Covid-induced job, income losses to hit poverty alleviation, development: report


NEW DELHI: The coronavirus pandemic has left deep marks across the world, and South Asia, including India, is no different. Disruptions caused by the pandemic have turned this once high-growth region into the worst performing geography in 2020, a UN report has said, adding that consequent job and income losses will reverse decades of development and hurt poverty alleviation efforts.

High rates of unemployment in 2020 will have a long tail and joblessness will remain elevated in 202, the report said. Unemployment has directly or indirectly hit 2.7 billion workers worldwide and economies with high informal workforce will need to handhold the labour market to help regain income, social security, and achieve sustainable development goals in education, poverty, and social equality, it said.

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This follows a report from the International Labour Organization that had highlighted the magnitude of working hour and income loss around the world, in the wake of the pandemic, and urged countries to step up efforts to address the issue. The ILO report had said South Asia including India could see 4.9% loss in working hours in 2021 and this could mean millions of job losses – up to 31 million in worst case scenario. To be sure, ILO estimates unemployment by counting losses in working hours. The organisation had said that of the 255 million jobs lost worldwide in 2020, South Asia accounted for 80 million.

“The crisis has wreaked havoc on the labour markets in the developing world. By mid-2020, unemployment rates had quickly escalated to record highs – 27% in Nigeria, 23% in India, 21% in Colombia, 17% in the Philippines and above 13% in Argentina, Brazil, Chile, Saudi Arabia and Turkey,” said the UN report titled Worldeconomic situation and prospect 2021.

The ILO report said that in Asia and the Pacific, the annual estimated decline in working hours in 2020 is 7.9% while southern Asia, driven by India, will likely see a 34.5% in the second quarter and 9.9% in the third quarter. “The two largest countries in the region, China and India, registered estimated annual average losses of 4.1% and 13.7%, respectively”.

The UN report said livelihood and income impacts have been particularly harsh for about 2 billion informal workers who have limited social protection, especially those self-employed in the informal economy. It said informal sector accounts for more than 60% of jobs in a number of large developing countries, including India, Indonesia, and Mexico.

“The job loss and income loss has a direct bearing on any economy. For India, the covid-19 outbreak has been one of large scale health, economic and people crisis. While people are talking about job loss and income loss in formal sectors, the informal sector has faced a severe trauma but lack of record or data hides the crisis a larger portion of the labour market is facing. This is and will be bad for poverty alleviation in both the short and medium term, for economic revival and for achieving sustainable development goals in area like education, poverty, social equity,” said K. R. ShyamSundar, a labour economist.

The UN report almost reiterates this viewpoint. “The total number of people living in poverty is expected to increase by 131 million in 2020 alone…and as many as 797 million people will still be trapped in extreme poverty in 2030, representing a poverty headcount ratio of over 9% (worldwide). The cardinal Sustainable Development Goal of eradicating extreme poverty by 2030 will likely be missed by a large margin.”

The report added that while the short-term impact of the pandemic has been severe, its long-term impact will be equally devastating and will be felt for years to come. With the crisis accelerating the pace of digitization and automation, millions of jobs lost in 2020 will not come back. Unemployment rates will remain elevated in the near term. While productivity in some sectors of the economy will rise during the post-crisis period, average productivity growth–consequently potential output of the world economy–will remain weak in the coming years.

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