Global labor market

Overview of the global labor landscape

Current employment trends

Across the world, employment patterns have become more dynamic as economies recover from disruptions in the early 2020s. Service sectors, especially health care, education, hospitality, and professional services, have driven a large share of job growth in many regions. Technology-enabled roles and remote-capable positions continue to expand, even as traditional manufacturing and extractive sectors adjust to new demand. The shift toward flexible work arrangements and hybrid models remains a defining feature of many labor markets, influencing both job design and geographic distribution of opportunities.

Unemployment and underemployment

Global unemployment remains unevenly distributed, with rates typically higher among youth and in economies facing inflationary pressures or slower growth. While some regions have achieved relatively low unemployment, underemployment and skill mismatches persist, meaning a portion of workers are not fully utilizing their capabilities or working fewer hours than they desire. In many countries, the quality of work—wages, job stability, and access to social protections—lags behind headline employment figures, underscoring the need for policies that promote constructive transitions and career progression.

Informal vs formal sectors

The informal sector remains a large part of the labor force in many developing economies, where workers often lack social protection, stable earnings, and formal contracts. Formal employment, in contrast, tends to offer greater wage stability, access to benefits, and pathways for career development. The ongoing challenge for policymakers is to encourage formalization without eroding livelihoods in the informal economy. Targeted measures include streamlined registration, social protection coverage, and incentives for formal hiring, particularly for small and medium-sized enterprises.

Regional labor market dynamics

North America

North America has seen steady job creation in recent years, with unemployment hovering near historic lows in several periods. The region faces tight labor markets in high-demand fields such as technology, health care, and skilled trades, leading to competition for highly skilled workers. Immigration policy and cross-border mobility also shape the labor supply, while remote and hybrid work models broaden geographic hiring pools, allowing firms to tap talent beyond traditional urban centers.

Europe

European labor markets show a mix of resilience and caution, with growth concentrated in services and green transition-related sectors. Aging populations and regional disparities shape unemployment and participation rates, particularly among youth and women in some countries. Europe’s emphasis on upskilling, digital competence, and green skills aligns with policy priorities to meet climate and productivity goals, though implementation varies by member state and funding availability.

Asia-Pacific

Asia-Pacific contains some of the world’s fastest-growing job markets, driven by manufacturing, digital services, and expanding consumer demand. China and India influence regional trends, but smaller economies in the region also contribute through diversification into services and advanced manufacturing. Automation and rising digitalization influence productivity and skill requirements, while urban migration sustains demand for new jobs in cities and regional hubs.

Africa

Africa faces the dual challenge of high youth unemployment and a large informal sector. Rapid urbanization creates demand for job-intensive growth in construction, services, and agribusiness, but job creation often lags population growth. Policy emphasis is increasingly placed on entrepreneurship support, targeted apprenticeships, and investments in scalable sectors to convert demographic momentum into broad-based employment gains.

Latin America and the Caribbean

Labor markets in Latin America and the Caribbean are characterized by persistent informality, regional inequality, and exposure to commodity cycles. Tourism, dynamic services, and expanding digital sectors offer opportunities, but vulnerabilities remain in terms of wage adequacy and social protection coverage. Skills development and resilience against shocks—such as climate events or economic downturns—are central to improving labor market outcomes in the region.

Labor market demographics

Age structure

Demographic profiles shape labor force dynamics: aging in many developed economies raises concerns about retirement trajectories and pension system sustainability, while younger populations in parts of Africa and South Asia create demand for job-rich growth and early skills development. The balance between these trends affects long-term productivity, fiscal pressures, and policy design for education and retirement frameworks.

Gender and diversity

Gender parity and inclusive practices remain central to expanding the labor pool and boosting productivity. Progress in female participation, leadership representation, and access to flexible work arrangements varies widely by country and sector. Addressing wage gaps, caregiving responsibilities, and workplace discrimination is critical to maximizing effective labor supply and achieving sustained economic growth.

Migrant workers and mobility

Migrant workers contribute significantly to many labor markets, filling shortages in sectors such as health care, agriculture, construction, and hospitality. Mobility rights, recognition of foreign credentials, and safe working conditions are essential to harnessing this talent while protecting workers from exploitation. Policies that streamline overseas recruitment, support integration, and safeguard protections help ensure mobility translates into durable gains for both migrants and host economies.

