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TWN Info Service
on UN Sustainable Development (Jan22/05) Geneva, 19 Jan (Kanaga Raja) - The International Labour Organization has projected that total hours worked globally in 2022 will remain almost two per cent below their pre-pandemic level, corresponding to a deficit of 52 million full-time equivalent jobs (assuming a 48-hour working week). This is a downgrade of its earlier full-year forecast in May 2021 that had projected a deficit of 26 million full-time equivalent jobs. In its World Employment and Social Outlook -Trends 2022 report, the ILO said global unemployment is projected to stand at 207 million in 2022, surpassing its 2019 level by some 21 million. The COVID-19 pandemic dominated the global economy for a second year in 2021, preventing a full and balanced recovery of labour markets, it added. "The pace at which economic activity has recovered has depended largely on the extent to which the virus has been contained, such that the recovery is following different patterns across geographies and sectors." Since the onset of the recovery, employment growth trends in low- and middle-income countries have remained significantly below those observed in richer economies, owing largely to the lower vaccination rates and tighter fiscal space in developing countries, said the ILO report. The impact has been particularly serious for developing nations that experienced higher levels of inequality, more divergent working conditions and weaker social protection systems even before the pandemic. Overall, key labour market indicators in all regions - Africa, the Americas, the Arab States, Asia and the Pacific, and Europe and Central Asia - have yet to return to pre-pandemic levels. For all regions, projections to 2023 suggest that a full recovery will remain elusive, said the ILO. The European and Pacific regions are projected to come closest to that goal, whereas the outlook is most negative for Latin America and the Caribbean and for South-East Asia. "All regions face severe downside risks to their labour market recovery that stem from the ongoing impact of the pandemic. Moreover, the pandemic is structurally altering labour markets in such ways that a return to pre-crisis baselines may well be insufficient to make up for the damage caused by the pandemic," said the report. "Two years into this crisis, the outlook remains fragile and the path to recovery is slow and uncertain," said ILO Director-General Guy Ryder. "We are already seeing potentially lasting damage to labour markets, along with concerning increases in poverty and inequality. Many workers are being required to shift to new types of work - for example, in response to the prolonged slump in international travel and tourism," he added. "There can be no real recovery from this pandemic without a broad-based labour market recovery. And to be sustainable, this recovery must be based on the principles of decent work - including health and safety, equity, social protection and social dialogue," said Mr Ryder. According to the ILO report, poverty has increased significantly among working people. The share of workers living in extreme poverty went up from 6.7 per cent in 2019 to 7.2 per cent in 2020, which equates to an increase of 8 million in the number of working poor. Yet, the poverty increase has been much more pronounced among those who were not working in 2020 - a result of the large losses in global employment being concentrated among low-income households. The ILO said new estimates suggest that, in 2020, an additional 30 million adults fell into extreme out-of-work poverty, comprising those who lost their job during the course of the crisis and those who did not have one to begin with. Low- and lower-middle-income countries are estimated to have experienced the largest rise in working poverty rates between 2019 and 2020, with increases of 1 and 0.9 percentage points, respectively, which represent a significant reversal of previous trends. "Prolonged lockdowns and travel bans, unthinkable before the pandemic, have disrupted supply chains, leading to negative consequences for direct and indirect employment linked to production networks." Estimates suggest that 97 million jobs connected to supply chains were highly adversely affected in April 2021 by the drop in global consumer demand for manufactured products. Overall, nearly one in three jobs in manufacturing supply chains globally are likely, as a result of the pandemic, to have undergone termination, a reduction in working hours or payment, or other worsened conditions, said the ILO. It said that the impact has been particularly pronounced in lower-middle-income countries that have long leveraged participation in production chains as a source of employment and growth. Lower-middle-income countries saw the largest decline, 11.8 per cent, in manufacturing employment, compared with 7.4 per cent in upper-middle-income, 3.4 per cent in low-income and 3.9 per cent in high-income countries. Labour supply disruptions have been widespread. With over 237 million confirmed COVID-19 cases worldwide as of October 2021 - a number that will continue to rise - illness has kept many from work, said the report. Others have stayed at home because physical workplaces have been closed owing to mandatory restrictions, for fear of contracting the virus or to take care of sick relatives. These factors have induced staff shortages in location-tethered work, said the ILO, adding that widespread school closures have caused a rise in unpaid care work at home, the burden of which has disproportionately