The crisis created by the COVID-19 coronavirus will have far-reaching effects on the labour market, according to an initial assessment by the International Labour Organization: an estimated 5.3 to 24.7 million people will lose their jobs. Compared to the 2008-2009 global financial crisis, global unemployment increased by 22 million.
Falling employment also leads to large income losses for workers. The study estimates that these will be between $860 billion and $3.4 trillion by the end of 2020. This will translate into falls in consumption of goods and services, which in turn will affect the prospects of businesses and economies.
This will lead to a significant increase in working poverty, as “income pressures resulting from the decline in economic activity will have a devastating effect on workers near or below the poverty line”.
The International Labour Organization estimates that between 8.8 and 35 million more people will be in working poverty worldwide, compared to the original estimate for 2020 (which predicted a decline of 14 million globally).
Underemployment is also expected to increase exponentially, as the economic consequences of the virus outbreak will result in reductions in working hours and wages.
The most vulnerable
The employment crisis will affect certain groups disproportionately and exacerbate inequality.
Among the most vulnerable are those:
- people with underlying health conditions and older people who are most at risk of developing serious health problems
- young people, who already face higher rates of unemployment and underemployment, are more vulnerable to falling labour demand, as observed during the global financial crisis
- older workers can also suffer an economic impact. After the MERS outbreak, it was found that they were more likely to experience higher rates of unemployment and underemployment, as well as reduced working hours
- women who are over-represented in the most affected sectors (such as services) or in occupations that are on the front line of the fight against the pandemic. ILO estimates that 58.6 per cent of employed women work in the service sector worldwide, compared to 45.4 per cent of men. Women also have less access to social protection and will bear a disproportionate burden of the so-called care economy in the event of the closure of schools or care systems.
- Unprotected workers, including the self-employed, casual and contract workers, are likely to be disproportionately affected by the virus, as they do not have access to paid or sick leave mechanisms, and are less protected by conventional social protection mechanisms and other forms of income relief.
- Migrant workers are particularly vulnerable to the impact of the COVID-19 crisis, which will limit their ability to access their workplaces in destination countries and return to their families.