New report reveals the extent of Covid-19 damage on global job market

New data from the UN’s International Labour Organization (ILO) shows that 8.8% of global working hours were lost in 2020 due to the Covid-19 pandemic, compared to the fourth quarter of 2019.

This, it said, is equivalent to 255 million full-time jobs – approximately four times greater than the number lost during the 2009 global financial crisis.

These lost working hours are accounted for either by reduced working hours for those in employment or “unprecedented” levels of employment loss, hitting 114 million people, the organisation said in a statement.

The ILO said that 71% of these employment losses (81 million people) came in the form of inactivity, rather than unemployment, as people left the labour market because they were unable to work because of pandemic restrictions, or simply ceased to look for work.

It warned that looking at unemployment alone, however, drastically understates the impact of Covid-19 on the labour market.

These massive losses resulted in an 8.3% decline in global labour income, equivalent to $3.7 trillion or 4.4% of global Gross Domestic Product (GDP).

The report identified the uneven impact on different economic, geographic, and labour market sectors, while highlighting concerns of a “K-shaped recovery”, whereby those sectors and workers hit hardest could be left behind in the recovery, leading to increasing inequality, unless corrective measures are taken.

Unsurprisingly, the worst affected sector has been accommodation and food services, where employment declined by more than 20%, on average, followed by retail and manufacturing.

In contrast, employment in information and communication, and finance and insurance, increased in the second and third quarters of 2020. Marginal increases were also seen in mining, quarrying and utilities, the ILO said.

Looking ahead

The UN said that the latest projections for 2021 show that most countries will experience a relatively strong recovery in the second half of the year, as vaccination programmes take effect.

The Monitor puts forward three scenarios for recovery; baseline, pessimistic and optimistic. The baseline scenario (which draws on International Monetary Fund forecasts from October 2020), projects a 3% loss of working hours globally in 2021 (compared to Q4 2019), equivalent to 90 million full time jobs.

“The signs of recovery we see are encouraging, but they are fragile and highly uncertain, and we must remember that no country or group can recover alone,” said Guy Ryder, ILO director-general

The pessimistic scenario, which assumes slow progress on vaccination in particular, would see working hours drop by 4.6%, while the optimistic scenario forecasts a 1.3% decline.

“This would depend on the pandemic being under control and an upsurge of consumer and business confidence,” it said.

In all scenarios the Americas, Europe and Central Asia would experience around twice the working hour losses of other regions.

“We are at a fork in the road. One path leads to an uneven, unsustainable, recovery with growing inequality and instability, and the prospect of more crises.

“The other focuses on a human-centred recovery for building back better, prioritizing employment, income and social protection, workers’ rights and social dialogue. If we want a lasting, sustainable and inclusive recovery, this is the path policy-makers must commit to,” Ryder said.

South Africa unemployment

The latest Stats SA unemployment numbers for the third quarter of 2020 showed that unemployment increased substantially by 2.2 million (52.1%) to 6.5 million, compared to the second quarter of 2020.

The number of discouraged work seekers increased by 225,000 (9.1%), and the number of people who were not economically active for reasons other than discouragement decreased by 2.9 million (15.8%) between the two quarters.

Stated simply, of the 2.85 million people who ‘left’ the country’s workforce during lockdown, only 543,000 managed to get their jobs back, leaving 2.2 million unemployed, and 225,000 joining the group of discouraged work seekers.

Read: South Africa to receive first batch of Covid-19 vaccines: Ramaphosa

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New report reveals the extent of Covid-19 damage on global job market