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Using an absolute definition of poverty and economic classes, this paper presents trends and estimates of the poor, near-poor and middle-class working population in developing Asia and the Pacific. It finds that since 1991, working poverty has fallen remarkably, while middle-class jobs now account for nearly two-fifths of all employment in the region (671 million middle-class workers). However, a sizeable share of workers (around 28 % or 497 million) still lives just above the poverty line and remains highly vulnerable to falling into poverty. This paper also applies a class-based framework for assessing inequality in the labour market, with a special focus on Cambodia, India, Indonesia and Viet Nam. It provides empirical evidence that economic participation is inversely related to affluence, while educational attainment and access to better quality jobs both increase with higher economic class status. In addition, it presents sex-and age-disaggregated analysis to highlight particular gaps for poor women and youth, and the measures that can help strengthen their position in the labour market.

This chapter focuses on the implications for inequality of recent ILO estimates of the labour income share and distribution. Using household surveys for 95 countries, mainly from the ILO Harmonized Microdata collection, we estimate the labour income of the self‐employed to produce an internationally comparable labour income share dataset. Furthermore, we use the same methodology to obtain the first‐ever estimates of the labour income distribution. The labour income distribution estimates complement the two main data sources used until now to study inequality: expenditure distribution and total income distribution. Crucially, labour income distribution data have a reasonable coverage for all country income groups, unlike other data sources that are characterized by undercoverage for either lower‐income countries (regarding data on total income) or higher‐income countries (regarding data on expenditure). The estimates show that the global labour income share declined substantially between 2004 and 2017. In high‐income countries, the decline in the labour share is driven largely by decreases in the average labour income of the self‐employed. This is consistent with a scenario in which new forms of work erode the earning power of the self‐employed. Focusing on income inequality, the use of the labour income distribution as a proxy for the total income distribution is found to be a more reliable proxy than the commonly used expenditure distribution data. Moreover, the estimates suggest that the use of expenditure as a proxy of income have led earlier studies to underestimate total income inequality severely in less developed countries. Hence, global income inequality is likely to be much higher than previously assumed.

The impact of the COVID-19 pandemic resulted in unprecedented labour market disruption, triggering the most severe global labour market crisis on record. The speed and depth of the crisis rendered labour force survey data unable to provide timely information. The ILO nowcasting model was designed to track the disruption in the world of work caused by the pandemic. This required: 1) filling data gaps, 2) increasing the timeliness of available data, and 3) focusing on an indicator that captured well the pandemic disruption: hours worked. The estimates obtained from the ILO nowcasting model have become the backbone of the empirical strategy behind the ILO Monitor on the World of Work publication series. The latest estimates corroborate that the pandemic induced very large declines in hours worked at an unprecedented speed. Furthermore, the recovery process has stalled, driven by a stagnant recovery in developing economies. The country-level input data and estimates of the ILO nowcasting model allow for complementary analysis, which was published in the ILO Monitor. The topics included the effects of COVID-19 testing and tracing, fiscal stimulus, and vaccination on labour market outcomes.

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