WORKERS worldwide could lose as much as $3.4 trillion in wages by the end of 2020, driving millions into poverty.
And because of the coronavirus disease or COVID-19 pandemic, from 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, warned a report released yesterday by the International Labor Organization (ILO).
“This will translate into falls in consumption of goods and services, in turn affecting the prospects for businesses and economies,” the United Nations agency said.
“This is no longer only a global health crisis, it is also a major labor market and economic crisis that is having a huge impact on people,” said Guy Ryder, ILO director-general.
Almost 25 million worldwide will lose employment because of the COVID-19 pandemic, it said. That’s a bit higher than what happened after the global financial crisis in 2008-2009.
Based on different scenarios for the impact on global gross domestic product 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 2008-2009 global financial crisis increased global unemployment by 22 million.
Falls in employment mean large income losses for workers, between $860 billion and $3.4 trillion in wages by end of December, the ILO estimates.
Underemployment is 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 as lockdowns restrict the movement of goods and people such as service providers.
Social protection such as unemployment benefits could go a long way in helping workers, the ILO said, citing a Social Security scheme in the Philippines.
The Social Security System is prepared to pay unemployment benefits to some 30,000 to 60,000 workers projected to lose their jobs following possible layoffs or business closures.
Certain groups will be disproportionately affected by the jobs crisis, which could increase inequality, the report said. These include people in less protected and low-paid jobs, particularly youth and older workers.
Migrants 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.
The United Nations agency called for urgent, large-scale measures such as supporting employment retention (short-time work, paid leave, other subsidies) and financial and tax relief, including for micro, small and medium enterprises.
The effects of the pandemic will be far-reaching, pushing millions of people into unemployment, underemployment and working poverty, said the preliminary assessment report, “COVID-19 and the world of work: Impacts and responses”.
It said the impact on global unemployment could be significantly lower if an internationally coordinated policy response, as happened in the global financial crisis of 2008/9, kicks in.
“In 2008, the world presented a united front to address the consequences of the global financial crisis, and the worst was averted,” said Ryder. “We need that kind of leadership and resolve now.”
