The Labour Market Impacts of the COVID-19: A Global Perspective
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The Labour Market Impacts of the COVID‑19: A Global Perspective Sangheon Lee1 · Dorothea Schmidt‑Klau1 · Sher Verick1 Published online: 6 October 2020 © Indian Society of Labour Economics 2020
1 Introduction The COVID-19 pandemic caused a global health crisis, which has rapidly transformed into economic and labour market shocks that have, in turn, led to a global job crisis with unprecedented magnitude. This note offers a brief overview of the current job crisis, drawing on the latest work of the ILO. As the pandemic continues to evolve with little sign of light at the end of the tunnel, any assessment of labour market disruptions involves a high level of uncertainty. Projecting possible future trajectories of development is even more uncertain. Nonetheless, it is crucial to monitor and analyse labour market impacts with best possible data and methods and update them on a regular basis, hence helping countries develop timely and informed policy responses. 1.1 Learning from the Great Recession (2008–2009) One important premise for our analysis is the rather unsuccessful experience from the Great Recession (2008–09). The mainstream policy response at the time was largely characterized by “trickledown recovery” measures, which resulted in slow economic recovery and greater social and political uncertainty. Recovery in employment and labour income was even slower and more painful (Fig. 1), which, in turn, contributed to a further slowing down of the economic recovery and depressing productivity growth. It took more than a decade for global unemployment to return to the pre-crisis level, while youth unemployment has never managed to recover fully from the crisis. In a sense, economy and employment became disconnected. Similarly, while labour productivity continued This note draws on the ILO Monitor: COVID-19 and the world of work, which has been published in five editions since early March 2020. All editions are available at: https://www.ilo.org/global/topics/ coronavirus/impacts-and-responses/WCMS_749399/lang--en/index.htm. * Sangheon Lee [email protected] 1
International Labour Organization, Geneva, Switzerland
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The Indian Journal of Labour Economics (2020) 63 (Suppl 1):S11–S15
Fig. 1 Slow and painful recovery in employment and wages during the Great Recession Source: ILO
to grow, wages and labour income lagged behind. As a result, inequality remains high or, in some case, is even growing. This is why this crisis response was widely understood to represent the failure of “trickledown economics”. Such mistakes should not be repeated in the current job crisis. 1.2 Unprecedented scale of labour market disruption Then, what is the overall magnitude of labour market disruption? In the beginning, we used our standard modelling to predict annual average unemployment in 2020 (in terms of levels and rates). But it soon became clear that looking at “annual” and “unemployment” is insufficient, and in some cases, can be even misleading. Annual averages do not reflect realities as the
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