Covid-19 Pandemic impacts 81 million jobs in Asia-Pacific labour markets

International Labour Organization (ILO) prepared Asia–Pacific Employment and Social Outlook 2020: Navigating the crisis towards a human-centred future of work report estimates a resulting jobs gap of 81 million in the Asia-Pacific region in 2020. The job loss is a result of the crisis, distributed as 32 million jobs for women and 49 million jobs for men.

The report estimates, the economic backlash of the COVID-19 pandemic wiped out some 81 million jobs in 2020. In nearly all economies with available quarterly data for 2020, employment levels contracted compared to 2019.

The COVID-19 impact on the labour market was felt first and foremost through the reduction in working hours induced by national lockdown and containment measures.

The impact of the crisis has been far-reaching, with underemployment surging as millions of workers are asked to work reduced hours or no hours at all. Overall, working hours in Asia and the Pacific decreased by an estimated 15.2 percent in the second quarter and by 10.7 percent in the third quarter of 2020, relative to pre-crisis levels.

Massive drops in working hours due to the COVID-19 crisis have had a devastating effect on jobs and incomes in Asia and the Pacific according to a new report by the International Labour Organization (ILO).

According to the report, most countries in the region saw a larger decline in working hours and employment for women than men. Also, women were more likely to move into inactivity than men. Young people have also been especially affected by working-hour and job losses. The youth share in overall employment loss was 3 to 18 times higher than their share in total employment.

The Asia–Pacific region is home to 1.3 billion of the world’s 2 billion informal workers. Despite its record as the region of fastest-economic growth in the world for at least the past decade, still, two in three (68 percent) of its workers are engaged in informal employment, and for some countries, the ratio is as much as nine in ten.

Working-hour losses are also influenced by the millions of persons moving outside the labour force or into unemployment as job creation in the region collapsed. Using available quarterly data, the report provides a preliminary estimate that the regional unemployment rate could increase from 4.4 percent in 2019 to somewhere between 5.2 percent and 5.7 percent in 2020.

The report also warns that given the scope of the damage to labour markets, the overall size of the fiscal response in the region has been insufficient, especially in the region’s developing economies. As a result of fiscal expenditure gaps, the crisis is likely to exacerbate inequalities among countries in Asia and the Pacific.

On the positive side, ILO can show in this report that government efforts to help enterprises retain workers, albeit on reduced hours, have worked to prevent what would otherwise be larger job losses.

The Asia–Pacific region was the first to feel the sting of the virus in early 2020, and some countries reacted quickly with strict lockdown protocols to prevent further contagion. In the first quarter of 2020, total working hours across the region were already 7.3 percent below the hours spent on work in the last quarter of 2019 (ILO 2020a). The loss of working hours in the first quarter was equivalent to a loss of 125 million full-time equivalent jobs (based on a 48-hour workweek).

Results for the second quarter were significantly worse, with working hours in Asia and the Pacific estimated to have decreased by 15.2 percent from fourth-quarter 2019, which translates to a loss of 265 million full-time equivalent jobs. The largest loss in working hours across the world is estimated to have occurred in South Asia (with a decline of 27.3 percent in the second quarter, equivalent to 170 million full-time jobs).

By the second quarter of 2020, compared with the same period in 2019, working-hour losses were associated with falling employment in the majority of countries with available data, with the scale of contraction from 0.1 percent to 19 percent. Employment loss ramped up significantly in most of the economies between the first two quarters of the year.

Based on World Bank estimates of increased poverty, the report estimates that an additional 22 million to 25.4 million persons could be added to the number of working poor (living on less than $1.90 a day), increasing the working poverty rate by 1 percentage point to an estimated 5 percent and bringing the working poor total in 2020 to an estimated 94–98 million. The breakdown by sub-region is an additional 4 million to 5.6 million working poor in East Asia and South-East Asia and the Pacific combined and 17.9 million to 19.8 million in South Asia.

This corresponds to a 4.2 percent decline, compared with the pre-crisis trend for both sexes, a 4.6 percent decline for female employment and a 4 percent decline for male employment.
The regional jobs gap in 2020 is largely driven by South Asia, where the 2020 employment estimate is nearly 50 million jobs below the pre-crisis baseline, corresponding to a 7.4 percent drop.

Approximately 5.7 million or 80.8 per cent of workers in Nepal have informal jobs. The majority of workers in all sectors are in informal employment, including the sectors expected to face the highest degree of disruption: construction (97 per cent), trade (74 per cent) and manufacturing (84 per cent).

However, Rapid Assessment of the Social and Economic Impacts of COVID-19 on the vulnerable groups in Nepal done by United Nations Development Work estimates that three out five jobs are lost in Nepal. Nepal’s projected pre-COVID GDP growth rate of 8.5 percent was estimated to decline to below 2.5 percent in 2019-2020, and severely constrain a rebound in 2020-2021.