A man receives bags with food as Volunteers from City harvest distribute food in Harlem on March 28, 2020 in New York City. With tens of thousands of New Yorkers out of work due to the epidemic, New York food banks are facing an influx of newcomers who never before would have needed them. (KENA BETANCUR / AFP)

Some 25 million jobs could be lost globally as economic activity plummets due to the COVID-19 pandemic, according to a report by UN agency the International Labour Organisation.

As governments around the world close borders, tighten travel, close non-essential businesses and restrict the movement of people, companies big and small are stumbling toward bankruptcy as the global economy struggles to cope with the biggest contraction ever seen in international trade.

This is no longer only a global health crisis, it is also a major labor market and economic crisis that is having a huge impact on people 

Guy Ryder, International Labour Organisation Director-General

The ILO’s March 19 report, ‘COVID-19 and the world of work: Impacts and responses’, calls for urgent, large-scale measures across three pillars: protecting workers in the workplace; stimulating the economy and employment; and supporting jobs and incomes – each to include measures to extend social protections and support employment retention and financial and tax relief.

“This is no longer only a global health crisis, it is also a major labor market and economic crisis that is having a huge impact on people,” said ILO Director-General Guy Ryder in a statement on March 19.

“In 2008, the world presented a united front to address the consequences of the global financial crisis, and the worst was averted. We need that kind of leadership and resolve now,” he said.

Governments and central banks are putting together financial packages including loans to businesses to keep them afloat and prevent mass unemployment.

Even so, thousands of people employed in hospitality, tourism, entertainment and aviation have already lost their jobs.

In the United States, investment bank Goldman Sachs predicts 2.25 million Americans will have filed for unemployment benefits this week – the highest level on record.

Pantheon Macroeconomics, an economic research consultancy, has forecast that in April, there may be an increase of 5 million unemployed in the US.

The British government announced on March 20 it will pay 80 percent of wages, up to US$2,895 per month, for employees who cannot work because of the pandemic.

Australia is bracing for an estimated job loss of over 1 million people within days as the government injects billions of dollars into the economy to help businesses and workers.

The governor of the Reserve Bank of Australia, Phillip Lowe, said on March 19 that Australia would suffer “significant” job losses due to the coronavirus crisis.

This was reinforced on March 24 when Westpac, one of Australia’s major banks, forecast unemployment in Australia could reach 11 percent by June. Just last week, the bank said it expected unemployment would peak at 7 percent. But it has revised up this forecast to 11 percent by June, or roughly 814,000 jobs lost. The current rate of unemployment in Australia is 5.2 percent.

In neighboring New Zealand, which went into total lockdown on March 24, job losses are expected to be in excess of 100,000 people.

The World Bank estimates that about 20 percent of Indonesians are vulnerable to falling into poverty in the face of economic shock and disjuncture from the COVID-19 pandemic.

According to the ILO, underemployment is also expected to increase on a large scale, as the economic consequences of the virus outbreak translate into reductions in working hours and wages.

Falls in employment also mean large income losses for workers. The ILO estimates these as being between US$860 billion and US$3.4 trillion by the end of 2020. This will translate into falls in consumption of goods and services.

The ILO said working poverty is expected to increase significantly too, as “the strain on incomes resulting from the decline in economic activity will devastate workers close to or below the poverty line”.

The ILO estimates that between 8.8 million and 35 million additional people will be in working poverty worldwide, compared to the original projection for 2020 of a decline of 14 million worldwide.

The report notes certain groups will be disproportionately affected by the jobs crisis. These include people in less protected and low-paid jobs, particularly youth and older workers; also women and migrants.

Rajiv Biswas, Asia-Pacific chief economist with global information firm IHS Markit, said the COVID-19 pandemic has escalated into the “biggest economic shock to the world economy since the global financial crisis in 2008-09”.

“For the Asia-Pacific region, the impact could be even worse than the global financial crisis, as escalating travel bans and lockdowns across many countries have intensified the severe negative impact of the pandemic,” he told China Daily.

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While the more developed nations such as Australia and New Zealand have significant fiscal capacity to provide economic stimulus measures to help households and small businesses, developing countries such as India and the Philippines have little fiscal capacity to alleviate the tremendous negative impact on ordinary low-income workers who have no savings and depend on their daily wages for survival, Biswas said.

Economist Priyanka Kishore, head of India and Southeast Asia economics for Oxford Economics, said: “We expect unemployment rates to rise across the board in 2020 to varying degrees.”

“Countries like Singapore and Malaysia, where the governments have announced support packages to help firms defray wage costs, should fare relatively better,” Kishore told China Daily.

“At the other end of the spectrum is the Philippines, where stronger containment measures (such as the lockdown in Luzon) are expected to have a more adverse impact on employment.”

Unemployment in Australia had been at record lows in recent years, but it has risen sharply within the past month.

Stuart Rosewarne, of the department of political economy at the University of Sydney, said this extraordinarily quick turnaround should be seen in the context of some “deep-seated structural problems that have been percolating for some time” in the Australian economy.

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Rosewarne said with growing proportions of the workforce employed in fixed-term and casual positions, “underemployment has grown significantly, wage stagnation has become entrenched and household debt exploded”.

As businesses began to close, the government was quick to pump money into welfare payments in a bid to prop up household expenditure, Rosewarne told China Daily.