The recovery of the labor market has stalled and presents downside risks: ILO

The job recovery After the impact of the first waves of COVID-19, it stagnated globally and the progress achieved has widened the gaps between advanced nations and those that are developing, deteriorating the medium-term outlook for the world of work, warned the International Organization. of Labor (ILO).

Introducing the eighth edition of the ILO Observatory: Covid-19 and the world of work, the agency revised down its projections on the effects of the emergency on the labor market. In this way, he estimates that in 2021 the equivalent of 125 million jobs, 25 million more places than the calculation presented last June, and which represents a decrease of 4.3% in the hours worked worldwide.

“Despite the resumption of economic development on a global scale, the general recovery in terms of working hours has stagnated and registers much lower values ​​than those before the pandemic, with wide differences between countries, according to their income level. In this edition of the Observatory, a broad downward revision of the previous forecasts made by the ILO for 2021 is carried out, taking into account the evolution slow, disappear, ineffective e uncertain of the labor markets ”, is specified in the report.

Covid-19 vaccines have helped mitigate a major impact on job recovery. The agency’s specialists estimate that for every 14 people who complete the inoculation plan, a full-time job is created. This explains why the countries that have advanced the fastest in this process have registered a greater rate of improvement in their labor market.

In addition, progress in vaccination plans it has become a key element for the return to the offices. Until the beginning of October, the proportion of fully vaccinated people reached 34.5% in the world. However, when analyzing this data by income level of the countries, the advance is 59.8% in advanced nations and 1-6% in developing nations.

“The current trajectory of the labor markets is one stalled recovery, with the appearance of important downside risks, and a great divergence between developed and developing economies, ”said ILO Director General Guy Ryder. “It is dramatic that these trends are determined by inequality in the distribution of vaccines and fiscal capacity, and it is urgent to solve both aspects.”

By region, the greatest impact on job losses in 2021 will be recorded by the Arab States and the American continent, with annual falls in working hours of 6.17 and 5.5%, respectively. The least impact is projected in Europe and Central Asia, with a decrease of 3.12 percent.

Productivity gap on the rise

Another element highlighted by the ILO in its report has to do with the atypical increase in labor productivity globally. This is because those most affected by the lockdown measures that were undertaken last year to curb COVID-19 infections were the least productive companies and workers with the lowest wages.

In this way, in 2020, labor productivity per hour in the world increased more than double the long-term average value, to a 4.9% level —The average annual rate between 2005 and 2019 was 2.4%. “The incidence of the COVID-19 pandemic led to an unprecedented unstable evolution in the level of labor productivity on a global scale,” details the ILO.

This effect was not only atypical, but also increased the productivity gap between high- and low-income nations at their highest level in the past two decades. In 2020, the agency details, each worker in an advanced economy produced 17.5 times more, on average, than one in a developing economy. By 2021, this proportion is estimated to increase to a historical amount of 18, “the largest gap since 2005.”

In this context, the ILO recommends maintaining the support and encouragement programs for the preservation of jobs. For each point of the Gross Domestic Product (GDP) that the fiscal incentives for the productive apparatus are increased, the agency estimates, the number of working hours increases 0.3 percent.

“Although it is necessary to adequately plan the design and adaptation of the stimulus packages In order to achieve the most effective results possible in a rapidly evolving environment, premature removal of fiscal support could exacerbate adverse effects on the labor market or slow down job recovery. Experience shows the importance of maintaining strong incentives ”, points out the ILO.

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