The COVID catastrophe: labour and unemployment

COVID-19 RESOURCE HUB | Financier Worldwide

LABOUR & EMPLOYMENT

Job security is a concern shared by virtually everyone on the planet that works for a living. Always at the mercy of economic factors, labour and employment issues are now at the top of the agenda on account of the devastating impact of coronavirus (COVID-19) on global economies over the past three months.

Quite simply, the scale of the economic catastrophe is breathtaking. According to its ‘ILO Monitor 2nd edition: COVID-19 and the world of work’ analysis, the International Labour Organization (ILO) forecasts that the COVID-19 crisis will wipe out 6.7 percent of working hours globally in the second quarter of 2020 – equivalent to 195 million full-time workers.

In the US, referred to at various times as the COVID-19 epicentre of the world, the pandemic has been particularly catastrophic in terms of labour and employment, with 30 million claims for unemployment benefits having been filed since the middle of March. Along with the US, it is a tale of woe across the globe.

“Workers and businesses are facing catastrophe, in both developed and developing economies,” says Guy Ryder, director-general at the ILO. “We have to move fast, decisively, and together. The right, urgent, measures, could make the difference between survival and collapse.”

Drilling down into what the ILO has described as “the worst global crisis since World War II”, large reductions are foreseen in the Arab States (8.1 percent, equivalent to 5 million full-time workers), Europe (7.8 percent, or 12 million full-time workers) and Asia and the Pacific (7.2 percent, or 125 million full-time workers). Huge losses are also expected across different income groups but especially in upper-middle income countries (7.0 percent, 100 million full-time workers). These figures far exceed the impact of the 2008-2009 financial crisis.

In terms of the sectors most at risk, accommodation and food services, manufacturing, retail, and business and administrative activities are particularly vulnerable. According to the ILO analysis, 1.25 billion workers are employed in the sectors identified as being at high risk of “drastic and devastating” increases in layoffs and reductions in wages and working hours. Many are in low-paid, low-skilled jobs, where a sudden loss of income is immediate and devastating.

Regionally, the proportion of workers in these at-risk sectors varies from 43 percent in the Americas to 26 percent in Africa. Some regions, particularly Africa, have higher levels of informality, which, combined with a lack of social protection, high population density and weak capacity, pose severe health and economic challenges for governments, states the ILO.

Across the globe, 2 billion people work in the informal sector – mostly in emerging and developing economies – and are particularly at risk. The eventual increase in global unemployment during 2020 will depend substantially on future developments and policy measures and there is a high risk that the end-of-year figure will be significantly higher than initial ILO projections.

In the ILO’s view, large-scale, integrated policy measures are needed, focusing on four pillars: (i) supporting enterprises, employment and incomes; (ii) stimulating the economy and jobs; (iii) protecting workers in the workplace; and (iv) using social dialogue between government, workers and employers to find solutions.

“This is the greatest test for international cooperation in more than 75 years,” said Mr Ryder. “If one country fails, then we all fail. We must find solutions that help all segments of our global society, particularly those that are most vulnerable or least able to help themselves.

“The choices we make today will directly affect the way this crisis unfolds and so the lives of billions of people,” he continues. “With the right measures we can limit its impact and the scars it leaves. We must aim to build back better so that our new systems are safer, fairer and more sustainable than those that allowed this crisis to happen.”

With more than 80 percent of a global workforce of 3.3 billion currently affected by full or partial workplace closures, until the pandemic eventually passes, the current outlook for labour and employment is bleak at best.

Fraser Tennant