Fair transitions Apply, adapt and amplify institutions for social justice.

 

 

Key points

• Environmental, digital and demographic transitions will leave societies that look fundamentally different from today’s societies in their wake. 
• Hundreds of millions of workers will be affected by these transitions, as enterprises close while others are created. 
• Regulations and policies that support equal access to opportunities for decent and productive employment and fair distribution need to be applied. 
• Key labour institutions need to be adapted to the specific challenges brought on by societal transitions. 
• Broader engagement is needed to integrate labour policies in other policy domains to reflect the interconnected and multidimensional nature of these transition

 Transitions are a natural feature of life. People transition from school to work, from one job to another, and from employment to retirement. They go from childhood to adulthood, and some to parenthood. Families grow and shrink. Societal transitions are distinct: they are structural changes that leave in their wake noticeably different economies, political systems and societal relationships.1 Today, the world is faced with a simultaneous set of three societal transitions: environmental, digital and demographic. These three societal transitions have distinct features, which will be discussed in turn in this chapter. They also share many commonalities. All involve enterprise creation, evolution and destruction. All will require effective policies to reskill and upskill workers, to support micro, small and medium-sized enterprises (MSMEs), and to accelerate the capacities of governments and social partners to adjust to rapidly changing circumstances. Current estimates are that 70 million workers will need to be retrained for the environmental transition, 840 million jobs are potentially exposed to generative artificial intelligence (AI) and 70 million new care workers will be needed just to maintain present levels of access to care in a world with more elderly. While these predictions are subject to considerable uncertainty and the changes will not happen overnight, hundreds of millions of workers will either be displaced or will see the day-to-day tasks within their occupations change. Fair societal transitions are essential to social justice and require support for workers and enterprises through conscious governance so that these changes are fair for all, including for the most vulnerable. If these transitions advantage some but leave many more behind, the consequence will be an increase in the sense of insecurity and mistrust in institutions that is already pervasive, undermining the objective of social justice. To meet this challenge, the lessons learned will need to be applied, adapted and amplified. Meeting this challenge requires, firstly, to apply the institutions that have been built over the past 100 years and that were reviewed in the previous chapters to the changes at hand; secondly, to adapt these institutions to address the specificities of the three societal transitions; and thirdly, to amplify them by integrating a social dimension and labour-related policies in the other unique policy domains of the concerned with these transitions, including through greater social dialogue, partnerships in the Global Coalition for Social Justice and multilateral cooperation. 

The concept of a “just transition” grew out of the realization that environmental policies must be sensitive to the needs and rights of workers, especially those in affected industries. This notion has further evolved into a comprehensive understanding that environmental policies must lead to a just transition for all – for both workers and employers, as well as beyond the workplace. This broader approach should be applied not only to environmental polices but to the governance of any societal transition. The term “fair transitions” is used in this report to describe results that promote social justice in all societal transformations.

Climate change and environmental degradation are altering both the planet and the world of work. The average global temperature is now more than 1.1°C above the pre-industrial average and is increasing at 0.2°C per decade. Biodiversity loss is equally alarming, as wildlife populations have declined by 73 per cent over the past 50 years (WWF 2024). Ecosystems are also affected, with the loss of 35 per cent of wetlands since 1970. Water scarcity affects roughly half of the world’s population for at least part of the year. These changes will have significant impacts on the world of work. First, many jobs across various sectors depend directly or indirectly on natural resources and ecosystem services, such as air and water purification, soil renewal, pollination and pest control. The increasing scarcity of natural resources and the declining ability of ecosystems to provide these services threaten these jobs. It is estimated that 1.2 billion jobs rely directly on these ecosystem services. Second, both jobs and enterprises rely heavily on environmental stability (for example, stable temperatures and predictable rain patterns) and the absence of environmental hazards (such as storms, floods and droughts). Lastly, environmental degradation tends to affect vulnerable workers the most, thereby generating and perpetuating inequality. While the 10 per cent richest households are responsible for about half of global emissions, it is low-income workers who are most affected, as they overwhelmingly work in sectors such as agriculture, construction and hospitality, where the effects of climate change will be felt most strongly. Likewise, the poor spend more of their income on energy. While a complete accounting of the relationship between the environment and the world of work is beyond the scope of this report, the present and future challenges of this transition are highlighted to illustrate the association between them: heat stress, inequality of impact, and job creation and destruction.  

