Which Countries Have Been Hit the Hardest by COVID-19 in Terms of Unemployment?
Across the globe the catastrophic effect of the coronavirus pandemic on human health and country’s economies is undeniable.
Entire countries have had to grind to a screeching halt as governments implement strict lock down regulations in order to minimize the spread of the virus as much as possible. The International Monetary Fund have dubbed this the “Great Lockdown”.
This microscopic enemy has sent stock markets into a wild frenzy, threatened the livelihood of individuals and their businesses, weakened some of the strongest currencies, crippled trade deals, and shot unemployment rates through the roof.
Skyrocketing unemployment rates can be attributed to massive reductions in global trade volumes as manufacturers get struck by lock down regulations, as well as the effects on all of the companies that contribute to the service industry.
The service industry is a fundamental contributor to the growth of many economies and has been one of the hardest hit by this pandemic.
The global outlook isn’t looking very positive. The United Nation’s International Labor Organization has predicted that 1.6 billion workers out of 2 billion in the informal economy are at risk of having their livelihoods destroyed. This equates to nearly half of the global workforce of 3.3 billion workers.
This has without a doubt escalated into a global crisis and it is unlikely that any country will escape this unscathed.
Let’s take a look at some of the countries that have been the hardest hit by COVID-19 in terms of unemployment.
THE UNITED STATES OF AMERICA
As of 22 May 2020, the U.S has over 1,620,000 cases making up approximately 31% of the world’s cases. This is the greatest number of cases than any other country by far and the ripple effect can clearly be seen throughout the country.
In just nine weeks, almost 39 million Americans have lost their jobs hitting a record high unemployment rate of 14.7%, this isn’t necessarily an accurate picture of the unemployment situation as thousands of applications for unemployment benefits still need to be processed and many have not yet made any application. Realistically, the real level of job loss is around 25% and is likely to jump as high as 30%.
In April alone, the US private sector let go of more than 20 million employees according to the payroll processor ADP. Concerns are being raised about whether or not these jobs will ever be returned.
Since the reopening of restaurants in the U.S. the number of customers is only around 10% compared to pre-pandemic levels.
This in conjunction with an average of over 3 million weekly unemployment claims paints a grim picture of job security in the U.S. for the next few months at least.
Current unemployment rates have already far exceeded peak rate of 10% recorded during the Great Recession in 2009 and is considered one of the most devastating loss of jobs since the Great Depression that started in October 1929.
The industry that has been hardest hit in terms of unemployment is definitely the leisure and hospitality industry that makes up approximately 40% of the total jobs lost.
Other industries across the economy that have been severely affected include education and health related services, professional and business services, as well as employment in the retail industries, with many major retailers filing for bankruptcy.
Treasury secretary, Steven Mnuchin, has reported that he expects unemployment rates to continue rising as the pandemic takes its toll and has warned of potential “permanent damage” to the economy if lockdown conditions are prolonged.
In response to the global spread of the novel coronavirus in February, and the public announcement by the World Health Organization of a global pandemic, Canada began to put a number of safety measure in place for the month of March.
Travel restrictions, business closures and strict social distancing measures were put in place. The exact timing and extent of these measures was varied based on province.
However, these actions to shut down the economy that were taken by the Canadian Government in order to protect the public health of its citizens, has resulted in a massive shock to the Canadian Labor market.
Since the start of the Canadian lockdown, over 3 million people are now unemployed and this number is expected to rise.
This is concerning due to the sheer magnitude of the number of jobs lost. Since February a decrease in employment of 15.7% has already far exceeded the record high of -5.4% back in the 1981-1982 recession, and that was over almost 17 months.
To give an even greater indication of how severe the situation is, between February and April, the labor force participation rate fell to 59.8%.
This decrease in labor force participation means that more than half of those eligible to work are not seeking employment.
So not only have people lost their jobs (increasing unemployment rates), they have also stopped searching for work (decreased labor for participation).
There are a variety of aid packages supplied by the federal and provincial governments that are available for individuals and organizations that require them.
However, this has started raising concerns that these aids could result in a disincentive to work in the future, especially amongst the lower income workers. Already, over 7.2 million people have applied for emergency unemployment assistance.
The cities of Japan were emptied as the Japanese government declared a state of emergency and with the aid of police forces toughened up on the country’s coronavirus measures in attempts to contain the spread of the virus.
This proved successful as Japan has managed to prevent an escalating number of cases and tragic death tolls that have ravaged across China, the USA and parts of Europe. However, the Japanese economy isn’t faring as well.
Consumer spending has taken a massive plunge, their stock market has dropped 23% since the beginning of the year, travel and tourism are nonexistent, and. Exporting activities have all but ceased.
To make matters worse, the postponement of the 2020 Tokyo Olympic Games has been estimated to decrease Japan’s GDP by 1.4%.
Unemployment is on the rise, but according to the Statistics Bureau of Japan, at a much slower rate than that of other G7 economies like the U.S. In March 2020, the number of unemployed people was 1.76 million. This is an increase of 20,000 from the same month in 2019.
