The unemployment rates triggered by the pandemic will be much higher than at the peak of the global financial crisis in 2008. The sharp contraction in economic activity suffered by many countries has led to a massive rise in global unemployment in the short term and a decrease in income opportunities in the long term. The recovery will take years despite the efforts of governments to develop adequate labor market policies concepts to mitigate the effects of the crisis.
Millions of people have lost their jobs and others are now working reduced hours. Compared to the first few months of the Great Depression, the current crisis represents up to 10 times fewer hours worked in some countries. Unemployment rates could reach 10% in OECD countries by the end of 2020 and as high as 12% if a second wave of the pandemic becomes a reality over the coming months.
Supporting employees and their incomes
While some economies continue to experience an exceptionally stark decrease in activity and unprecedented job losses, others have begun to redress the current situation by adopting efficient policy responses. The various job retention programs put in place have allowed employers to retain their workforce and avoid any further deterioration in economic activity with about 60 million people across the OECD countries becoming beneficiaries of such programs.
The German government covers around two-thirds of workers’ wages when employers reduce their working hours rather than laying them off during lockdowns. In April, this resulted in about 6.8 million Germans receiving money through the German Kurzarbeit program which forms a key part of the government’s trillion-euro coronavirus support package and which has been extended for another 24 months for those companies that apply before the end of the year.
Hundreds of thousands of Dutch businesses have already benefited from the emergency packages provided by the government. Some of the support measures that were due to end in October 2020 have been extended in order to provide relief from the consequences of the pandemic and to encourage businesses to invest more in economic growth. The job retention scheme, NOW, has been extended for another nine months with the assistance gradually being reduced. However, other measures such as self-employment income support, tax measures, guarantees and loans will be available for an extended period. These measures together with those newly introduced entail additional expenditure of some €11 billion and elicit investments amounting to €1.5 billion.
The crisis has exacerbated existing vulnerabilities
If weak labor market conditions persist, unemployment benefits could be made available for a longer period of time. However, for millions of workers these benefits could cease in the next few months as some governments decide not to further extend certain of their subsidy measures, as is the case in the United Kingdom where the Coronavirus Job Retention Scheme will end on 31 October 2020.
Most countries have made significant efforts through fiscal and monetary policy tools to provide the continuing relief that many businesses and workers need. By the end of May 2020, over 90 countries had announced fiscal measures totaling over US$10 trillion. A large part of the policy response took the form of deferrals, waivers of tax, social security contributions and the provision of grants, credit guarantees and wage subsidies to businesses. In emerging and developing economies, the resources have been predominantly used to support the most vulnerable groups through non-contributory cash transfers.
Striking heterogeneity in unemployment and policy response
The policy responses adopted by each government have shaped the levels of unemployment experienced by each country. Some countries faced an immediate record drop in the levels of employment, while others succeeded in keeping the crisis under control. According to Eurostat, the number of unemployed people increased by 336,000 in the European Union bringing the June 2020 total to 15.1 million.
Meanwhile, nearly one million Americans are filing claims for unemployment benefit every week pointing to the fragility of the job market worldwide. The grim labor market statistics that were predicted have already been exceeded by the actual unemployment rate in Brazil which has reached a 13.3%. The second quarter of 2020 does not bring an encouraging prospect for Nigeria either whose unemployment rate stands at 27% representing about 21.7 million people without jobs.
Self-employed workers have been particularly exposed to the regrettable consequences of the coronavirus and, likewise, young people have found themselves in a serious situation, registering an increase in unemployment rates and facing difficulties in finding a job. However, among the most vulnerable are the 1.6 billion informal workers who represent half of the global workforce.
Unprecedented scale of labor market disruption
The OECD has analyzed two epidemiological scenarios for the next 18 months and their possible repercussions. If the pandemic crisis remains under control, the unemployment level is projected to increase to 9.4% on average across the OECD countries by the end of the year with substantially different levels being experienced across various nations countries. If, however, a second wave becomes a reality, this could boost the unemployment rate even further to 12.6%. The OECD analysis points to a gradual recovery with unemployment rates at or above the peak level observed during the global financial crisis being reached by the end of 2021. With a more pessimistic outlook, the International Labor Organization has announced a 11.9% drop in working hours in the last quarter of the year which is equivalent to 340 million full-time jobs.
Securing employment in a post pandemic world is more challenging, but the job seekers should take advantage of all the available options. DevelopmentAid is a community of over 170,000 international development organizations, consulting companies and other employers, who use our platform to connect to candidates. If you are already on the list of experts on our platform and you are actively looking for a job, don’t forget to regularly update your profile as this is the only way to appear at the top of the search results. Make sure to attach a most recent version of your CV, short description of your key qualifications and availability. These simple actions will help you to capitalize on a wide range of opportunities. Make the first step now, click to update your profile. For more information and tips on updating the profile click here.