Higher heat levels induced by climate change endanger the safety, health and well-being of workers and the sustainability of many enterprises. It reduces their productivity and threatens economic development, progress towards decent work and the viability of enterprises. According to the latest estimates, 2.4 billion workers – 71 per cent of the world’s workers – were exposed to some kind of heat stress in 2024. Of these, 22 million workers sustained some kind of heat injury and 18,000 died as a result of excessive heat. A worker’s natural defence mechanism against heat stress is to slow down, take more frequent and longer breaks or limit working hours, all of which, in turn, reduce productivity, economic output and family income. While in 1995 an estimated 1.4 per cent of the total working hours were lost because of heat stress, by 2030, under the optimistic assumption of an increase of 1.5°C by the end of the century, an estimated 2.2 per cent of total working hours worldwide will be lost to high temperatures – a productivity loss equivalent to 80 million full-time jobs (see figure 4.1). Among the ten countries most affected, with losses exceeding 5 per cent of total working hours, eight are low-income countries.

Intentional countermeasures – such as changing working hours to avoid peak temperatures, more water breaks, improved air circulation or the introduction of air conditioning (this last one is not possible for many of the most impacted jobs) – can reduce the economic as well as the health impacts of increased temperatures. International labour standards provide guidance in the form of the Plantations Convention, 1958(No. 110), and the ILO code of practice Ambient Factors in the Workplace. 

In recent years (from 2020 onwards), in response to the increase in frequency, intensity and duration of heatwaves (see figure 4.2), an increasing number of countries have taken up adaptation measures. While it is mostly high- and upper-middle-income countries that have adopted legal provisions, other countries with relatively high exposure to heatwaves, such as Burkina Faso, India and Thailand, have also started to implement adaptation measures.

 Figure 4.2 shows that adaptation measures have been increasingly operationalized through legally binding regulations. It also appears that until very recently, legislation represented the main avenue for the implementation of adaptation measure. However, since 2010, an increasing number of countries have used guidance and tools to promote and help the effective implementation of adaptation measures. The use of policies and programmes appears to also be relatively recent, with 80 per cent of references in policies and programmes published after 2019. 

More detailed and adapted regulation is of course necessary, but regulation typically lags behind facts on the ground. In this context, continual social dialogue between workers and employers on working conditions will allow workplaces to adapt quickly and efficiently to changing climatic conditions.  

A second issue related to climate change is that of inequality of impact. While high-income earners are responsible for most carbon emissions, low-income earners will bear the greatest impacts. Figure 4.3 shows that while the bottom half of the world’s population contribute to 12 per cent of emissions, they will bear the 75 per cent of the relative income losses due to climate change. Conversely, those with incomes in the top 10 per cent are responsible for 48 per cent of emissions but will bear only 3 per cent of the income losses associated with climate change.

The changes necessary to accelerate a clean energy transition may increase inequalities. For example, removing fossil fuel subsidies is a first step to reflect the full cost of using fossil fuels. However, fossil fuel subsidy reform then leads to price increases that disproportionately affect the poorest households, who spend a larger share of their income on these goods. Prices of fertilizer and food, transport, cooking and housing will also increase; and low-income households spend a large share of their income on these goods. As a result, fuel subsidy removals have brought on social unrest, making elected leaders reticent to implement such measures.

According to ILO estimates, the measures needed to limit global warming to a maximum of 2°C may lead to job losses of around 6 million – primarily in the fossil fuel sector. However, these same measures might also lead to the creation of some 24 million jobs, stemming from the adoption of sustainable practices in energy generation, construction and transport. This transformation of employment has already begun in the energy sector. Figure 4.4 shows employment in renewable energy since 2012.

The International Energy Agency reports that employment in renewable energy and energy efficiency is already greater than in fossil fuels. While employment in fossil fuels increased by 1.6 per cent from 2019 to 2023 and stood at 21.8 million jobs in 2023, employment in renewables and efficiency increased by 5.6 per cent to 23.5 million jobs. Similar calculations can be done relative to advancing towards sustainable agriculture and the circular economy (recycling). If job transitions into sustainable agriculture and the circular economy are added to those in energy generation, construction and transport, over 100 million jobs may be created, compared with 80 million that are potentially eliminated. While the net impact upon jobs is positive, this is a massive change in employment that will require reskilling and upskills for at least 70 millions of workers.

One obstacle to assessing the impact on a global scale is that the current edition of the International Standard Classification of Occupations (ISCO), known as ISCO-08 since it was published in 2008, does not distinguish green jobs from other jobs. ISCO is currently under revision, however, and one of the objectives of the new classification is to allow for the identification of green jobs. Similar difficulties exist relating to the International Standard Industrial Classification of All Economic Activities, revision 4, known as ISIC-4.  

The employment transition creates many difficulties. The skills necessary for jobs in fossil fuels are often not the same as those required in the renewables sector, nor are they necessarily located in the same place. 

