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By some measures, the global labour market situation appears to have recovered from the Covid-19 pandemic shock, with improved employment indicators in many regions. Yet, beneath these gains, unprotected and insecure forms of employment are proliferating. Informal employment remains the dominant form of labour market participation in low- and middle-income countries. Temporary and casual forms of work, including zero-hours contracts, sub-contracted labour and solo self-employment, are on the rise worldwide. The segmentation between a relatively well-protected group of wage workers in formal employment and the rest of the labour force is reinforcing inequality. Insecurity—and the anxiety it generates—is putting pressure on societies, fueling polarization and undermining the social contract.
While global forces such as digitalization and international competition have contributed to these trends, growing job insecurity is not an inevitable outcome. Policy and institutional choices have played a critical role in shaping labour market transformations and mediating their effects. This paper examines these dynamics, arguing that strong labour market institutions and policies are essential to rebuild the social contract.