and largely fallen on women. TRENDS IN EMPLOYMENT According to the ILO report, labour market recovery will remain weak through 2023. Employment losses and a drop in labour income characterized 2021 as they had the year before. It said that low- and lower-middle-income countries have fared the worst. Moreover, people who already faced a disadvantage in the labour market - such as women, youth, the elderly, and migrant workers - have experienced higher employment losses than have other groups. Adjusted for population growth, employment, hours worked and labour force participation remained below pre- pandemic levels in 2021 and are expected to remain so until at least 2023, said the ILO. In 2022, the ratio of hours worked to the population aged 15-64 is projected to remain 1.8 per cent below its 2019 level; the corresponding projected ratios are 1.7 per cent below the 2019 level for employment and 1.1 per cent below the 2019 level for the labour force. Assuming a 48-hour work week, the ILO said the decline in hours worked was equivalent to a deficit of about 125 million full-time jobs globally in 2021 relative to the fourth quarter of 2019. It said the employment deficit in 2021 was 92 million, and the decline in the labour force participation rate (LFPR) relative to 2019 levels corresponds to a labour force deficit of 67 million people. Although the deficits are becoming smaller, they are projected to continue to be significant through 2023, it added. The global LFPR, having fallen by almost 2 percentage points between 2019 and 2020, is projected to recover only partially, to 59.4 per cent by 2023, more than 1 percentage point below its 2019 level of 60.5 per cent. With employment recovery projected to be even slower than labour force recovery, the global unemployment rate is projected to remain above its 2019 level until at least 2023, said the report. "The total number of the unemployed is projected to decline in both 2022 and 2023. Despite this progress, global unemployment is projected to remain stubbornly higher than its 2019 level of 186 million, at 203 million in 2023." Furthermore, unemployment recovery is expected to be concentrated in high-income countries, which will account for half of the global decline in unemployment between 2021 and 2023 but contain only 18 per cent of the global labour force. Since the very beginning of the pandemic, lower-middle-income countries have fared the worst, said the ILO. They have seen the largest drop in the ratio of total weekly hours worked to the population aged 15-64, in the employment rate and in the LFPR. They are also seeing the slowest recovery. Poverty estimates suggest that eight out of ten new poor in 2020 were in middle-income countries. The damaging impact of the pandemic on jobs and livelihoods, if not quickly reversed, will run the risk of inducing long-term structural change with enduring adverse implications for labour markets, the ILO cautioned. Uneven impacts of containment measures and the decent work deficits that they have contributed to are threatening the prospects for sustainable and inclusive economic growth, it said. "Temporary shifts in inflation rates and prices, or changes in the cost of capital relative to the price of labour, pose more risk of generating structural problems the longer they persist." Moreover, said the ILO, the pandemic is exacerbating inequality. It has had a disproportionately adverse impact on women, youth, migrants and the elderly. By accelerating technological change, the pandemic has revealed a deepening digital divide, it added. Intense and prolonged supply chain shocks are creating uncertainty in the business climate and raise the spectre of a re-configuration of the geography of production in ways that will have serious implications for employment, it said. For the moment, most analysts agree that inflation rate fluctuations are a result of uneven patterns of opening up, pent-up demand, and supply chain bottlenecks, the ILO added. As economies settle, these drastic price swings are likely to stabilize. However, should there be a resurgence in the pandemic, or other crises related to climate change, for instance, the inflationary impact could become more structural in nature, said the report. The ILO said that the COVID-19 pandemic has highlighted the extent to which crises can generate volatility that extends beyond capital markets to affect labour markets with devastating consequences, especially for the most vulnerable. Thus far, the massive amount of investment required to revive depressed economies, together with a continuing shortage of workers in certain essential services, seems to have restored the bargaining power of low-income households in some countries. In the United States, for example, wages for low-income workers have increased at their fastest rate since before the 2008 financial crisis. However, if inflation should become more endemic, there would be some risk that premature austerity measures would be implemented and hence the risk of a prolonged jobs crisis, said the report. In some developed countries, the monetary response to the pandemic has fuelled asset prices, favouring capital owners and rent-seeking over productive investment and employment creation, it noted. It said it is a well-acknowledged fact that labour's share of national income has been dropping and that of capital increasing for the better part of three decades. "The lack of a strong macro-prudential framework and faltering support for the real economy with stronger public investment have meant that in many advanced economies unconventional monetary policy