Retraining workers, matching workers with new jobs and providing income replacement for workers and their families during their job transitions all yield considerable challenges. Widely shared economic growth and job creation will require that efforts to promote a green economy be complemented by policies that support displaced workers and provide decent work opportunities around the globe. The Guidelines for a Just Transition towards Environmentally Sustainable Economies and Societies for All (hereafter ILO Guidelines) provide a map on how to get from the jobs of today to the jobs of the future (see box 4.1). The ILO Guidelines were adopted one month before the Paris Agreement (2015). The vision of these guidelines is reflected in the Paris Agreement. The Preamble to the Paris Agreement emphasizes the need to provide a just transition for workers and create decent work in accordance with nationally defined development priorities. The ILO Guidelines and the Paris Agreement further influenced the agenda for the United Nations Sustainable Development Goals (SDGs) for 2030, most particularly SDG 8 on decent work andeconomic growth. Notably, SDG target 8.4 requires the international community to improve progressively, through 2030, global resource efficiency in consumption and production and endeavour to decouple economic growth from environmental degradation.

Nationally determined contributions (NDCs) provide a metric for evaluating how effective these guidelines have been in shaping climate policy. NDCs are climate plans by individual countries that outline efforts to contribute to reducing greenhouse gas emissions and adapting to climate change. Increasingly, NDCs also indicate considerations for broader societal objectives. Just transition and related considerations have seen an increase over time, from 1 country (less than 1 per cent) in the initial NDCs, to 72 countries (39 per cent) in subsequent rounds. Just over two thirds of plans make references to employment, while 15 per cent reference decent work (see table 4.1).

Looking ahead, as countries are submitting a new round of NDCs in 2025, they should increase their focus on just transitions, employment, decent work and related considerations.

Today’s world is increasingly digital, so it is no surprise that the world of work has digitalized along with it. In 2023, two out of three people in the world had used the internet during the preceding three months, compared with a negligible 0.7 per cent in 1995 – the year of the first World Summit for Social Development – and 28.5 per cent in 2010.

 As a general purpose technology, the internet has led to the growth of new industries and occupations, as well as new ways of organizing work. E-commerce has upended traditional commerce, accounting for over 17 per cent of retail sales worldwide in 2024. Mobile money accounts have enabled the financial inclusion of previously unbanked persons. In 2023, sub-Saharan Africa, with 335 million active mobile money accounts, outranked other regions of the world in the use of this service. Digitalization has brought dynamism to the world, positively contributing to overall economic and employment growth. Information technology services have been the fastest growing segment of the global economy over the last 20 years, up by 8 per cent compared to 5.1 per cent growth overall in the global economy. There have been concomitant increases in employment, with new ILO research finding that employment gains from exposure to 40 emerging digital technologies, including AI-based technologies, have been most pronounced in low-income countries, followed by upper-middle- and high-income countries . In Rwanda, for example, the roll-out of 3G across the country has led to new employment opportunities, with the benefits skewed, as in other countries, towards more skilled workers. Digitalization has also enabled not only new forms of work, but also new ways of working. Telework, defined as the use of information and communication technologies for work performed outside the employer’s premises, expanded sharply during the COVID-19 pandemic, as many countries implemented mandatory teleworking for office workers to thwart the spread of the virus. In 2020, close to 17 per cent of workers around the world were working from home (either teleworking or engaging in other home-based employment) compared with 7.9 per cent the preceding year. Working from home continues to be an important feature of the world of work, as can be seen in figure 4.5, which shows an impressive increase across countries between 2019, just prior to the pandemic, and 2023.

 

The increase in telework has prompted countries to adopt regulations to better protect workers. While many countries, including Australia, the Philippines, and also countries in Europe and Latin America, had regulations on telework prior to the pandemic, the provisions were sometimes limited, with vague definitions and few specific rights. Since 2020, many of these countries have updated their existing regulations and new countries have adopted regulations that: clarify legal definitions and access to telework; define rights and obligations for employers and workers; address equipment and cost responsibilities; establish health and safety measures; and introduce the right to disconnect. Another significant development has been the growth of digital labour platforms. Digital platform work comprises both online work as well as work that is in situ, meaning it is mediated online but the service is delivered in a specific geographic area. Although in situ platform work is most associated with taxi and delivery services, the model has permeated into new fields, including domestic work, beauty services, retail support, nursing and others. Digitallabour platforms have emerged with the assistance of technological advances, specifically GPS, smartphones, mobile data, as well as machine learning – a type of AI. Digital labour platformsuse AI for a range of functions related to the organization of work, including matching clients with workers, routing, dispatching, setting prices for customers and remuneration for workers, and offering incentives. Real-time data collection informs fully automated decision-making, allowing platforms to tailor offerings to individual clients and workers. Digital labour platforms have brought employment opportunities for workers, including migrant workers, but they are also associated with decent work deficits=. 

