more non-standard forms of employment is in many cases associated with the rise in inequality and poverty rates in many countries,” Ryder said. “These trends risk perpetuating the vicious circle of weak global demand and slow job creation that has characterized the global economy and many labor markets throughout the post-crisis period.”

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The ILO estimated around $3.7 trillion in lost global demand as a result of unemployment, lagging labor incomes and the effect on consumption, investment and government revenue.

“The growing disconnect between labor incomes and productivity may have affected private consumption and global demand, thereby also reducing private investment,” the ILO report said. “A vicious circle may be at work, with lower demand affecting output and employment, thereby further depressing demand.”
The increasing gap between the rich and poor has become a worry globally, with the Organisation for Economic Co-operation and Development (OECD) noting last year that while gross domestic product (GDP) per person is rising, personal incomes are falling.

The growing chasm between the richest and poorest is dragging economic growth globally, knocking nearly 9 percentage points off the U.K.’s growth from 1990-2010, and between 6 and 7 percentage points off growth in the U.S., the OECD, which is made up of 34 major economies, said last year. Slower economic and employment growth tend to feed each other. –Leslie Shaffer | @LeslieShaffer1

–Katy Barnato contributed to this article.