Coronavirus pandemic has put the world in a tailspin, with workers bearing the maximum brunt of the disease, particularly due to lockdown. Surging welfare claims, increasing job losses and freezing economic activities are exhibiting a gloomy portrait of the world’s labour market.
In just a few months, the jobless numbers in several countries have shattered the records, raising anticipations of a further rise in the unemployment rate in June quarter 2020. Be it developed economies like the US and Australia or the developing ones like India and Brazil, the pandemic has hardly left any country in peace.
Last week, the UN Labour agency declared some frightening statistics on the international labour market scenario amidst COVID-19.
The International Labour Organization (ILO) has warned that the pandemic is expected to wipe out nearly 200 million full-time jobs worldwide in the next three months alone owing to full or partial lockdown measures implemented across the globe.
Moreover, the ILO projects the impact of COVID-19 to be far worse than the 2008-2009 financial crisis on the world’s workforce. In fact, the agency already sees four out of five workers being affected by the pandemic, especially in sectors like retail and wholesale, food and accommodation, manufacturing and business services and administration.
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Let us now discuss the current unemployment scenario in different countries across the world:
Australia’s Unemployment Rate Surges in March
As per the ABS latest statistics, Australia’s unemployment rate rose to 5.2 per cent in March 2020 in seasonally adjusted terms against anticipations of 5.4 per cent. Surprisingly, the seasonally adjusted employment rose by 5,900 people, driven by a rise of 6,400 people in part-time employment.
It is worth noting that the unemployment rate surged in all states and territories except Victoria in March 2020, with a significant rise of 0.4 points observed in South Australia and 0.2 points in Western Australia and New South Wales.
Additionally, the monthly hours worked in all jobs improved by 8.6 million hours in seasonally adjusted terms in March 2020 to 1,784.9 million hours. According to the ABS Chief Economist, Mr Bruce Hockman, March data demonstrates the little early impact of COVID-19 on the Australian labour market; however, the impact from major coronavirus induced actions will be visible in April data.
The effect of coronavirus-driven restrictions imposed on restaurants, clubs, pubs and cafes in the second half of March is likely to weigh heavily on the employment figures for April 2020.
Economist at National Australia Bank Limited (ASX:NAB) expects the unemployment rate to reach 11.75 per cent by mid-year. Additionally, Australia’s Treasury has also projected an increase in the unemployment rate to 10 per cent through June, which is expected to reach 15 per cent without government subsidy.
To recall, the federal government recently announced a major $130 billion JobKeeper package to support around six million workers stay in the job and prevent the nation from an economic downturn. As per Westpac Banking Corporation (ASX:WBC), Australia may have witnessed an unemployment rate of 17 per cent by June; however, with this subsidy, it is likely to see a jobless rate of 9 per cent.
Notably, the measures put in place to suppress the spread of virus across Australia have been successful in reversing and slowing the growth of cases in the nation, revealed the National Cabinet lately.
5.2 Million Jobless Claims Filed in US Last Week
About 5.2 million Americans filed for unemployment benefits during the week ended 11th April 2020, reported the US Department of Labor in its latest update. With this, the total number of jobless claims filed in the country have reached 22 million since 14th March 2020.
Causing a staggering loss of jobs, the coronavirus pandemic has wiped out years of employment gains from the US labour market, triggering a widespread economic pain. The job losses are a result of massive layoffs in different industries as states enacted lockdown measures to prevent the spread of the pandemic.
Some economists are now anticipating jobless rate to increase to 20 per cent in April amid massive job losses, while some are expecting it to reach 15 per cent. These projections are at their highest level since the level of unemployment rate in 1930s Great Depression.
Unemployment Rate Likely to Rise to 10% in UK
The Office of Budget Responsibility or ODR expects the unemployment rate in the UK to increase to 10 per cent of the working population (around 2 million people) in the coming months. Britain’s budget watchdog anticipates lockdown measures to bring the country to a standstill. Additionally, ODR speculates Britain’s economy shrinking by 35 per cent this spring season.
The ODR has forecasted the UK economy to shrink by over a third between April and June if nationwide lockdown stays in place for another three months. However, the UK economy is likely to bounce back quickly in the subsequent two quarters, with overall impact being 13 per cent decline in the GDP by FY21.
China’s Unemployment Rate Dips in March 2020
At the time when countries across the world are observing or anticipating an increase in the unemployment rate, China’s jobless rate has slightly improved in March, falling from 6.2 per cent in February to 5.9 per cent last month.
However, it is imperative to note that the nation’s economy shrank for the first time in decades in the March quarter, contracting by 6.8 per cent. The world’s second largest economy suffered a major hit from the coronavirus outbreak amidst forced closures of businesses and factories.
Last year during the same quarter, China saw a healthy economic growth of 6.4 per cent at the time it was locked in a trade war with the US. Besides GDP, the nation’s factory output and retail sales also plummeted by 1.1 per cent and 15.8 per cent, respectively in March.
The coronavirus driven shock to labour markets marks a stress test for economic policies across the world, intensifying pressure on central banks and governments to prevent the economies from going into recession. Significantly, the policymakers are leaving no stone unturned to avert the possible financial downturn, injecting massive stimulus into the economies. However, the effectiveness of these policies will determine the extent to which coronavirus induced disruptions are deterred.