In response to these concerns, the ILO Governing Body began a two-year standard-setting process on decent work  in the platform economy at the 2025 and 2026 International Labour Conferences to develop normative guidance for ILO Members on the governance of this new form of work. Digital labour platforms are just one example of the increased use of AI in the world of work. Workplaces (and workers) across the world are increasingly using AI to automate a range of tasks, from drafting emails, to graphic design, and to recruitment. In a survey of employees in 47 countries undertaken between November 2024 and January 2025, 77 per cent of employees report that AI is being used by their organization, with almost half stating that it is used from a moderate to very large extent across a range of areas and tasks. Moreover, 58 per cent of employees report intentionally using AI tools and systems in their work on a regular basis (Gillespie et al. 2025). AI task automation does not necessarily imply automation of occupations, as the technology may also complement human labour. Whether the adoption of the technology leads to automation (and thus potential job loss depending on the degree of automation) or job complementarity depends on a range of factors, which include the centrality of the automated task to the occupation, how the technology is integrated into work processes and management’s desire to retain humans to perform or oversee some of the tasks, despite the potential of automation. It may also depend on the extent to which institutions fostering social justice – including social dialogue between employers and workers – play a role. ILO research on the possible implications of generative AI on employment finds that it is clerical support workers that are most exposed to generative AI technology, with nearly 70 per cent of clerical tasks in the two highest gradients of exposure (Gmyrek et al. 2025). In contrast, other occupational groups such as professionals, associate professionals, and services and sales workers, have 75 to 80 per cent of their tasks in the low or very low exposure category. This means that, while some of their functions could potentially be automated, most still require human intervention. On account of the greater exposure of clerical support occupations – a field overrepresented by women – women are twice as affected as men by the risks of potential automation from generative AI technology. Indeed, in high-income countries, 9.6 per cent of women’s employment is in the highest exposure gradient (gradient 4), compared with 3.5 per cent of men’s employment (see figure 4.6). While high exposure does not mean necessarily that these jobs will be lost, it is clear that potential job losses are most likely to be felt by women. There is therefore a need to ensure that any policies instituted to support workers at risk are designed with a gender perspective.

 The Termination of Employment Recommendation, 1982 (No. 166), encourages employers, to the extent possible, to redeploy staff at risk of technological unemployment to other jobs within the same organization. If not possible, they are encouraged to explore other solutions, including through adjustments to working hours and hiring policies, and to undertake such measures after consultation with workers’ organizations. In the event of job loss, other policies are needed, including income support through unemployment insurance or other social protection measures. There is also a need to develop and institute reskilling and upskilling programmes that can prepare workers for new careers, notably in the digital economy, as well as in the evolving green and care economies. Since dislocation predominantly affects them, women may be the predominant focus of such support measures. As should generally be the case, it will be critical to ensure that support measures are designed to be inclusive of all workers, and in particular take access to transport and the need for childcare services into consideration. 

In addition to potential job losses, another major concern is the deepening digital divide, and its impact on productivity gaps, whether between rich or poor countries, or between large and small enterprises. While the potential for occupations to benefit from the productivity-enhancing effects of the technology is relatively similar across countries – as indicated by the comparable shares of employment found in gradients 1 and 2 across regions – in practice, these augmenting effects may not be realized due to constraints in physical infrastructure (such as electricity access and broadband) as well as lack of digital skills in lower-income countries. Indeed, ILO research on Latin America that incorporates data on computer use at work reveals that many of the occupations with potential for augmentation have relatively low usage of computers at work (see figure 4.7). As a result, these countries risk not realizing the potential productivity gains from AI, unless investments are made in increasing digitalization, both in terms of infrastructure, but also the skills needed to work effectively with the technology. Digital technologies also do not affect enterprises equally. As highlighted earlier, MSMEs face major barriers to accessing the necessary infrastructure (electricity, broadband internet) and new technologies, including AI.

A particularly significant area of concern is how Artificial Intelligence (AI) and digitalization more broadly affect working conditions. Technological systems can alter workers’ autonomy or control, the speed or intensity of their work, the task content of their work and thus their use of skills, as well as workers’ interactions with managers or colleagues. Some algorithms are the result of mostly linear programming, essentially just automating decisions made previously by humans. Others use machine learning or other types of AI to make decisions in ways that humans may not understand or control. Algorithmic management can affect workers by affecting work intensity, occupational safety and health outcomes, and data privacy as well as decisions on scheduling. The potential effects need to be governed so that they respect fundamental principles and rightsat work and foster decent work.

Compared to technological and environmental transitions, the demographic transition is generally slower moving and more predictable but no less challenging. Although increases in longevity have contributed, the demographic transition under way today is primarily driven by falling fertility. In 1990, the total fertility rate, or the average number of children that women had across the world, was about three; today, it is closer to two. 

However, what is most striking about trends in the total fertility rate is the divergence between countries. While fertility rates are falling everywhere, they are doing so at very different speeds in different country income groups, meaning different countries are at markedly different stages of the demographictransition (see figure 4.8). 