Skills, education, and lifelong learning

Demand for skills

Skill demands are shifting toward digital literacy, problem-solving, and adaptability. Technical competencies in data analytics, programming, cybersecurity, and system thinking complement soft skills such as collaboration, communication, and creativity. Employers increasingly prioritize a mix of these capabilities to navigate automation, globalization, and changing consumer needs.

Upskilling and reskilling

Lifelong learning is becoming a workforce imperative. Employers, governments, and educational institutions are investing in upskilling and reskilling programs to help workers transition between occupations and industries. Apprenticeships, modular training, and subsidized courses reduce entry barriers and support career progression, contributing to higher productivity and longer labor market participation.

STEM vs non-STEM talent

Demand for STEM talent remains strong in technology, manufacturing, and science-driven sectors, yet non-STEM roles in management, human services, and the creative economy sustain broad opportunities. A balanced talent pipeline—combining core STEM capabilities with domain-specific expertise in non-STEM fields—appears essential for innovation and inclusive growth in a rapidly evolving economy.

Technology, automation, and productivity

Impact of automation and AI

Automation and artificial intelligence raise productivity and create new job categories, even as they pose displacement risks for routine tasks. Effective policy responses include early identification of at-risk roles, targeted retraining, and social protections that cushion transitions. Regions that couple investment in technology with broad-based skills development tend to realize stronger, more inclusive productivity gains.

Remote work and gig economy

The rise of remote work and flexible arrangements expands talent access and regional job matching, while gig platforms offer flexible income opportunities. These trends improve labor market participation for some groups but can complicate career progression, benefits, and earnings stability. Policymakers are increasingly considering portable benefits, portable pensions, and clear labor standards to protect gig workers without stifling platform innovation.

Digitalization and skills mismatch

Digitalization accelerates skills mismatches when education systems and on-the-job training lag behind technology adoption. Continuous learning ecosystems, industry partnerships, and modular curricula help workers stay current. Data-driven labor market analytics can guide investments to where demand will grow, reducing friction in hiring and retention.

Policy approaches and reforms

Active labor market policies (ALMPs)

Active labor market policies, including job search assistance, wage subsidies, and publicly funded training, aim to connect job seekers with opportunities and reduce friction in transitions. The effectiveness of ALMPs depends on targeting, timely delivery, and evaluation. Programs that combine reemployment services with skills development tend to produce better employment outcomes and longer tenures in new roles.

Education-system alignment with labor demand

Aligning education with labor market needs involves curricula that emphasize both core competencies and industry-relevant skills. Strong partnerships between schools, universities, and employers support apprenticeships, co-op placements, and industry-responsive programs. This alignment helps reduce time-to-employment and increases the relevance of credentials in the job market.

Social protection and labor rights

Social protection systems—unemployment insurance, health coverage, and retirement benefits—provide stability during job transitions and shocks. Robust labor rights enforcement ensures safe working conditions, fair pay, and the right to organize. Well-designed protections can support productivity by reducing risk, encouraging mobility, and enabling workers to pursue skill development without fear of precarity.

Measurement, data, and trends

Labor force surveys

Labor force surveys and ILO-based indicators remain essential for understanding participation, unemployment, and underemployment. Differences in definitions, sampling, and timeliness can affect cross-country comparisons. Strengthening standardized measurement and expanding timely data collection improves policy responsiveness and international benchmarking.

International benchmarks

Global benchmarks help track progress on participation, skills alignment, and earnings. Common indicators include unemployment rates, labor force participation by age and gender, job vacancy trends, and the share of workers in formal employment. International cooperation enhances comparability and drives shared best practices in policy design.

Data gaps and challenges

Many regions face gaps in data quality, frequency, and granularity, especially regarding informal work, underemployment, and credential recognition across borders. Addressing these gaps requires investment in statistical capacity, harmonization of definitions, and the integration of administrative data with survey data to create a fuller picture of labor dynamics.

Trusted Source Insight

OECD highlights the critical role of skills development, lifelong learning, and well-designed labor policies to raise productivity and labor force participation in a rapidly changing economy. The organization emphasizes aligning education systems with labor market needs, supporting workers through transitions, and pursuing inclusive policies to reduce inequalities amid automation and demographic shifts.

Source: https://www.oecd.org