has proved to be a boon for shareholders and house owners, pushing global stock markets to unseen heights, worsening wealth inequality and contributing to further market concentration." Not only does this endanger socio-political stability, but it also risks destabilizing economic growth by constricting wage-based household consumption, said the ILO. Going forward, macro-policymakers face some difficult choices. On the one hand, runaway inflation may require policy to be tightened more quickly than it has been so far, it added. At the same time, the recovery is asymmetric, and tightening would hit low-income households disproportionately. In addition, said the ILO, monetary policymakers are constrained by the high level of (public) debt: raising interest rates prematurely or too fast is likely to force fiscal policymakers to scale down their support measures, thereby magnifying any tightening of monetary policy. "What is most likely is that major central banks will scale down their asset purchases without raising rates at the expense of continuing stimulus of the private (banking) sector." The ILO said fiscal policymakers are likely to become more parsimonious with their support as well, targeting it more selectively. Nevertheless, rate rises are already happening, with consequences for exchange rates and capital flows, putting further pressure on the recovery, especially in low- and lower-middle-income countries, where the stagflation pattern is felt more strongly, it added. DEEPENING INEQUALITY Even before the pandemic, technological advances were shaping media, retail, health, social interactions, financial transactions and politics, said the ILO report. They were prompting labour substitution and creating new jobs, but also breaking up existing work into smaller gigs and fundamentally restructuring labour markets. In certain sectors, technology adoption saves labour - for instance, when robots are deployed in manufacturing or when technology raises productivity so that fewer workers are required. In other sectors, such as the gig economy, rising numbers of people are relying on platforms to generate income. In the midst of such changes, people who lack access to technology, or the skills needed to engage with it, or who are victim to biases embedded in certain algorithms are already facing a significant disadvantage, said the ILO. "The pandemic is now accelerating these changes and deepening the digital divide within and between countries." Those who have access to the technology and are able to work from home have fared better in the COVID-19 crisis than those in location-tethered professions. The former also tend to be in higher-skilled professions and/or in larger, formal enterprises - a trend that widens the gap along these vectors. As education and training institutions closed and shifted to online learning, only those with access to the technology and the skills to use it - whether teachers, trainers or students - were able to engage effectively. For some students unable to effectively access online learning, what they have lost will have important implications for their ability to make the transition from education to work, said the ILO. The ILO said economically vulnerable populations in developing countries, where the digital divide is more acute, have been particularly affected. When it comes to the global labour market impacts of the pandemic, women, especially young women, have been among the worst affected, and their recovery has also been among the slowest, it added. Even in non-crisis times, decent work deficits are more pronounced among women. They tend to receive lower remuneration for the same work and frequently endure poorer working conditions than their male counterparts. They are also more susceptible to layoffs and face more barriers to re-entering the labour market than men do. Analysis by UN Women and the UN Development Programme (UNDP) suggest that by 2021 approximately 435 million women and girls around the world would be living on less than US$1.90 per day - and that 47 million would fall back into poverty as a result of pandemic-related shocks. Given that women are more likely than men to spend resources on supporting their families and communities, an adverse impact on women's employment has a cascading impact on the welfare of households, communities and economies, said the ILO. The ILO also said that before the onset of the pandemic, temporary employment as a share of total employment had been increasing over time, though not uniformly across sectors and countries. It noted that temporary employment rates are higher in low- and middle-income countries (just over one third of total employment) than in high-income countries (15 per cent). But the nature of temporary employment varies between developed and developing countries, it observed. In the former, although it may be an entry point into a more permanent position, or a flexible and strategic means of entering and engaging in the labour market, temporary workers lack job security and regular incomes and do not always fulfil the eligibility requirements for access to social protection or employment protection. On the other hand, for workers in the developing world, temporary work often comes in the form of informal employment with little to no access to social protection systems and employment protection. The ILO said temporary workers suffered job losses at a higher rate than non-temporary workers at the beginning of the pandemic, but most economies have since seen a rise in newly created temporary jobs.
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