Whereas high-income countries on average fell beneath replacement fertility in 1976, low-income countries are not projected to do so until 2093. While the right to found a family is internationally recognized (Article 16 of the Universal Declaration of Human Rights), fertility decisions are nevertheless influenced at least in part by policies and institutional supports in place. In a global study conducted by the United Nations Population Fund and YouGov of 14,000 adults across 14 countries,12 the most important limitation cited by respondents on why they have fewer children than desired was “financial limitations” (39 per cent), followed by “job insecurity” (21 per cent) and “housing” (19 per cent). The top non-financial reason was the “lack of a partner” (14 per cent). 

A survey of the views of 22,000 millennial and Generation Z respondents in 44 countries showed that the high cost of living is a top concern, with half indicating they live pay cheque to pay cheque (Deloitte Consulting 2023). Many carry some form of debt, limiting their current and future social and financial decision-making. In addition, the lack of a supporting environment for conciliating work and family, particularly for women, is both a barrier to opportunities in the world of work and a drag on fertility. Childcare availability and affordability allow for both greater labour market participation and higher fertility. So, while fertility decisions are individual and private, the lack of policies to support an enabling environment for families and overall economic insecurity may be linked to low fertility rates. The fall in total fertility rates will have three consequences for the world of work. The first is that some countries will see a decrease in the size of their labour forces, leading to potential worker shortages with consequences for productivity and distribution. The second is that there will be fewer working adults to financially support and take care of another significant demographic transition, that is, the increasing numbers of non-working elderly adults. The final consequence will be a greying workforce with more older workers and fewer younger ones.

Figure 4.9 shows that the labour force will fall in high-income and especially in upper-middleincome countries, which will see their labour force fall 5 per cent from 2030 to 2050. Low- and lower-middle-income countries, on the other hand, will see their labour forces continue to grow by roughly 30 per cent between 2030 and 2050. These opposing dynamics mean that while some parts of the world face potential labour shortages, others will still have many young people and a potential labour surplus.  

For countries with declining population growth, labour shortages may be addressed in several ways, including increasing productivity and other labour market policies. In many of the upper-middle-income countries in which the labour force will fall, millions of workers are still employed in informal, low-productivity jobs, particularly in agriculture. The transition of these workers into higher-productivity jobs could exorcise the spectre of labour shortages. In addition, policies such as reskilling, well-regulated migration, retaining older workers and encouraging the labour force participation of women, can mitigate potential labour shortages, all while contributing to equality of opportunity. An opposing dynamic is occurring in countries in which the population is still increasing and which will still have growing numbers of young people. The surge in young people entering the labour market in low- and lower-middle-income countries could be a source of economic dynamism. It may also lead to increased migratory pressures if their economies cannot produce the almost 660 million new and productive jobs needed from now until 2050. The employment policies mentioned in Chapter 2 of this report will continue to be important for countries facing a growing labour force.

Perhaps the best-known consequence of ageing is an increase in old-age dependency ratios, meaning with increased age, people may become more dependent on others for care. Providing care to those who need it is important to a thriving and healthy society and a central element of the social contract for social justice more broadly, but the increasing numbers of those needing care will be a challenge going forward. There are three types of dependency ratios: (i) the child dependency ratio, which is the number of children aged 0 to 14 divided by the number of youth and adults aged 15 to 64; (ii) the old-age dependency ratio, which is the number of elderly persons aged 65 and over divided by the number of youth and adults aged 15 to 64; and (iii) the total dependency ratio, which is the sum of the two previous ones. Figure 4.10 shows the expected evolution of dependency ratios up to 2050. 

Panel A shows the impact of falling fertility rates. While the child dependency ratio has been falling and will continue to fall as people have fewer and fewer children, the old-age dependency ratio will only increase. The interaction between the two creates a worldwide total dependency ratio that will reach a minimum in 2032 and will increase thereafter. Panel B shows that different country income groups will follow different trajectories. While total dependency ratios will be rising in high- and upper-middle-income countries, lower-middle- and particularly low-income countries can count on a substantial demographic dividend from their still-youthful populations – if they can create the necessary jobs. 

