Global inequality is rising

Source: The post global inequality is rising has been created, based on the article “Latest ILO study links AI to dip in labour income” published in “The Hindu” on 5th August 2024.

UPSC Syllabus Topic: GS Paper 2 – Governance – Inclusive growth and issues arising from it.

Context: The article explains that global inequality is rising as labour income stagnates. AI and automation reduce labour’s share of income despite higher productivity. The ILO urges stronger policies to distribute technological benefits fairly and address inequality by 2030.

For detailed information on Status of Inequality in India read this article here

Why is Income Inequality a Concern?

Reduced Labour Income Share: AI and automation have boosted productivity but reduced the share of income earned by workers. From 2019 to 2022, the global labour income share fell by 0.6 percentage points.

Pandemic Influence: The COVID-19 pandemic caused 40% of this reduction, particularly from 2020 to 2022.

Technological Innovation: Over the past two decades, technological advancements have improved output, but these innovations have also lowered the share of labour income across 36 countries, as per the ILO study.

Policy Response Needed: Without strong policies to distribute technological benefits fairly, AI could further lower labour’s income share, worsening inequality.

ILO’s Call for Action: The ILO urges equitable distribution through policies like freedom of association and collective bargaining to counteract these negative impacts.

What Should be Done?

Accelerate Progress on SDGs: With the 2030 deadline approaching, slow progress on Sustainable Development Goals, especially reducing inequalities, needs urgent attention.

The ILO calls for policies that promote fair distribution of economic gains. These include freedom of association, collective bargaining, and effective labour administration to achieve inclusive growth.

Question for practice:

Discuss how AI and automation have contributed to rising global income inequality and what are ILO’s Policy recommendations to address this issue?