Employment Patterns

The Growth of the Global Labour Force

Labour force: everyone of working age who is either in work or actively looking for it.

World Bank estimates put the global labour force at about 2.4 billion people in 1991 and about 3.7 billion in 2025. The main reasons are:

• Population growth: most of the extra workers are in developing countries, especially in South Asia and Africa, where populations are young and still growing.
• More women in paid work: in many countries, including the UK, better education and changing attitudes have brought more women into the labour force.
• Economies opening up: as China, India and the former Soviet bloc joined world trade, hundreds of millions of workers came within reach of global firms.

As the global labour force grows:

• Firms: more workers are available in low-wage countries → firms move production there or buy from suppliers there → lower costs → lower prices or higher profit.
• Workers in developing countries: factory and service jobs arrive → people leave low-paid farm work → higher incomes, though pay and conditions can be poor (unit 3.4.2).
• Low-skilled workers in high-income countries: they compete with workers abroad who cost less → jobs in industries such as textiles move overseas → job losses, or lower pay for those who stay.
• Skilled workers in high-income countries: firms sell into bigger global markets → more demand for design, engineering and finance skills → higher wages.

The effect depends on:

• Productivity as well as wages: a worker paid half as much who produces a third as much costs more per unit of output (unit 2.3.1).
• Whether the work can move: a factory job can go abroad, but a plumber or a care worker has to be where the customer is.

Structural Change

Structural change: a long-term shift in the share of jobs and output between the sectors of an economy.

As an economy develops, jobs move from the primary sector to the secondary, then to the tertiary and quaternary sectors. Many developing countries are still moving workers off farms and into factories, where each worker produces far more, so incomes rise. The UK made that move long ago and has since shifted from manufacturing to services.

In 1978 about one UK job in four was in manufacturing. By 2026 it was about one in 15, and services made up about 85% of jobs.

Jobs move between sectors because of:

• Rising incomes: as incomes rise, people spend a bigger share on services such as eating out, travel and health care (unit 2.2.4).
• Higher productivity: machines let farms and factories produce more with fewer workers, so jobs there fall even when output does not.
• Global competition: much manufacturing has moved to lower-cost countries, especially in Asia.
• Technology: new industries, such as software and online services, create jobs in the quaternary sector.

When an industry declines:

• Its workers: plants close → their skills or location don't match the new jobs → structural unemployment (unit 2.5.4) → lower incomes, sometimes for years.
• The local area: a large employer closes → its former staff spend less in local shops → more firms cut jobs, and whole towns can decline.
• Firms in growing sectors: demand for new skills outruns supply → skill shortages (unit 3.5.3) → they pay more to recruit, which raises their costs.

The cost of structural change depends on:

• Labour mobility: workers who can retrain or move to where the jobs are find new work faster.
• The speed of change: a slow decline lets people retire or retrain; a sudden closure leaves them stranded.

Interdependence of Labour Markets

Labour markets are interdependent when a change in one country affects jobs and wages in another. Globalisation links them in four ways:

• Trade: a major trading partner goes into recession → it buys fewer imports → exporters elsewhere cut output → they cut jobs.
• Firms moving production: wages rise in one country → MNCs move factories to cheaper ones → jobs fall in the first and rise in the second. As wages in China rose, some clothing production moved to countries such as Vietnam and Bangladesh.
• Migration: workers move to countries with higher pay or more jobs → labour supply rises where they arrive and falls where they left.
• Digital services: work such as coding, accounting and customer service can be done online from anywhere → firms hire across borders → a programmer in the UK competes with one in India (unit 2.1.4).

How closely two labour markets are linked depends on:

• Barriers: tariffs, migration rules and work permits all slow the links.
• Skills: the more specialised the job, the fewer people worldwide can do it, so the less its pay is held down by competition from abroad.