-global income losses could reach more than a trillion dollars says ILO

THE Novel Coronavirus (COVID-19) pandemic, which has infected more than 168,000 persons and killed about 7,000 persons globally, could continue to pose more problems for the global economy as the International Labour Organisation (ILO) projects an increase in unemployment by 25 million due to the virus.

According to a report from the ILO, an internationally coordinated policy response, as happened in the global financial crisis of 2008/9, could, however, reduce the impact on global unemployment.

The preliminary assessment note, COVID-19 and the world of work: Impacts and responses, prepared by the ILO, calls for urgent, large-scale and coordinated measures across three pillars: 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,” said the ILO.

Based on different scenarios for the impact of COVID-19 on global Gross Domestic Product (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 ILO, in its report, further noted: “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, 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.”

Falls in employment also mean large income losses for workers. The study estimates these as being between US$860 billion and US$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.

The ILO said 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.

“This is no longer only a global health crisis, it is also a major labour market and economic crisis that is having a huge impact on people,” said ILO Director-General, Guy Ryder, adding: “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.”

He said this is no longer only a global health crisis, but also major labour market and economic crisis that are having a huge impact on people.

The ILO note warns that certain groups will be disproportionately affected by the job crisis, which could increase inequality. These include people in less protected and low-paid jobs, particularly youth and older workers; women and migrants too. 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.

“In times of crisis like the current one, we have two key tools that can help mitigate the damage and restore public confidence. Firstly, social dialogue, engaging with workers and employers and their representatives, is vital for building public trust and support for the measures that we need to overcome this crisis.

“Secondly, international labour standards provide a tried-and-trusted foundation for policy responses that focus on a recovery that is sustainable and equitable. Everything needs to be done to minimize the damage to people at this difficult time,” Ryder said.