BizNEWS

Covid-19 Pandemic Triggers Massive Disruption of Labor Markets

Diep Nguyen
BizLIVE -

Through lockdowns and travel restrictions, demand has slumped and many businesses have been forced to close or cut back operations, with serious impacts on workers.

Covid-19 Pandemic Triggers Massive Disruption of Labor Markets
The coronavirus disease (COVID-19) pandemic has triggered a massive disruption of labour markets that has had disproportionate impacts on youth employment. Through lockdowns and travel restrictions, demand has slumped and many businesses have been forced to close or cut back operations, with serious impacts on workers. 
Nearly 220 million young workers (15–24 years) in the region are particularly vulnerable given their short tenure on the job, their employment in especially hard-hit sectors and their tendency to earn livelihoods in unsecure informal jobs.
The usual challenges of youth employment are heightened in economic crises. Given their relative lack of experience, young people face higher rates of unemployment than adults (25 and older) regardless of the business cycle. 
Young people are also more likely than adults to work in less-secure, lower-wage employment, frequently with limited legal rights, social protection, and representation. The current COVID-19 crisis brings the vulnerabilities of youth labour markets to the fore, but with the further complication of disrupted education and training pathways. Young people will be hit harder than adults in the immediate crisis and also bear higher longer-term economic and social costs. Pre-existing vulnerabilities of youth in the labour market will be exacerbated, with negative consequences for intergenerational poverty and inequality.
The crisis negatively impacts the prospects for youth through three channels. Young people are experiencing (1) job disruptions from reduced working hours and layoffs, (2) disruptions in education and training as they try to complete studies, and (3) difficulties transitioning from school to work and moving between jobs. The crisis will affect young people differently depending on their situation in the labour market.
The scale of the impact will depend on the length of the crisis, the choices of governments in the socioeconomic recovery, and the capacity of institutions to implement effective measures.
Youth in Asia and the Pacific faced a challenging labour market situation before the crisis. Even before the COVID-19 pandemic, young people faced numerous constraints in their access to decent work. 
The regional youth unemployment rate was 13.8 per cent in 2019 compared with 3.0 per cent for adults and the global youth unemployment rate of 13.6 per cent. More than 160 million youth (24 per cent of the population) were not in employment, education or training in 2019, and the region’s rates have been rising primarily as a result of the exclusion of young women who face an excessive burden of unpaid household and care work.
Four in five young workers in the region were engaged in informal employment – a higher share than among adults – and one in four young workers was living in conditions of extreme or moderate poverty.
At the onset of the crisis, nearly half of young workers in the region were employed in the four sectors destined to be hardest hit by the recession. These sectors – wholesale and retail trade and repair, manufacturing, rental and business services, and accommodation and food services – employed nearly half of all young people (more than 100 million) working in Asia and the Pacific at the onset of the crisis. 
Young women are overrepresented in three of the four highly impacted sectors, particularly in accommodation and food services.
The vulnerabilities of youth in labour markets were already visible in the first half of 2020 as the COVID-19 crisis unfolded. Youth unemployment rates jumped in the first quarter of 2020 from the last quarter of 2019 in all economies for which data are available. 
Compared with the first quarter of 2019, the youth unemployment rate increased in six of nine economies that have quarterly data available: Australia, Indonesia, Japan, Malaysia, and Viet Nam, as well as in Hong Kong, China, which showed the largest increase of 3 percentage points. All economies that experienced increases showed sharper jumps in youth rates than in adult rates.
The reduction in working hours is unprecedented. Working hours across the region dropped 7.1 per cent in the first quarter of 2020 from the fourth quarter 2019. The loss of working hours increased to 13.5 per cent in the second quarter of 2020. While the regional figure is not disaggregated by age, evidence from two countries – the Republic of Korea and Thailand – showed young workers experienced a significantly larger loss of hours than adults.

DIEP NGUYEN