Out of work
Covid-19 outbreak could result in nearly 25 million more job losses worldwide, says ILO
● The economic crisis triggered by continuing coronavirus pandemic could cause 24.7 million job losses worldwide, resulting in the total income losses of nearly US$3.45 billion, according to the International Labour Organization.
All businesses, regardless of size, are facing challenges, the United Nations agency said in a report released on March 18. Especially hard hit will be those in the aviation, tourism and hospitality industries, with significant declines in revenue, insolvencies and job losses.
The ILO predicted three scenarios for the impact of Covid-19 on economic growth depending on the severity and duration of the pandemic, which had resulted in lockdowns of nearly onethird of the world’s population as of last week.
The first low-impact scenario would lead to an increase in unemployment worldwide of 5.3 million, from a base of 188 million in 2019, and drag down world gross domestic product (GDP) by around 2%.
A medium-scale impact would result in 13 million job losses and a GDP loss of 4%, while the worst-case scenario would involve 24.7 million job losses and cut GDP by 8%.
By comparison, the ILO said, the 2008-09 global financial crisis lifted unemployment by 22 million positions globally.
Underemployment is also expected to increase on a large scale as the epidemic leads to a significant reduction in working hours and wages, the agency added.
“Self-employment in developing countries, which often serves to cushion the impact of changes, may not do so this time because of restrictions on the movement of people and goods,” it said.
As employment declines, and tough virus containment measures take effect, the ILO estimated that income losses for workers would be between $860 billion and $3.4 trillion by the end of the year, while infected workers have already lost nearly 30,000 work hours.
The loss of labour income can translate into lower consumption in the market which could affect the continuity of businesses and economies, the report noted.
“In 2008, the world presented a united front to address the consequences of the global financial crisis, and the worst was averted. We need that kind of leadership and resolve now”
GUY RYDER ILO director-general
“This is no longer only a global health crisis, it is also a major labour market and economic crisis that is having a huge impact on people,” said ILO director-general Guy Ryder in the statement.
Disruptions to production, initially in Asia, have affected supply chains around the world. Data from the National Bureau of Statistics in China showed that the total value-added of industrial enterprises in the country declined by 13.5% during the first two months of 2020, which was the peak of the pandemic in the world’s second-largest economy.
As a result of income losses, “working poverty” is rising as economic activity falls off, which will devastate workers already in precarious circumstances. The ILO defines the working poor as employed persons living in households in which per-capita income is below the poverty line of $1.90 per day. It estimates that between 8.8 million and 35 million more people will be in working poverty worldwide in 2020, compared with an earlier estimate of 14 million.
Meanwhile, the economic crisis and pandemic have a disproportionate effect on certain groups, which can widen the inequality gap. The most vulnerable groups include people in less protected and low-paid occupations, women, unprotected and migrant workers.
Women are overrepresented in more affected sectors or on front-line occupations dealing with the pandemic such as services and health sectors. Female and unprotected workers such as self-employed, casual and gig workers have less access to social protection and do not have paid or sick leave.
Migrant workers are particularly vulnerable because of restrictions that will limit access to their work destination countries and could prevent them from returning to their families.
“In 2008, the world presented a united front to address the consequences of the global financial crisis, and the worst was averted. We need that kind of leadership and resolve now,” Mr Ryder said.
The ILO report recommended proactive, large-scale and integrated measures across three key pillars: protecting workers in the workplace, stimulating the economy and labour demand, and ensuring employment and incomes.
The measures include social distancing, teleworking, paid sick leave, parental-care leave, and financed health services for all workers.
And even though top priority is protecting the health of workers and their families from Covid-19, the economic support to cushion businesses and workers in the crisis is still needed.
Employment and income protection for indirectly affected enterprises and workers, even for those who are self-employed, requires social protection through existing schemes such as social assistance and unemployment benefits along with employment retention.
Policies are also needed to help stabilise economic activity such as unemployment benefits, tax relief for all firms, and lending and financial support for specific sectors especially micro, small and medium enterprises.
To successfully implement and develop such policies, the ILO stressed that it requires accurate, consistent, timely and transparent information and dialogue between governments, workers’ and employers’ organisations to create sustainable solutions from the community, to the national and global levels.
Many countries have been promoting various policies starting with teleworking and arranged hours as well as paid sick leave. In China, for example, the government has ordered a salary to be paid to workers who are unable to work due to quarantine or sickness and ensured the contracts of migrant workers. It has also subsidised 300 billion yuan for masks and health-related items for companies to purchase for their workers.
In South Korea, the government has announced a special budget of 20 trillion won in order to stimulate the economy and labour demand. It also added more subsidies into tourism and other affected sectors.
Meanwhile, the Japanese government and organisations are working across various dimensions. For example, the Ministry of Justice has set up a website with hotlines on Covid-19-related bullying and harassment, while the Japanese Trade Union Confederation has facilitated access to afterschool childcare centres to support working parents due to school closures.