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Pandemic's impact on labor markets is worse than anticipated - International Labor Organization

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The COVID-19 crisis has affected productivity, workers and businesses. The productivity gap between developed and developing countries is projected to widen from 17.5: 1 to 18: 1 in real terms.

Pandemic's impact on labor markets is worse than anticipated - International Labor Organization

The global recovery has stalled, inequality between developed and developing countries is growing, the COVID-19 pandemic continues - all with dire consequences for labor markets. This is reported by experts from the International Labor Organization (ILO).

“The current dynamics in labor markets indicate that the recovery has stalled and may decline, as well as a serious gap between developed and developing countries,” said ILO Director General Guy Ryder. The main drivers of this trend, he said, are uneven distribution of vaccines and unequal opportunities for countries to support business.

"Both of these problems require immediate solutions," said the head of the ILO.

According to the ILO, the total work time in 2021 will be below the “dock” level by 4.3%, which is equivalent to the loss of 125 million full-time jobs. The new ILO forecast differs significantly from the June one, according to which these figures were 3.5% and 100 million, respectively.

ILO experts fear that without concrete financial and technical support, the situation on the labor market will continue to deteriorate.

In the third quarter of 2021, total working time in high-income countries was 3.6% lower than in the fourth quarter of 2019. Meanwhile, in low-income countries the loss was 5.7%, while in lower-middle-income countries it was 7.3%.

Regarding the situation in various regions, the least shocks in employment were in Europe and Central Asia, where only 2.5% of the work time was lost. Labor markets in Africa, the Americas and the Arab States were most affected during the pandemic, with losses of 5.6%, 5.4% and 6.5%, respectively.

Experts, like the head of the ILO, associate these indicators in part with two factors: uneven levels of vaccination of the population and fiscal stimulus. The ILO estimated that for every 14 people fully vaccinated in the second quarter of 2021, this meant one additional full-time equivalent job in the global labor market.

The ILO believes that if low-income countries were provided with more equal access to vaccines, one quarter would be enough for them to catch up with more developed countries in terms of employment recovery.

Fiscal stimulus remains the most important factor determining the pace of recovery. But so far, about 86% of all business support packages adopted in the world are in high-income countries. The ILO notes that an increase in fiscal stimulus by just one percent of annual GDP would lead to an increase in annual working hours compared to the last quarter of 2019 by an average of 0.3%.

The COVID-19 crisis has affected productivity, workers and businesses. The productivity gap between developed and developing countries is projected to grow from 17.5: 1 to 18: 1 in real terms, the highest since 2005.

The head of the ILO recalled that in June this year, at the International Labor Conference, the Global Call to Action was adopted for a people-centered recovery from the COVID-19 crisis. The countries of the world have pledged to ensure that economic and social recovery is inclusive, stable and sustainable.

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