The ongoing coronavirus pandemic has forced the world to a standstill. Markets are closed, roads are empty, people are locked inside their houses and business is not as usual. The novel virus which first originated in China has now become a global headache. So far the virus has infected more than 470,000 cases and claimed more than 21,000 lives.
Industries like travel, hospitality, airline, and manufacturing are the worst hit due to the pandemic. The virus has once again established how interconnected our economy is. How something happening in one part of the world, can have severe implications for the rest of the world.
Back in the time of the French Revolution, Diplomat Klemens von Metternich had said that “When France sneezes, the whole of Europe gets cold.” While this may not be true today, one can easily replace France with China and Europe with the world and see what a tragedy it has become due to the coronavirus. When the virus was first discovered in China, it halted the production of many corporations causing a delay in deliveries. China went into a lockdown and the rest of the world was going on at its normal pace. But this lockdown in China created a domino effect, businesses a few days later started feeling the heat of this lockdown. Fast forward three months later and here we are.
Governments around the world have ramped up their efforts to contain the virus and bring normalcy to life. Several organizations have also joined hands with governments to make this end as quickly as possible, because simply if this situation prolongs, people will start losing their jobs, small and medium scale businesses will be forced to shut their shop and poverty will definitely rise. Some experts are even predicting that this crisis is worse than that of World War 2 and the Great Depression combined.
But what most experts and individuals fear, is that this pandemic might cause a global joblessness crisis. And their fears are somewhat coming true. Recently we saw how Indian hospitality chain OYO Rooms laid off more than 15,000 employees from different markets due to losses and as a cost-cutting measure.
The travel industry is in a similar kind of soup. With countries imposing travel restrictions and organizations cutting down on employee travel, the industry is facing severe challenges. It’s like basic commuting from one place to another has come to a halt. Indian travel start-up TravelTriangle also scummed to this crisis. The seven-year-old startup at the beginning of the month laid off more than 300 employees and sent a few on unpaid leaves to save cash.
Due to curb on travel, airlines are now also being forced to ground their fleets and wait till the crisis is over. However, this grounding of flights is causing severe cash burn to these airlines. Budget carriers like IndiGo and GoAir have substantially cut down their employee salaries and few other airlines have even asked their employees to take unpaid indefinite leave until the dark days are over.
According to a recent report by the International Labour Organization, a UN agency, it is being estimated that nearly 25mn people could lose their jobs worldwide due to the pandemic. The report, titles “COVID-19 and World of Work: Impacts and Responses” highlighted that this impact can be lowered with the help of international coordination.
The International Labour Organization (ILO) calls for urgent, large-scale and coordinated measures across three pillars – protecting workers in the workplace, stimulating the economy and employment, and supporting jobs and incomes.
According to the report, epidemics and economic crises can have a disproportionate impact on certain segments of the population, which can trigger worsening inequality. Based on past experience and current information on the COVID-19 pandemic and insights from previous crises, a number of groups can be identified:
1.) Those with underlying health conditions and older people are most at risk of developing serious health issues.
2.) Young persons, already facing higher rates of unemployment and underemployment, are more vulnerable to falling labor demand, as witnessed during the global financial crisis. Older workers can also suffer from economic vulnerabilities. After the MERS outbreak, older workers were found to be more likely than prime-age individuals to experience higher unemployment and underemployment rates, as well as decreased working hours.
3.) Women are over-represented in more affected sectors (such as services) or in occupations that are at the front line of dealing with the pandemic (e.g. nurses). The ILO estimates that 58.6 percent of employed women work in the services sector around the world, compared to 45.4 percent of men. Women also have less access to social protection and will bear a disproportionate burden in the care economy, in the case of closure of schools or care systems.
4.) Unprotected workers, including the self-employed, casual and gig workers, are likely to be disproportionately hit by the virus as they do not have access to paid or sick leave mechanisms, and are less protected by conventional social protection mechanisms and other forms of income smoothing.
5.) Migrant workers are particularly vulnerable to the impact of the COVID-19 crisis, which will constrain both their ability to access their places of work in destination countries and return to their families.
Many countries have already introduced unprecedented stimulus packages to protect their societies and economies and keep cash flowing to workers and businesses. To maximize the effectiveness of those measures it is essential for governments to work with employers’ organizations and trade unions to come up with practical solutions, which keep people safe and to protect jobs.
These measures include income support, wage subsidies and temporary layoff grants for those in more formal jobs, tax credits for the self-employed, and financial support for businesses.
But as well as strong domestic measures, decisive multilateral action must be a keystone of a global response to a global enemy. The G20’s virtual Extraordinary Summit on the Covid-19 response in March is an opportunity to get this coordinated response going.
Sandeep is a journalism and mass communication graduate with a keen interest in politics and business. He is a part of Research & Content team at HrNxt.com.