Coronavirus crisis will cut working hours by almost 7% worldwide in second quarter 2020, a “catastrophic” effect equivalent to the loss of 195 million full-time workers, the International Labor Organization announced on Tuesday .
The United Nations agency has warned that 1.25 billion workers – nearly two-fifths of the 3.3 billion workers worldwide – are employed in sectors that are experiencing drastic declines in production, retail trade and real estate manufacturing, accommodation and food services. Over four-fifths of the global workforce lives in countries where full or partial lock-in measures are in place.
“Workers and businesses are facing disaster, in both developed and developing economies,” said Guy Ryder, Director-General of the ILO. “It will hit the most vulnerable the hardest.”
The magnitude and speed of job losses in the developed world have taken policymakers by surprise. Nearly 10 million people in the United States filed initial unemployment claims in the last two weeks of March, and many economists expect the unemployment rate in the United States to rise rapidly above 10%. A similar scale of job losses has hit Europe, although many workers can access government wage subsidy programs designed to limit long-term unemployment.
The ILO warning came just three weeks after publishing an analysis suggesting that the pandemic would cause 25 million job losses in 2020, more than what was lost after the 2008 financial crisis.
Ryder said it now seemed likely that more than 30 million jobs had been lost in the first quarter alone, and the ILO was now expecting a much more serious short-term impact, using more up-to-date data from business surveys and Google search trends to illustrate what he called “The terrible reality of today’s job market.”
He predicted that the number of hours worked worldwide would decrease by 6.7% in the second quarter of 2020 compared to the previous three months, reflecting both layoffs and other temporary reductions in working time. This would amount to the loss of 195 million full-time jobs, based on a 40-hour work week.
The ILO made its estimate using the historical relationship between hours of work and purchasing managers’ surveys of business conditions which are published monthly in some countries. The ILO has assumed that other countries taking the same measures to control the spread of the virus would experience an impact similar to that of the countries studied.
Surveys may not be a reliable guide – they show that an overwhelming proportion of businesses expect conditions to worsen, but say nothing about the severity of the recession or the likely duration of the recession. However, these are the most recent data available internationally; only a few countries publish up-to-date administrative data on applications for benefits and wage subsidies. In addition, official data is several months behind on the ground.
The sectors most exposed to sharp declines in production are labor-intensive and employ millions of workers, often low-paid and low-skilled, who will feel the effects particularly, according to the ILO. They represent the highest proportion of jobs in the Americas, Europe and Central Asia.
But the ILO has also warned that the virus is now spreading in countries where a large proportion of the workforce does not have access to social protection; excluding agriculture, more than 70 percent of workers work in the informal sector in Africa and 90 percent in India.
The ILO has not forecast for the whole year, as it has stated that the global increase in global unemployment in 2020 will depend on the policies adopted by countries to stimulate demand for labor once the economy will start to recover. He stressed the need for new measures such as cash payments and transfers of basic goods to support the hardest hit in countries where the level of the labor market is informal.
“We will be tested more and more strongly as the pandemic expands its reach in the developing world,” said Ryder.
He argued that while many governments had already “done the right thing” with fiscal and monetary stimulus, there was still no comprehensive international response to the “obvious need for solidarity and support for the world.” in development”.
The recent IMF and World Bank call for bilateral debt relief was “clearly not enough,” he said, adding, “We must see very large-scale resources made available to most vulnerable countries. “