ILO: The Covid-19 pandemic will cause an unemployment crisis

Line up for food stamps in Barcelona, Spain, March 30. Photo: New York Times.
Line up for food stamps in Barcelona, Spain, March 30. Photo: New York Times.

The International Labor Organization (ILO) warns that the Covid-19 pandemic will lead to unemployment and joblessness globally and calls on governments to design bailouts.

In the new report, the International Labor Organization (ILO) calls the Covid-19 pandemic “the most severe crisis since World War II”, with the number of jobless people rising sharply across the globe.

“The impact of Covid-19 on employment is very deep, broad and unprecedented,” the ILO report wrote.

The sudden disruption of blockade orders drastically reduced both the number of jobs and the number of hours worked. Illustrating this, ILO estimates that the number of hours worked will decrease by 6.7% in the second quarter of this year. If we assume a 48-hour workweek, that reduction is equivalent to 195 million workers.

Global unemployment crisis

However, the ILO noted that the above rates are not consistent with the increase in unemployment rate. The increase in unemployment rate will be smaller, because many workers can relax, reduce working hours and keep their jobs.

Even so, the above figure is significant compared to the 2008-2009 financial crisis, when the number of unemployed people worldwide increased to 22 million, according to Reuters.

“It is normal for a crisis, weeks, months to affect unemployment, but this happens immediately,” Lee Sang Heon, ILO’s employment policy director, told reporters. tablets. “This crisis is unprecedented … we need large-scale measures.”

The unemployment crisis has started in the world. In the United States, April 2 statistics show that the pandemic caused 10 million Americans to lose their jobs in the previous two weeks, worse than the worst months of the 2008-2009 financial crisis.

Unemployment in the US is forecast to exceed 10% in the second quarter of this year, and remain at 9% through 2021, compared with only 3.5% in February, according to the Office of Congressional Budget (CBO). .

In India, a 21-day national blockade order severely affected about 120 million migrant workers, many of whom would lose their incomes, unable to remain in the city, and have to walk hundreds of kilometers to their hometowns.

Lee Sang Heon, ILO's employment policy director. Screenshots.
Lee Sang Heon, ILO’s employment policy director. Screenshots.

Money needs the right target group

ILO Director-General Guy Ryder appreciated the huge economic support packages of many governments.

When asked about the “good” bailout, he noted about the bailout’s design: “The challenge is not only to inject the required amount of money, but to reach the right people in need of relief.”

According to him, experience shows that the economy recovers the fastest after the recession in places where enterprises keep workers, so that they remain attached to their jobs. “So it can be reproduced without re-recruiting … we need to keep that link … it will benefit later.”

He mentioned the example of Germany during the 2008-2009 financial crisis, or the current measure in European countries: subsidies to allow businesses to take time off or work while still paying enough wages, in the hope that when The pandemic passes by, the economy revives immediately.

France spends 50 billion USD directly on businesses to retain labor. More than 337,000 businesses are giving more than 3.6 million employees a paid vacation, the state refunds, according to the New York Times. These numbers are expected to double.

“Enterprises that had previously done well need the state’s support to overcome the pandemic, and pay workers as they are doing. But support needs conditions, ”Mr. Ryder said.

Especially for large enterprises, subsidies need to “aim at a broader goal of keeping jobs and working with workers”.

“The support package is a two-way, reciprocal road. The design of the relief package is quite important, ”said the ILO director general.

The industries most at risk of unemployment

ILO Director General Guy Ryder in an online press conference on April 7. Screenshots.
ILO Director General Guy Ryder in an online press conference on April 7. Screenshots.

According to the ILO report, a number of sectors are at high risk, are severely affected and production volume plummets, and will account for most of the total reduction in employment. In total, there are currently 1.25 billion people working in these high-risk industries, accounting for 38% of the world’s workforce.

These sectors include tourism, food, wholesale, retail, and real estate, labor intensive labor, low education and low wages, according to the report.

In addition, the informal economy, freelancing (estimated to account for 2 billion people worldwide) will be greatly affected, due to the lack of basic protections, such as unemployment benefits, health insurance. , sick leave. Their work is also most disadvantaged when there are blockade orders.

Lee, ILO’s employment policy director, said in the previous recession, these freelance workers had found a way to “survive” through hardships. But this time, they could not do so because of the blockade orders.

The World Labor Organization calls on countries, in addition to disease control, to adopt macro policies with many goals, such as immediate support of the most impacted industries, ensuring food supply, stimulating economy and recruiting, protecting labor affected.