Non-working days: almost half of the world's working-age population may lose income due to the COVID-19 pandemic

As a result of the coronavirus pandemic, about 1.6 billion informal workers risk losing their source of income completely. Thus, almost half of the world's workforce could be left without a livelihood. This is stated in the report of the International Labor Organization (ILO).

“According to estimates, in the first month of the crisis, incomes of workers in the informal sector of the economy decreased by an average of 60% worldwide. This means a decline in income in Africa and the Americas by 81%, in the Asia-Pacific region - by 21.6%, in Europe and Central Asia - by 70%. Without alternative sources of income, these workers and their families will completely lose their livelihoods, ”said ILO specialists.

Employment in the informal sector of the economy means work that is not fully regulated by labor contracts. This was in an interview with RT, said Professor of the Financial University under the Government of the Russian Federation Alexander Safonov. According to him, we are talking about seasonal or project employment - an employee is hired for a certain period of time, often without concluding an agreement, and upon completion of work they pay a fee.

“Such employment may suddenly end due to unforeseen circumstances, for example, in this case, due to the coronavirus. In such a situation, a person is left without any benefits from the state that would apply to him if he worked under an employment contract. As a result, such an employee did not seem to work at all for the authorities, and he risks losing his livelihood after losing his place, ”Safonov explained.

According to Johns Hopkins University, the total number of people infected with COVID-19 coronavirus infection in the world exceeds 3.2 million, of which almost 228 thousand died. The spread of the disease and quarantine measures introduced by states provoked a massive reduction in trade volumes, the closure of enterprises and the suspension of business.

“In most countries, shops, food outlets, entertainment centers closed, and entire production stopped. Borders between states are also blocked, which led to the breakdown of supply chains and triggered a serious crisis in global aviation and rail transportation. This did not happen either during the Great Depression or during the wars: the economy almost completely stopped, ”said Yegor Klopenko, creator of the ITLEADERS venture capital club, RT.

According to ILO estimates, worldwide over 436 million enterprises face high risks of serious malfunctions. Of these, 232 million work in wholesale and retail trade, 111 million in the manufacturing industry, 51 million in the housing and catering sector, and 42 million in real estate and other businesses.

“Some enterprises suspended work by order of the authorities, while others because of falling demand for their products. As a result, companies were forced to lay off staff to reduce increased costs. At the same time, up to a third of closed companies may not survive quarantine and declare bankruptcy, which will lead to additional layoffs and an increase in global unemployment, ”Anton Pokatovich, BCS Prime analyst, said in an interview with RT.

According to ILO estimates, from April to June 2020, world working hours will decrease by 10.5% compared with the fourth quarter of 2019. According to experts, such a decrease is comparable to the loss of about 305 million jobs.

Untimely vacation

A rather serious problem with employment is observed in the EU countries. According to a McKinsey study, amid a pandemic, nearly 59 million Europeans were at risk of jobs. About a quarter of workers in the private sector can be fired or sent on unpaid leave.

First of all, the explosive growth of unemployment could affect the countries of Western Europe, where the most stringent quarantine measures were introduced. This was in an interview with RT the president of the all-Russian public organization of small and medium-sized enterprises "Support of Russia" Pavel Sigal.

“For example, in the UK, the unemployment rate has already increased tenfold, and in Austria the number of citizens officially joining the labor exchange has exceeded 12%. At the same time, after quarantine cancellation, the figures can still grow significantly due to the wave of bankruptcies of commercial companies. According to various estimates, in the second quarter of 2020, the EU's GDP runs the risk of slipping by more than 10%. In such conditions, small and medium-sized businesses cannot function normally, and all the more, maintain a large staff, ”the expert noted.

In an even more difficult situation was the American labor market. Over the past month, more than 26 million people have applied for unemployment benefits in the United States. The increase in the number of calls observed since the beginning of March has become the maximum for the entire time of observation - since 1967. This is evidenced by the data of the Ministry of Labor of the States.

“According to economists, in April, the US unemployment rate runs the risk of surpassing the 20% mark, although at the beginning of the year the figure was 3.5%. The last time such a high number of unemployed in the States could be observed during the Great Depression, ”said Anton Pokatovich.

In addition to the introduction of quarantine measures and the closure of enterprises, experts explain the record increase in unemployment in the United States with the peculiarities of the country's labor legislation. According to Pavel Segal, workers are practically not protected from dismissals. Moreover, more than a third of employees work without an employment contract on a part-time basis. 

“The authorities usually do not impose any sanctions on companies if they dismiss workers. As a result, in order to keep the business afloat, corporations are now simply dismissing the staff, and after the crisis they plan to recruit new employees. I don’t exclude that the unemployment rate in the country in the medium term can reach 25%, ”the analyst explained.

According to experts, the emerging global labor market crisis has affected Russia as well. According to the head of the Ministry of Labor, Anton Kotyakov, on the television channel Russia 24, the number of unemployed in the country may increase from the current 3.7 million to 5-6 million people. At the same time, according to analysts, the peculiarities of Russian legislation, as well as measures of state support for business and the population will help curb rising unemployment.

“With the filing of the state, banks began to issue preferential loans to businesses for paying salaries to employees, which allowed companies to preserve labor groups as much as possible. Moreover, the dismissal in Russia is not as common practice as in the EU and the USA, and employees are more protected from unlawful loss of place by the conditions of labor legislation. This specificity so far favors a slower growth rate of Russian unemployment compared to Western countries, ”said Anton Pokatovich.

Specialists of the International Labor Organization note that the growth rate of global unemployment in 2020 will largely depend on how the global economy will develop in the second half of the year, and how effectively the measures taken will save existing jobs, as well as increase demand for workers force after the transition of the economy to the recovery stage.