India, China reduced global income inequality: ILO

Economic convergence, driven mainly by China and India, has caused global labour income inequality to decline over the past 13 years, finds the International Labour Organisation.

According to the ILO, the global labour income distribution is lopsided. A worker in the top decile earns $7,475 per month and one in the bottom decile, just $22. The highest-earning 10 per cent of workers worldwide received almost half, or

48.9 per cent, of total pay, the next decile received

20.1 per cent while the remaining 80 per cent workers received just 31 per cent.

Although global pay inequality levels are very high, it is important to note that they have decreased between 2004 and 2017. However, if India and China are excluded, a much slower reduction in labour income inequality over that period has been observed. Interestingly, these findings do not reflect a decrease in

inequality within India or China-indeed, the data suggest that neither country registered such a decline during 2004-17. Instead, the two countries have enjoyed very high growth rates, which, together with their initially low level of average labour income, have contributed "mechanically" via economic convergence to a global decrease in inequality.

The report also finds that despite the economic progress made in past decades, the number of people not in employment, education or training and workers in poverty are likely to increase in Asia-Pac, including India, due to the recent deceleration

of GDP.

The share of youth who are not in employment, education or training in the region reached 24.3 per cent in 2019 compared with 23.9 per cent in 2018. The high rate is driven by South Asia, where opportunities for young women to go to university or work is limited. In South Asia nearly 161 million youth, including 81 million young women, have this status.

Further, the labour productivity growth rate, measured as output per worker, dropped from 4.3 per cent in 2018 to 3.9 per cent in 2019. This drop was driven mainly by countries in South-East Asia, the Pacific and

South Asia, including India and some of the Asean countries where GDP growth decelerated. Poor job quality and high rates of informality remain a challenge to be tackled by governments and employers' and workers' organisations. As many as 79.1 million workers in Asia and the Pacific, or 4.2 per cent, remained in extreme poverty in 2019, and 277 million workers or 14.6 per cent were still living in moderate poverty. While working poverty continues to decline, those who have escaped poverty remain highly vulnerable to adverse economic shocks and therefore face a significant risk of becoming poor again.

The report also found that the Periodic Labour Force Survey (PLFS) of India is not in line with international best practice. The main difference between the ILO modelled estimates of November 2019 and those of November 2018 is the revision of historical unemployment rates for India. There are considerable methodological differences here, it said.