The dynamics of global demographics shape our world today, highlighting several key aspects: youth bulges in developing countries versus aging populations in developed ones, rapid urbanization in some regions, international migration, and persistent challenges in achieving gender equality. This blog explores these demographic shifts and their implications, particularly on labour markets. Understanding these demographic dynamics is crucial for fostering inclusive and sustainable global growth. As World Population Day approaches, it serves as a timely reminder of the importance of proactive policies and investments in preparing for demographic changes and that employment-sensitive policies matter.
Youth bulges versus aging populations
Many developing countries have a high proportion of individuals under age 25, leading to what is known as a youth bulge. Persons under 25 represent a whopping 61 per cent of the population in low-income countries, compared to 27 per cent in high-income countries. This demographic trend presents both opportunities and challenges. On one hand, a large youth population can drive economic growth if young people are well-integrated into the labour market. On the other hand, it requires significant job creation, education, and training programs to avoid high levels of youth NEET (not in employment, education, or training). Unfortunately, more than a quarter of youth aged 15-24 are NEET in low-income countries.
Meanwhile, many developed countries are experiencing aging populations due to declining birth rates and increasing life expectancy. One-fifth of the population in high-income countries is over age 65 versus only 3 per cent in low-income countries. This demographic shift poses challenges related to healthcare, pension systems, and labour force dynamics. While 97.5 per cent of persons above retirement age were receiving a pension in 2020 in high-income countries, the majority were not receiving one in low- and lower-middle-income countries.
Older persons in developed countries are staying in the labour market longer. Labour force participation rates for persons aged 55-64 significantly increased in the last two decades in 49 out of the 53 high-income countries with available data, with an unweighted average increase of 20 percentage points. Participation rates also increased for persons aged 65 and above, albeit to a lesser extent, in 41 of these countries.
Urbanization
Urbanization is another major demographic trend, with more people living in cities than ever before. This shift influences employment patterns, particularly the rise of services and industries in urban areas compared to agriculture-based economies in rural regions. Urbanization can create new job opportunities and drive economic development, but it also requires policies to manage the transition and ensure that urban growth is inclusive and sustainable.
In the 1990s, both Africa and Asia and the Pacific had similarly low proportions of their populations residing in urban areas compared to other regions. Since then, these regions have undergone substantial urbanization. This has been accompanied by significant increases in the share of employment outside of agriculture. Asia and the Pacific, for instance, saw a remarkable rise of 25.7 percentage points in non-agricultural employment from 1991 to 2022.
Amidst rapid urbanization, working poverty rates declined in both regions. In Asia and the Pacific, the share of working poor decreased by an impressive 48.8 percentage points from 1991 to 2023. In Africa, despite progress (-17.3 points), challenges such as political instability, conflicts, and limited infrastructure hindered more widespread poverty alleviation. Sadly, urbanization in Africa has often been accompanied by the proliferation of urban informal settlements (slums) and inadequate access to basic services.
Even as people increasingly migrate from rural to urban areas and shift away from agriculture, informality remains a pressing issue in both Africa and Asia and the Pacific. Many individuals, including in urban areas, remain in informal employment, lacking stable incomes and legal protections.
International migration
Global migration trends, driven by current demographic trends, contrasting economic opportunities, climate change and humanitarian factors, significantly influence population dynamics and labour markets worldwide. In 45 out of 148 countries with available data, at least 10 percent of the labour force consists of foreign-born individuals or foreign citizens. International migrants are often drawn by the promise of better job opportunities, safety and security, and higher standards of living in destination countries. Consequently, high-income countries host over two-thirds of the 169 million international migrant workers globally.
International migrant workers play a crucial role in many sectors, including healthcare, hospitality, construction, and manufacturing. In high-income countries, international migrants often dominate sectors requiring specialized skills or manual labour. In low-income countries, migrant labour is particularly crucial for seasonal agricultural production and is likely to be informal, mirroring conditions faced by native-born workers.
Meanwhile, the COVID-19 pandemic further underscored the vulnerabilities faced by international migrant workers across the globe. Disparities in job security, social protection, and access to healthcare among migrant populations highlighted the urgent need for inclusive policies and international cooperation to safeguard their rights and well-being.
Gender equality and family planning
Gender equality and family planning are central themes of World Population Day. Women constitute about half of the world’s population but have lower labour force participation rates than men. These gender gaps in participation widen significantly when considering the presence of young children in the household. Research shows that childcare responsibilities disproportionately fall upon women due to gender norms. Unsurprisingly, mothers of young children significantly reduce their labour force participation compared to women in households without young children. In contrast, men’s participation rates show much smaller changes when they become fathers. These disparities contribute to staggering gender gaps in labour force participation, which reach 38 percentage points for couples with young children, compared to a 23-point gap for households without young children.
Furthermore, studies indicate that the “motherhood pay gap,” which refers to the disparity in wages between mothers and non-mothers, is rather significant in certain countries. Motherhood often results in a wage penalty that can endure throughout a woman’s career, contrasting with fatherhood, which is consistently linked with a wage premium. Regardless of family situation, gender pay gaps persist across various industries and occupations.
Traditional gender roles not only affect childcare responsibilities but also influence women’s career choices, opportunities for leadership roles, and access to education and training. For example, women remain under-represented in managerial positions in most countries. Such little progress has been made globally over the past two decades that it will take almost two centuries before gender parity is achieved in managerial positions at the current rate of progress. Northern Africa particularly faces daunting challenges, with a mere 12.6 per cent of managerial positions held by women, mirroring the systemic hurdles across Arab States and parts of Asia. Meanwhile, young women are twice as likely as young men not to be in employment, education or training, with their global NEET rate reaching a worrying 30 per cent.
Addressing these entrenched gender disparities necessitates dismantling traditional gender norms and fostering inclusive employment policies and workplaces. Empowering women, who comprise half of the world’s population, to participate fully in the workforce can unlock greater potential for sustainable economic growth and social progress.
Concluding remarks
World Population Day reminds us that understanding population trends is crucial for addressing global employment challenges. By examining how demographic changes impact labour markets, we can better prepare for the future and create more inclusive and sustainable employment opportunities on our way towards social justice.
