COVID-19 and Global Unemployment

• 19 Mar 2020

Why in News

The International Labour Organization (ILO) has recently said that the COVID-19 pandemic will drastically increase global unemployment, leaving up to 25 million more people out of work and slashing incomes.

• COVID-19 is not only a global health crisis but also a major labour market and economic crisis that is having a huge impact on people.

Key Points

• The International Labour Organization (ILO), has warned that the economic and labour crisis sparked by the coronavirus will have far-reaching impacts on labour market outcomes.
• The ILO said that by comparison, the global financial crisis of 2008-09 increased global unemployment by 22 million.
• Major Findings:
  
  • A study based on the report suggests that the world should prepare to see a significant rise in unemployment and underemployment in the wake of the pandemic.
    
    • In the best-case scenario, 5.3 million more people will be pushed into unemployment.
    • In the worst case scenario, 24.7 million more will become jobless, on top of the 188 million registered as unemployed in 2019.
  • Underemployment is also expected to increase on a large scale, as the economic consequences of the virus outbreak translate into reductions in working hours and wages.
  • Self-employment in developing countries usually serves to cushion the impact of economic shifts but this time due to the severe restrictions on the movement of people and goods, it might not help
  • Reductions in access to work will also mean large income losses for workers.
    
    • The study estimates the income loss between $860 billion and $3.4 trillion by the end of 2020, which will translate into falls in consumption of goods and services, in turn affecting the prospects for businesses and economies.
  • The number of people who live in poverty despite holding one or more jobs will also increase significantly.
    
    • The strain on incomes resulting from the decline in economic activity will devastate workers close to or below the poverty line.
  • Some groups will be disproportionately impacted by the jobs crisis, including youth, older workers, women and migrants which will only increase the already prevailing inequality.
• Suggestions:
  
  • The ILO has called for urgent, large-scale and coordinated measures to protect workers in the workplace and stimulate the economy, employment and job support through social protections, paid leave and other subsidies.
  • It is suggested to tackle this pandemic in the same way the global financial crisis of 2008 was tackled, by presenting a united front to address the consequences.

Source: TH