Global Informality Rates Rise as Structural Economic Shifts Slow Down

The International Labour Organization (ILO) recently released its Employment and Social Trends 2026 report, providing a detailed look at the current state of the global workforce. The findings indicate that the global unemployment rate held steady at 4.9 percent throughout 2025. However, beneath this headline figure, researchers identified significant challenges regarding the quality and stability of available work. One of the most concerning developments is the steady rise in global informality, which has increased by 0.3 percentage points over the last decade. By 2026, the report projects that approximately 2.1 billion people will be employed in the informal sector. This shift suggests that a growing number of workers are operating outside of formal regulatory frameworks, often without access to standard labor protections or benefits. The report also highlights a notable slowdown in structural transformation across the global economy. Over the past twenty years, the pace at which workers transition from low-productivity sectors to more formal, productive industries has been cut in half. This stagnation is a primary driver of weak job quality and limited productivity growth worldwide. When workers remain trapped in low-productivity roles, their ability to improve their economic standing is significantly hindered. The data further reveals a persistent jobs gap, which is estimated to reach 408 million people by 2026. This gap represents the number of individuals who are without work but are interested in finding employment. The uneven nature of employment growth is also a major concern, as high-income nations experience different labor market pressures compared to developing economies. Extreme working poverty remains a critical issue, defined by the ILO as employed individuals living in households with a per capita income of less than USD 3 per day. These workers often lack the resources necessary to achieve basic financial security, even while maintaining active employment. The report emphasizes that the transition to formal, productive sectors is essential for long-term economic health. Without a renewed focus on structural transformation, many nations may struggle to improve the living standards of their workforce. Policymakers are now being urged to consider these trends when designing future labor market interventions. Addressing the rise in informality will require a multifaceted approach that includes better access to education, skills training, and legal protections for all workers. As the global economy continues to evolve, the ability to create high-quality, formal jobs will remain a central challenge for governments and international organizations alike.