It is important to emphasize that the demographic dependency ratios are imperfect indicators of dependency, as increases in longevity have also led to more healthy years, allowing workers to extend their labour market activity well past standard retirement ages or to play important roles in their extended families post-retirement. Indeed, many individuals over 65 are fully capable of taking care of themselves and, in many cases, of others. The first way in which a dependency ratio affects society is through the social protection transfer system. Given that child benefits complement family income while old-age benefits replace individual income, child benefits are much lower than old-age benefits, both per beneficiary and in aggregate. The world as of 2023 spent on average 0.7 per cent of GDP on benefits for children, whereas benefits for the elderly amounted to 7.6 per cent of GDP on average. This means that there is an asymmetry in the fiscal impacts of child and old-age dependency ratios, and social protection budgets cannot count on fewer child benefits to offset more old-age pensions. If the ratio between beneficiaries of social security and those who are paying for it becomes too high, this will increase the funding burden on those who are working. Globally, 80 per cent of individuals over the retirement age receive some form of old-age pension, but more than 165 million are still outside the pension system and in the interests of fairness must be brought in. This has put pressure on social security budgets throughout the world. If financing for old-age benefits is not sustainable, effective and adequate, quality of life for the elderly is at risk. Countries will need high levels of employment that are unlikely to be attained if barriers to participation for women, older persons, youth, persons with disabilities and persons from marginalized groups are not reduced. Increased formalization of jobs, enterprises and economic transactions is crucial, as informality reduces the economic base from which to finance social protection. Likewise, increased and broad-based productivity that allows wages to increase for all and legal frameworks that allow those in all forms of work to contribute to social security are crucial for financing pensions in the coming decades. As seen in the previous chapters of this report, these are all policies that contribute to labour market inclusion for social justice. They foster win–win situations that avoid trade-offs between present and future generations. In addition, the parameters that guide retirement may require reconsideration. 

Table 4.2 shows that the modal, or most common, statutory retirement age is 60 for both men and women, but many countries have a retirement age of 65 and in a few, the retirement age is as high as 70. As fertility rates drop, older people face greater pressure to extend their working lives, and some governments have started to raise the age of retirement in order to keep pensions systems viable. In 15 out of 27 EU Member States, governments have already adopted a future retirement age higher than the present one. An alternative (or complementary) policy approach that allows individuals more leeway is deferred retirement. This approach allows workers who opt to retire later to benefit from increased pension accrual. Accrual rates for working beyond pensionable age usually vary between 3 and 10 per cent per year.

Other policy approaches include introducing or increasing penalties for early retirement, lengthening the eligibility period to qualify for retirement or otherwise tighten eligibility criteria. In sum and as table 4.3 shows, there has been no lack of initiatives to keep pension systems solvent and viable. Nevertheless, for the demographic change to be managed in a humane and equitable manner, each measure must be analysed not only on the basis of its fiscal merits (which are crucial) but also on its distributive impacts, including careful assessments of whether anyone is left unprotected. Of particular importance is consideration of the type of work involved: governments and social partners may wish to consider whether retirement rules should take into account occupational conditions (for example, office work as opposed to construction). The second way in which dependency ratios affect society is through the demand for care services. Care work includes all the activities and relationships involved in meeting the physical, psychological, cognitive, mental health and developmental needs of children, adolescents, youth, older persons and persons with disabilities. It is provided by different actors, including households, the state and the private and not-for-profit sectors.

 

There are many models for state-provided care that include residential, community-based or in-home care and support. What all models require is financing and qualified, skilled and adequately renumerated care workers. The care sector is plagued by worker shortages and decent work deficits. Low wages, long hours of work, occupational safety and health risks (including stress, violence and harassment at work), low social status, insecure or no formal contracts, and limited or no social protection are endemic to large parts of the care sector. ILO standards on domestic workers, nursing personnel, maternity protection, workers with family responsibilities, working hours, wages and social protection, among others, can help social actors at the national level to bridge care gaps that affect workers as well as those for whom they provide care. While there are no worldwide estimates of expenditure on long-term care for older persons, OECD estimates set it at 1.7 per cent of GDP. As these numbers reflect the spending of mostly higher-income countries, it is likely that the global number is considerably lower. The overall care economy includes about 381 million jobs globally or approximately 11.5 per cent of total employment (ILO 2024f). Given ageing populations, the number of long-term care jobs needed is expected to increase from 85.2 million in 2023 to 158.1 million in 2050 (ILO, forthcoming).20 Only 89 out of 179 countries mandate public provision of long-term care services for older persons (ILO 2022c). The mandates are also skewed towards high-income countries (see table 4.4). Family obligations in the form of legal obligations for families to take care of their elderly members exist in 70 out of 178 countries.

Table 4.4 suggests that even with an increase in the paid care sector, a large part of the care responsibilities will inevitably fall upon families, particularly women. Elevated care responsibilities mean that carers have less time available for paid work, which limits equality of opportunity (see Chapter 2). However, it also affects economic growth and is a drag upon the economy, as productive workers are kept out of the labour market. In addition, it can constrain decisions about having children. Universal and affordable long-term care services, supported by longterm care leave policies and family-friendly workplace policies and arrangements can allow for reconciliation between engagement in paid work and care responsibilities. Long-term care leave allows employed persons to take care of family members who have a long-term functional dependency (ILO 2022c). Unfortunately, such provisions are still rare in law. Table 4.5 shows that only 30 per cent of the 185 countries for which such information is available have laws that allow workers to take extended leave – either paid or unpaid – to care for family members.

