The damage to labour markets around the world is proving far more severe than initially estimated after governments extended shutdowns to damp the spread of the coronavirus.
The International Labour Organisation said Wednesday that working hours will be 10.5% lower this quarter than before the crisis started, equivalent to 305 million full-time jobs. The figure marks what it described as a “significant deterioration” on its previous estimate of 195 million jobs.
“It’s a statistic that’s difficult to capture and we all have to think of the human suffering that stands behind that extraordinary figure,” said ILO Director-General Guy Ryder.
The huge number captures the impact on the global economy from the virus and the tough measures to contain it. While those steps were necessary to limit the death toll, they have shut down businesses and cut incomes and jobs. They’re also costing governments billions in welfare spending, with millions of workers claiming benefits or getting subsidised wages on furlough programs.
While workers in many European countries have benefited from strong social protection, the ILO warned that many don’t have access to labour safety nets.
“It is said that this virus doesn’t discriminate, and that’s true medially, but in economic terms, it discriminates massively, and it discriminates against those at the bottom,” Ryder said.
Almost 1.6 billion informal workers are either significantly impacted by lockdowns or working in the hardest-hit sectors. The first month of crisis could cut their earnings by 60% globally, with the largest declines in Africa and Latin America, it said.
In addition, the rate of relative poverty, defined as the proportion of workers with monthly earnings that fall below 50% of the median, could increase sharply.
Surveys of activity have already given a sense of the hit to global growth. First-quarter GDP data due Wednesday and Thursday will show the early impact of the lockdowns, with the U.S. economy forecast to have contracted an annualised 4%. The euro-area economy also shrank, ending a seven-year expansion.
But an even deeper slump is expected this quarter, which has pushed many businesses close to collapse and left workers’ future in doubt.
The ILO‘s analysis showed that more than 400 million enterprises — made up of companies and self-employed — are in “at risk” sectors such as manufacturing, retailing, restaurants and hotels.
Amid such severe damage, governments are keen to start reopening their economies. Many have outlined rough timeframes, but are wary of moving too fast and creating a second deadly wave of the disease.
© 2020 Bloomberg