ILO predicts a substantial rise in global unemployment and underemployment due to pandemic

Anna Triponel

March 16, 2020

Companies around the globe are putting emergency measures in place to face the economic downturn linked to the COVID-19 pandemic. These include managing costs by laying off workers, placing staff on unpaid leave and reducing working weeks. For instance, this week hotel company Marriott announced it would put “tens of thousands” of its 130,000 staff on unpaid leave, and airline company Virgin Atlantic has asked its 8,500 staff to take eight weeks of unpaid leave over the next three months, with the cost spread over six months’ salary, to “drastically reduce costs without job losses.”

US Treasury secretary stated this week that, without strong federal intervention, the pandemic could send unemployment soaring to 20%. Recent estimates from the UK are that over 200,000 people working in the leisure and hospitality sectors have been laid off since mid-February, a number which could rise soon to over one million – with around a quarter of the UK’s workers in sectors where demand has shrunk due to social distancing measures.

In a study released this week by the International Labor Organisation (ILO), the ILO finds that the virus and subsequent economic shocks will impact both the quantity and quality of jobs. There will be “a significant rise in unemployment and underemployment in the wake of the virus.” With the base level of global unemployment at 188 million (2019 figures), unemployment would rise in the millions – anywhere between 5.3 million and 24.7 million. Underemployment, characterised by “significant downward adjustments to wages and working hours” is also likely, coupled with a restriction on self-employment options due to limitations on movement.

The ILO points to a likely “disproportionate impact on certain segments of the population, which can trigger worsening inequality.” In particular, “the strain on incomes resulting from the decline in economic activity will devastate workers close to or below the poverty line.” There will be an additional 8.8 to 35 million people in working poverty, as compared to if COVID-19 had not taken place. The ILO provides a list of those groups who are most vulnerable, including young persons, older workers and women. Unprotected workers, such as self-employed, casual and gig workers are likely to be disproportionately hit by the economic effects of the virus, as are migrant workers.

The ILO urges governments to adopt policies that will mitigate the impacts of COVID-19 on the world of work. These policies include measures to protect workers and employers and their families from the health risks of COVID-19, as well as “timely, large-scale and coordinated policy efforts … to provide employment and income support and to stimulate the economy and labour demand.”

(Update: The ILO has since said that global job losses from the coronavirus crisis will exceed this 25 million estimated. “The projection will be much bigger, far higher than the 25 million we estimated” according to Sangheon Lee, director of ILO’s employment policy department)

Source: International Labor Organisation Note, COVID-19 and world of
work: Impacts and responses
(18 March 2020)

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