The economic and labor crisis created by the COVID-19 pandemic could increase global unemployment by almost 25 million, according to a new assessment by the International Labour Organization (ILO).
The coronavirus pandemic could trigger a global economic crisis destroying up to 25 million jobs around the world if governments do not act fast to shield workers from the impact.
ILO, which is based in Geneva, stated:
However, if we see an internationally coordinated policy response, as happened in the global financial crisis of 2008-9, then the impact on global unemployment could be significantly lower.
The organization called for urgent, large-scale and coordinated measures across three key areas: protecting workers in the workplace, stimulating the economy and employment, and supporting jobs and incomes.
These measures include extending social protection, supporting employment retention (i.e. short-time work, paid leave, other subsidies), and financial and tax relief, including for micro, small and medium-sized enterprises.
In addition, the note proposes fiscal and monetary policy measures, and lending and financial support for specific economic sectors.
Based on different scenarios for the impact of COVID-19 on global GDP growth, the ILO estimates indicate a rise in global unemployment of between 5.3 million (“low” scenario) and 24.7 million (“high” scenario) from a base level of 188 million in 2019. By comparison, the 2008-9 global financial crisis increased global unemployment by 22 million.
The organization further stated that underemployment is also expected to increase on a large scale, as the economic consequences of the outbreak translate into reductions in working hours and wages. 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 (e.g. service providers) and goods.
Low employment also means large income losses for workers. The study estimates these as being between USD 860 billion and USD 3.4 trillion by the end of 2020. This will translate into falls in consumption of goods and services, in turn affecting the prospects for businesses and economies, said the ILO.
It also noted that working poverty is expected to increase significantly too, as “the strain on incomes resulting from the decline in economic activity will devastate workers close to or below the poverty line”. The ILO estimates that between 8.8 million and 35 million additional people will be in working poverty worldwide, compared to the original estimate for 2020 (which projected a decline of 14 million worldwide).
Swift and Coordinated Policy Responses
ILO Director-General Guy Ryder says:
This is no longer only a global health crisis, it is also a major labor market and economic crisis that is having a huge impact on people. 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.
The ILO warns that certain groups will be disproportionately affected by the jobs crisis, which could increase inequality. These include people in less protected and low-paid jobs, particularly youth and older workers as well as women and migrants. The latter are vulnerable due to the lack of social protection and rights, and women tend to be over-represented in low-paid jobs and affected sectors.