Part-time work can also allow workers to reconcile unpaid care work with paid work. In nearly all countries of the world, women are more likely than men to be found in part-time work. Although women make up less than 40 per cent of total employment, they make up 57 per cent of all those working part-time, mostly due to their traditional role as caregivers. In the United Kingdom in 2023, the most cited reason for working part-time was to manage caring responsibilities (32 per cent, rising to 45 per cent among women aged 35 to 49). In contrast, only 13 per cent of men who work part-time indicated that they did so to manage caring responsibilities. Part-time work can be part of the solution only if part-time workers can count on the same kind of labour protection as full-time ones. In the Netherlands, for example, where most parttime workers hold permanent employment contracts, the average hourly wage gap between full-timers and part-timers is negligible, and part-time workers pay pro-rata social insurance contributions in exchange for pro-rata entitlements to old-age, unemployment, sickness and disability benefits. Finally, it is important to stress that poor health and disability in old age responds to social determinants. Social protection coverage across the life cycle, as well as policies to encourage healthy life styles, address some of the social determinants of poor health that influence the loss of functional abilities and intrinsic capacities in old age. In other words, promoting social justice early in life through protecting rights, ensuring equal opportunities and addressing distributional fairness, will improve outcomes (potentially decreasing costs) later in life.

Improved life expectancy and falling fertility will not only lead to greater dependency ratios but will change the profile of workforces around the world. Figure 4.11 shows the labour force by age category from 1990 to 2050 (projected). These trends will continue beyond 2050 as the population continues to age.

Although not without its benefits, an older workforce presents many challenges. To begin with, older workers are far less likely to engage in reskilling and training, which is particularly worrisome given the fast rate of technological change. Another concern is that ageing is associated with increased disability. Figure 4.12 shows the age-disability profiles for four countries, one from each country income group. While the profile is steeper for lower-income countries, it is present everywhere – an older labour force will be a labour force with more workers with disabilities. This means that workplaces must adapt to older workers in order to allow them to be productive members of society.

The ability to make the transition to retirement depends on the benefits available and how workers and their families are supported during this phase, along with other factors such as health and personal preferences. For example, a healthy person at retirement age may be forced to return to employment if the retirement pension or other income support is insufficient; while a person with poor health may have to stop working despite their preferences and needs. One policy that allows reconciliation between old age and work is partial retirement – a transition period of part-time work in which employees begin receiving either a partial or full pension. While partial retirement is not a substitute for adapting workplaces to the needs of older workers, it does allow those who wish to continue to engage in paid work, although with fewer hours. In Europe, 11 countries allow for partial retirement and various others22 have provisions that encourage combining part-time work with a pension.

 

Social policy must ensure that extending working life is not a life sentence to work. It requires an equality-based approach for older workers that, firstly, removes barriers of implicit and explicit age discrimination against the elderly persons so that equal opportunities for productive and decent employment are made available, and secondly, offers older workers a genuine choice between continuing to work or transitioning to a decent retirement. Social dialogue, including collective bargaining and workplace cooperation, is crucial for adapting workplaces to an older labour force. 

Harnessing these transitions to take advantage of their opportunities while mitigating their risks will require a combination of three efforts (see figure 4.13): Hours of Work (Industry) Convention, 1919 (No. 1). 

▶applying existing labour institutions to the changes at hand; 

▶adapting labour institutions to the specific challenges of each transition; 

▶amplifying labour institutions to integrate the policy domains of the three transitions

Since its first Convention in 1919 on working hours, the ILO’s tripartite constituents have come together to develop standards on national policies and labour institutions that support workers, sustainable enterprises and society at-large. The institution-building relies on and includes fundamental principles and rights at work, as well as regulations and policies that support equalaccess to opportunities for decent and productive employment and fair distribution. Many of the policies are transversal, meaning that they apply across contexts, and can be drawn upon to mitigate the negative impacts on workers and enterprises from the effects of the societal transitions discussed in this section. 

Policies can be grouped into four categories: (i) Social protection policies, particularly unemployment insurance, which provides income support to workers while they are between jobs. (ii) Active labour market policies, which provide skills training and job placement services to support workers in accessing opportunities. (iii) Promotion of sustainable enterprises, including access to credit, which can support the creation of new enterprises and thus employment in growing areas of the green and digital economy. (iv) Labour protection, which in addition to wage policies, includes specific policies that are highly relevant to periods of change, such as the protection of workers’ wages, working time and occupational safety and health. 

In addition to the policies mentioned earlier, there is also a need ensure existing labour institutions are fit for purpose to address to each transition, and to adapt those that are not to the tasks that face it. The adaptation of existing policies is best managed through social dialogue – a critical governance institution. Key labour institutions that need to be adapted to the environmental transition include labour statistics, skills and training regulations, social protection policies, occupational safety and health regulations and enterprise regulations. First, labour statistics and foresight of labour market impacts should include assessments of sectoral job creation and destruction to inform skills, social protection and approaches to formalization. These evidence-based statistics and projections should inform upskilling, reskilling and initial training in emerging green industries, as well as dedicated social protection policies for workers who may lose their jobs or transition within or across sectors (for example, the Employment Policy Convention, 1964 (No. 122)). 

