Covid-19 crisis paints grim picture of labour market
That the coronavirus global pandemic has brought devastating social and economic consequences for millions around the world is a foregone conclusion.
With the International Monetary Fund predicting a -3 per cent economic contraction globally, it can only get worse before it gets better.
On Tuesday, the United Nations said that nearly half of the global workforce – an estimated 1.6 billion people – could be casualties of decreased demand for labour, as industries and businesses halt operations due to the pandemic-enforced lockdowns.
With reduction of Foreign Direct Investment (FDI) in the medium term, the future of work remains grim.
The United Nations Conference on Trade and Development (UNCTAD) projects that the downward pressure on FDI will be -5 to -15 per cent.
According to the global trade body, over two thirds of the multinational enterprises (MNEs) have either issued profit warnings, or slowed capital expenditures in affected countries.
On average, the top 5,000 MNEs, who are the major carriers of global FDI, have revised their 2020 earnings by about nine per cent due to Covid-19.
One of the peculiar effects of the pandemic on the labour market is that it will reverse the usual rural to urban migration, particularly in the developing world.
As many jobs are urban-based, their scarcity means millions of unemployed people will relocate back to their rural homes, putting extreme pressure on the inadequate infrastructure.
Moreover, it will take several months into 2021 before struggling economies can stabilise and deliver the same number of opportunities hitherto available.
Meanwhile, the battle for survival by the millions of jobless persons could lead to both internal and cross-border strife due to resource conflict.
There is also a high likelihood of an unprecedented surge in crime, as unemployed youth become desperate trying to eke out a living.
Due to the drastic decrease in jobs, many labour organisations will become powerless as millions of jobless people fight for the limited opportunities left after the pandemic’s devastation.
There is a high possibility that workers around the world will have less bargaining power and some unscrupulous employers could actually use Covid-19 to abuse labour.
The International Labour Organisation (ILO) notes that, “working in the absence of protections such as sick leave or unemployed benefits, these workers may need to make a choice between health and income.”
Further, ILO says that informal workers, who comprise about the 61 per cent of the world’s labour force, are particularly vulnerable as they are already in a disadvantaged position.
The constricted labour force could create a spiral effect of economic underperformance, which will in turn perpetuate joblessness, ending in a vicious cycle of poverty in developing and emerging economies.
Economic stimulus packages in developing countries should build the capacity of the informal sector by funding small industries to get into mass production.
With the disruption of global supply chains, this is a target area for policy intervention in job creation.
However, it might not all be gloom. Covid-19 could be a boon for some sectors, particularly those producing hygiene-based products and services.
With proper standardisation, for instance, production of sanitisers could be a saving grace by creating thousands of self-employment opportunities.
For example, the production of face masks in several Africa countries has created thousands of jobs at the local level, for sewers and the sellers hawking them on the streets.
Although this businesses might not be as lucrative post-corona crisis, those who reinvest the incomes will contribute to expanding the job market.
To mitigate the effects of the pandemic on people’s livelihoods, the IMF recommends that “policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically.” — The writer is a communication expert, and public policy analyst —[email protected]