Hanoi (VNA) ꦓ– The International Labour Organisation (ILO)’s latest report on COVID-19 impact on the labour market reveals that the devastating losses in working hours caused by the COVID-19 pandemic have brought a “massive” drop in labour income for workers around the world.

“Massive” drop in labour income

The sixth edition of the “ILO Monitor: COVID-19 and the world of work”, released on September 23, says that the global working hour losses in the first nine months of 2020 have been “considerably larger” than estimated in the previous edition of the Monitor (issued on June 30). The revised estimate of global working time lost in the second quarter (Q2) of this year (when compared to Q4 2019) is for 17.3 percent, equivalent to 495 million full time equivalent (FTE) jobs (based on a 48-hour working week), whereas the earlier estimate was for 14 percent, or 400 million FTE jobs. In Q3 of 2020, global working hour losses of 12.1 percent (345 million FTE jobs) are expected. The outlook for Q4 has worsened significantly since the last ILO Monitor was issued. Under the ILO’s baseline scenario, global working-hour losses are now projected to amount to 8.6 percent in Q4 of 2020 (compared to Q4 2019), which corresponds to 245 million FTE jobs. This is an increase from the ILO’s previous estimate of 4.9 percent or 140 million FTE jobs. One reason for the estimated increases in working-hour losses is that workers in developing and emerging economies, especially those in informal employment, have been much more affected than by past crises, the Monitor says. Global labour income is estimated to have declined by 10.7 percent, or 3.5 trillion USD, in the first three quarters of 2020, compared with the same period in 2019. This figure excludes income support provided through government measures. The biggest drop was in lower-middle income countries, where the labour income losses reached 15.1 percent, with America the hardest hit region at 12.1 percent. It also notes that the drop in employment is more attributable to inactivity than to unemployment, with important policy implications. While many stringent workplace closures have been relaxed, there are significant variations between regions. About 94 percent of workers are still in countries with some sort of workplace restrictions, and 32 percent are in countries with closures for all but essential workplaces.

The “fiscal stimulus gap”

The 6th edition of the Monitor also looks at the effectiveness of fiscal stimulus in mitigating labour market impacts. In countries where sufficient data is available for Q2 2020, a clear correlation exists, showing that the larger the fiscal stimulus (as a percentage of GDP), the lower the working-hour losses. In that period, globally an additional fiscal stimulus of 1 percent of annual GDP would have reduced working hour losses by a further 0.8 percent. However, while fiscal stimulus packages have played a significant role in supporting economic activity and reducing the fall in working hours, they have been concentrated in high-income countries, as emerging and developing economies have limited capacity to finance such measures. In order for developing countries to reach the same ratio of stimulus to working hours lost as in high-income countries, they would need to inject a further 982 billion USD (45 billion USD in low-income countries and 937 billion USD in lower-middle income countries). The stimulus gap for low income countries amounts to less than 1 percent of the total value of the fiscal stimulus packages announced by high-income countries. This huge “fiscal stimulus gap” is even more worrying in the light of the social protection deficits in many developing countries. Moreover, some of these countries have also had to redirect public spending from other objectives in order to mitigate the labour market impact of the crisis. “Just as we need to redouble our efforts to beat the virus, so we need to act urgently and at scale to overcome its economic, social and employment impacts. That includes sustaining support for jobs, businesses and incomes," said Guy Ryder, ILO Director-General. “As the United Nations General Assembly gathers in New York, there is pressing need for the international community to set out a global strategy for recovery through dialogue, cooperation and solidarity. No group, country or region can beat this crisis alone,” he concluded./.