The job dislocation of COVID-19 will reduce global GDP

Outlook

The shock to demand, supply and finance could cause significant job losses -- on April 7 the ILO estimated 230 million formal full-time job losses. Additionally, part-time workers account for one-fifth or more of many countries’ workforces. Informal workers account for more than half of many developing economy workforces.

Containment measures have locked down around one-third of the world population. Some shutdowns could persist for months, decimating consumption, which accounts for 50-66% of major economies’ GDP.

Countries experiencing deep recession could struggle to maintain political and financial stability as they will have to repay debts at the same time as voters demand pro-growth structural reforms.

Impacts

• The shutdowns expose workers with little social protection, supporting arguments to include them permanently in social security systems.
• Reskilling and re-equipping workers will be key to an economy rebounding and harnessing the opportunities the global recovery will offer.
• Job churn will rise in COVID-19’s wake; in particular, demand will rise for workers with advanced technical, cognitive and social skills.
• COVID-19 will test intergenerational equity as older people face higher health risks, but younger people fear a greater financial impact.