COVID-19 creates turmoil in Asia-Pacific labor markets

Massive drops in working hours due to the COVID-19 crisis have had a devastating effect on jobs and incomes in the Asia-Pacific region, while women and young people have taken a hit at a much higher rate compared to other groups, said a newly released report.

It is estimated that the economic backlash of the pandemic has wiped out some 81 million jobs around the world in 2020, and employment levels also contracted compared to 2019, according to Asia–Pacific Employment and Social Outlook 2020, a document released on Tuesday by the International Labour Organization.

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 the Asia-Pacific region 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.

Working-hour losses are also influenced by the millions of people moving outside the labor 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.

Chihoko Asada Miyakawa, ILO's assistant director general and regional director for Asia and the Pacific, said the virus has inflicted a hammer-blow on the region's labor markets, one that few governments in the region stood ready to handle.

Low levels of social security coverage and limited institutional capacity in many countries have made it difficult to help enterprises and workers back on their feet, a situation compounded when large numbers remain in the informal economy, she said.

"These pre-crisis weaknesses have left far too many exposed to the pain of economic insecurity when the pandemic hit and inflicted its toll on working hours and jobs."

Meanwhile, in most countries in the region, the report found that women are experiencing a larger decline in working hours and employment than men, and are more likely to move into inactivity.

The same situation emerged among young people, who 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.

"With increased unemployment, young workers are likely to find it difficult to compete for new jobs. When they do find work, it may well be a job that does not match their aspirations," said Sara Elder, senior economist at the ILO Regional Office for Asia and the Pacific.

Millions of women have also paid a high price and it could take years for those who have exited the labor force to return to full employment, she added.

Given the scope of the damage to labor markets, the report also warned that 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 the Asia and the Pacific, it said.

According to a preliminary estimate, an additional 22 million to 25 million people could fall into working poverty, which would push the total number of working poor (living on less than $1.90 a day) in the Asia–Pacific region to between 94 and 98 million in 2020.