FeaturedNationalVOLUME 16 ISSUE # 21

Labour market crisis

The coronavirus has left over 100 million workers out of jobs in the world. It is obvious that people of poor countries have been hit hard by lockdown restrictions and Pakistan is no exception, where thousands of jobs had been lost even before the onset of the pandemic as a consequence of economic policies of the government.

According to the Asian Development Bank (ADB), between 1.5 million and 2.3 million jobs could have been lost in Pakistan in the wake of the coronavirus pandemic last year, when the authorities imposed strict lockdown restrictions which resulted in an economic downturn in the country. It maintained that the employment prospects of the region’s 660 million young people were severely challenged. It also urged governments to constructively engage their young citizens in policy and social dialogue and adopt “urgent, large-scale, and targeted interventions.”

“Prioritizing youth employment and maximizing youth productivity in the recovery process will improve Asia and the Pacific’s future prospects for inclusive and sustainable growth, demographic transition and social stability,” said the 2020 report, adding that job losses among the region’s youth was likely to continue throughout the year and “could result in youth unemployment rates doubling.” With a negative economic growth rate in 2020, the report claimed that young Pakistanis were likely to lose about 1.5 million jobs. The country’s unemployment rate that stood at 8.9pc in 2019 rose between 17.3 and 21.5pc in 2020.

A new assessment by the International Labour Organisation (ILO) shows the labour market crisis created by the pandemic is far from over, and employment growth will be insufficient to make up for the losses suffered until at least 2023. Global unemployment is expected to stand at 205 million in 2022, surpassing the level of 187 million in 2019. It corresponds to an unemployment rate of 5.7pc. Excluding the Covid-19 crisis period, such a rate was last seen in 2013. The ILO’s World Employment and Social Outlook: Trends 2021 projects that the global crisis-induced “jobs gap” will reach 75 million in 2021, before falling to 23 million in 2022. The related gap in working-hours, which includes the jobs gap and those on reduced hours, amounts to the equivalent of 100 million full-time jobs in 2021 and 26 million full-time jobs in 2022. The shortfall in employment and working hours comes on top of persistently high pre-crisis levels of unemployment, labour underutilisation and poor working conditions.

The worst affected regions in the first half of 2021 have been Latin America and the Caribbean, and Europe and Central Asia. In both, estimated working-hour losses exceeded 8pc in the first quarter and 6pc in the second quarter, compared to global working-hour losses of 4.8pc and 4.4pc in the first and second quarter, respectively. The pandemic has pushed over 100 million more workers into poverty. “Covid-19 has not just been a public health crisis, it’s also been an employment and human crisis,” ILO chief Guy Ryder said. “Without a deliberate effort to accelerate the creation of decent jobs, and support the most vulnerable members of society and the recovery of the hardest-hit economic sectors, the lingering effects of the pandemic could be with us for years in the form of lost human and economic potential, and higher poverty and inequality,” he warned.

And while global employment is expected to recover more quickly in the second half of 2021, provided the overall pandemic situation does not worsen, the ILO warned that the recovery would be highly uneven. This, it said, was due to inequitable access to Covid-19 vaccines. So far, more than 75pc of all the jabs have gone to just 10 countries. The limited capacity of most developing and emerging economies to support strong fiscal stimulus measures will also take its toll, the ILO said, warning that the quality of newly created jobs will likely deteriorate in those countries. The fall in employment and hours worked has meanwhile translated into a sharp drop in labour income and a rise in poverty. Compared to 2019, 108 million more workers around the world were categorised as poor or extremely poor, meaning they and their families live on less than $3.20 per person per day.

The report highlighted how the Covid-19 crisis had worsened pre-existing inequalities by hitting vulnerable workers harder. For many of the two billion people who work in the informal sector, where social protections are generally lacking, pandemic-related work disruptions have had catastrophic consequences for family incomes and livelihoods. The crisis has also disproportionately hit women, who have fallen out of the labour market at a greater rate than men, even as they have taken on more of the additional burden of caring for out-of-school children and others. Youth employment, meanwhile, fell 8.7pc last year, more than double the 3.7pc for older workers.

According to a report by the Lahore School of Economics, the net job losses in Pakistan were estimated at 0.7 million in 2020 as the country’s gross domestic product (GDP) growth became negative in the wake of lockdowns. The loss of jobs and livelihood was mainly found in the informal sector, where 0.6 million people lost employment, whereas in the formal economy, only 0.1 million people lost their livelihoods.

The performance of any government in the world is assessed by its ability to create jobs and check inflation. The PTI government has failed on both fronts. It can blame the pandemic for the lost jobs but it has no excuse for high prices of food. It has failed miserably to check profiteers and hoarders. It will have to put in more serious efforts to check inflation.

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