The global labour market outlook has deteriorated since ILO’s last projections and a return to pre-pandemic performance is likely to remain elusive for much of the world over the coming years. ILO Director –General Guy Ryder has said, “Two years into this crisis, the outlook remains fragile and the path to recovery is slow and uncertain.” Moreover, the global unemployment is expected to remain above pre-pandemic levels until at least 2023. “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,” added the ILO chief.

World Employment and Social Outlook (WESO)– Trends 2022 released by ILO early this week has warned of a slow and uncertain recovery as the pandemic continues to have a significant impact on global labour markets. The report examines in impact of the crisis on global and regional trends in employment, unemployment and working poverty.

WESO Trends has warned of potentially lasting damage to the labour market. It warns that the overall impact on employment is significantly greater than represented in the raw figures, as many people have left the labour force. The labour participation rate of the 2022 global labour force is projected to remain 1.2 percentage points below that of 2019, while employment to population ratio to remain 1.4 per cent lower. Since the pandemic’s future course is uncertain, the recovery is also uncertain. “We are already seeing potentially lasting damage to labour market, along with concerting increases in poverty and inequality,” said the ILO Chief. In 2022, ILO has projected 52 million full-time job loss due to labour market disruption.

The damage is likely to require years to repair, with potential long-term consequences for labour forces, household incomes, and social and possibly political cohesion. There are also stark differences in the impact that the crisis is having across groups of workers and countries – deepening inequalities within and among nations – while weakening the economic, financial and social fabric of almost every State, regardless of development status, the report has warned.

At the regional level the European and the North American regions are showing the most encouraging signs of recovery, while the southeast Asia, and Latin America and the Caribbean, have the most negative outlook. At the national level, labour market recovery is strongest in high-income countries, while lower middle-income economies are faring the worst. 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.

The underlying structural deficiencies and inequalities are amplifying and prolonging the adverse impact. The large informal economy in many developing countries is impairing the efficacy of some policy instruments, since informal enterprises have been less able to access formal lines of credit or pandemic related government support. Thus the relief measures have been less likely to reach those in need, and inequities within countries have worsened. Smaller businesses have experienced greater declines in employment and working hours than have larger ones.

Developing economies relying on exports of labour-intensive goods or commodities have particularly struggled to adjust to volatile demand due to shifts in economic growth pattern.

Employment losses and reductions in working hours have also led to reduced incomes, and it has compounded in the countries where there is absence of any comprehensive social protection systems. It has compounded the financial stress of already economically vulnerable households, with cascading effects on health and nutrition.

The report has warned of the disproportionate impact of the crisis on women’s employment which is expected to last in the coming years. It also warns that closing of education and training institutions “will have cascading long-term implications” for young people, particularly those without internet access.

They asymmetric recovery of the global economy has started to cause long-term knock-on effects, in terms of persistent uncertainty and instability that could derail the recovery. Changes in market demand and rising online services, skyrocketing trading costs and pandemic induced changes in labour supply have all created bottlenecks in manufacturing, impeding the return to pre-pandemic labour market conditions.

Intense and prolonged supply chain shocks are creating uncertainty in the business climate and could lead to a reconfiguration of the geography of production, with significant implications for employment. The rise in prices of commodities and essential goods, while labour markets remain far from recovered, significantly reduces disposable income and thereby adds to the cost of crisis. Policymakers have difficult choices – situation requires tightening of monetary and fiscal policies, and if it is done it would severely hit low-income households.

Worsening of labour market conditions have resulted into loss of income for the workforce, which in turn has further depressed the aggregate demand, creating a vicious circle that underscores the need for concerted policies to expedite labour market recovery, tackle inequalities and return the global economy to a path of sustainable growth.

“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 the ILO chief. (IPA Service)