As climate change and environmental degradation are expected to disproportionately harm lower-income workers and families, there will be a need to (i) adapt social protection to potentially deal with price increases; (ii) consider place-based strategies, such as investing in renewable energies in geographic areas where other energy production has been reduced; and (iii) adapt skills training programmes and enterprise, entrepreneurship and informality policies to facilitate access of those most affected by job destruction. Finally, regulations are specifically needed to strengthen protections of workers against heat stress, providing work hours and breaking time regulations, and exposure to heat and environmental hazards regulations among others (for example, the occupational safety and health Conventions on heat stress). The digital transition has brought new ways of working and organizing work, from the growth of telework to the development of digital labour platforms, to the possible effects of AI on employment and working conditions. Telework, platform work and algorithmic scheduling have created new challenges to the efficacy of traditional working time regulations, given the ability to work anytime, anywhere. Yet, the need for working time regulation to protect workers for excessive hours, insufficient hours and irregular scheduling still holds. New developments, such as laws and collective bargaining agreements on the right to disconnect and advanced notification of scheduling, are an example of how existing institutions can be adapted to new challenges.

The current standard-setting discussion on decent work in the platform economy at the ILO based on tripartite social dialogue will provide guidance to ILO Member States and constituents on how to manage the multiple challenges related to diverse forms of work arrangements. The opportunities and challenges brought by AI and algorithmic management to the world of work also require an adaptation of labour institutions. Given that women are more likely to be affected by automation, some countries may need to adapt unemployment benefit schemes and job training and placement programmes to better accommodate women, which is also relevant to accommodating the child and elderly care concerns of the demographic transition. Though still emergent in respect of the digital transition, social dialogue, including collective bargaining, has begun to be used to address some of the challenges of AI and algorithmic management, including negotiations that have resulted in high-road approaches to AI investments and uses, based on complementing rather than replacing worker skills, empowering the workforce, and adapting labour and social protections to new forms of work. With regard to the demographic transition, labour market institutions must be prepared to address issues such as an ageing workforce and population – and the greater need for care that ageing entails. Investments are also needed to improve the working conditions of jobs in thecare economy to alleviate the shortages that plague many countries. Expansion in the provisions of paid leave to care for ageing family members and in improving the quality of part-time work will help facilitate work–life balance and retain prime-age workers, particularly women, in paid employment. Good quality part-time work can also facilitate in the retention of older workers, as are policies that accommodate workers with disabilities.

Ensuring these transitions are managed justly includes policies well beyond the world of work. The policy questions on climate change and environmental degradation, digitalization and AI and demographics go beyond the labour sphere, and decisions taken on these questions will likewise have repercussions on the world of work. Without a broader engagement between policy spheres and integration of, for example, labour environmental, infrastructure and healthcare policies, fair transitions may be jeopardized and the trust societies have in the institutions tasked with guaranteeing social justice will be further undermined. For each transition, there are instances where such broader engagement is needed. With respect to the just transition, one third of NDCs still do not consider employment, 40 per cent do not consider just transitions and 85 per cent have no reference to decent work, despite their centrality to the workers and enterprises that will be affected. 

Current debates on AI, and the many national AI strategies being developed, routinely ignore world of work considerations, including possible effects on employment, job quality and market concentration. Scant attention is given to working conditions despite the much greater impact that AI will have on existing jobs, and thus on the enterprises and workers that engage with the technology in their work. Moreover, emerging issues such as the protection of workers’ personal data have received little attention, with most privacy legislation excluding the world of work from its coverage. Finally, the intersection of the demographic transition with international migration, working time policies and disability has been insufficiently considered. Broader engagement is thus needed at the national and international levels to address the many dimensions of societal change. At the national level, this would mean broader engagement between the traditional tripartite representatives (employers’ and workers’ organizations and labour ministries) and other government ministries such as ministries of finance, industry, technology, health and the environment. In addition, representatives from central banks, provincial and local governments, and civil society could also be brought together. The aim of this broad convening would be to develop a comprehensive approach to the ongoing developments of these transitions based on the different expertise of the different participants, and to ensure that world of work issues and social justice are central in all transition discussions. At the international level, this amplification would require engagement of the multilateral system beyond the ILO and the United Nations system, to include international financial institutions such as international and regional development banks, regional institutions such as the African Union, the Association of Southeast Asian Nations and the European Union, and national actors from different parts of the world. The multilateral system has experience with broader convenings, including the UN Global Compact and the coordinated effort undertaken to address the HIV/AIDS pandemic, for example. Ideally, the actors involved in this broader engagement would develop mechanisms for policy and regulatory development, monitoring and adaptation to evolving social, economic or environmental changes.