According to an estimate made by the Daiwa Institute of Research, even if things start to return to normal by June, Japan will probably still see job losses encroach the 1 million mark.
This means that unemployment is expected to rise to 3.8% from a 2.4% rate in 2019.
But if lockdown measures remain in place for the remainder of the year, the number of people finding unemployment could rise as high as 3 million with an unemployment rate reaching 6.7%.
Another worrying factor is the massive decrease in the ratio of available positions to the lowest it has been in three years, as well as the rapid increase in the number of individuals applying for emergency loans via government programs set up for people who have lost their jobs or have had to face wage cuts.
The UK has been grappling with a high death toll and is one of the countries with the highest number of recorded Covid-19 cases.
Government measures to try and curb the spread have resulted in a nationwide lockdown which, like all other countries in the same boat, has resulted in a massive increase in the number of people finding themselves unemployed.
The British government have attempted to soften the economic blow that the pandemic is having by implementing a £65.5 billion (equivalent of $80.65 billion) package in attempts to protect the National Health Service, as well as businesses and jobs.
However, this hasn’t been able to prevent the pound from taking a massive nosedive against the dollar and euro and hasn’t been able to prevent massive companies such as Flybe and Debenhams from reaching the brink of collapse.
Across the UK, shutting down of businesses is proving easier than actually reopening them as lockdown measures remain in place and as unemployment rates continue to rise.
Already, there have been close to 2 million applications for Universal Credit since the start of the country’s lockdown and over a quarter of the UK’s working population have registered for the retention scheme put in place by the British Government, who are offering to pay 80% of an employee’s wages.
Worst case scenario, financial company Nomura predict that Britain’s GDP could fall 7.8% and unemployment rise to over 6 million people affected, making up 21% of the workforce. Potentially reaching greater rates than the Great Depression.
At present South Africa is amongst the few with a relatively low number of reported cases and deaths due to COVID-19. However, JP Morgan has predicted that South Africa will be amongst the hardest hit by this pandemic.
The country is currently facing one of the strictest lockdowns in the world as manufacturing comes to a screeching halt, travel bans restrict exports, and consumer spending on everything but essential items plummets.
Travel preventions both into and out of the country have put a spanner in the works for South Africa’s once flourishing tourism industry and has put thousands of jobs on the line.
Before the pandemic even began, the country had one of the highest unemployment rates in the world sitting at a staggering 29%. This rate has been predicted to rise to 50% according to the Chamber of Commerce and Industry chief executive officer, Alan Mukoki. As many as 7 million people are expected to become unemployed.
President, Cyril Ramaphosa addressed the nation stating that “We must save lives and livelihoods”. He has implemented a $26 billion recovery package, the largest in Africa, which includes increased payments to 16 million citizens already dependent on welfare, as well as monthly payments to the newly unemployed.
Italy has been hard-hit by the corona virus outbreak, with over 230,000 reported cases.
Since the first case, the number of cases grew exponentially each day and the death toll was amongst the highest in the world at one stage.
The country has implemented a national lockdown since the beginning of March, and the ripple effects on their economy have been catastrophic.
By the end of March, the unemployment rate in Italy had dropped to 8.4%. This is the lowest that it had ever been in years. Forecasts for March 2020 predict that the unemployment rate could continue to rise even further and reach 11.2% by the end of the year.
According to the General Confederation of Italian Industry, the country’s GDP for 2020 is expected to fall by 10% while the FTSE MIB, Italy’s stock exchange index, has depreciated a staggering 31% this year.
The Italian government has approved a $59.6 billion (£55 billion) stimulus package in order to mitigate the effects of the pandemic on the country’s economy by helping out affected businesses and struggling families. “Nobody must lose their job because of the coronavirus,” stated Italian Economy Minister, Roberto Gualtieri.
China boasts the world’s second largest economy, but even after several weeks of lock down, the pandemic has wreaked havoc on the country’s economy and unemployment rates.
The full extent of unemployment is difficult to capture due to the sheer size of the country. However, data captured in Beijing bring the official unemployment rate for April up to a historic high of 6%.
This figure only captures the jobless numbers in urban areas. This figure represents over 27 million people who have lost their jobs which, according to Willy Lam from Chinese University of Hong Kong, “could be seriously understated.”
The data from Beijing excludes all workers from rural communities and the approximately 290 million migrant workers who work in construction, manufacturing and other low paying yet fundamental activities.
Taking this into consideration, the figures are more likely to state that 80 million people were out of work by the end of March, according to Zhang Bin, an economist from the Chinese Academy of Social Sciences.
There is also evidence that the coming months are going to be tough for jobseekers with job vacancies plunging 28% in the first 3 months of 2020 in comparison to the fourth quarter of 2019.
Beijing also expects approximately 8.7 million individuals to graduate from college and university by the end of this year, creating even stiffer competition in the job market.
GLOBAL CHALLENGES FOR 2020
The coronavirus pandemic has resulted in the need for pretty much every single forecast that was made for the 2020 global economy to be revaluated.
The International Monetary Fund (IMF) has a bleak outlook on the economy and has estimated a decrease of 3% for the global economy, stating that the world will “very likely” experience the worst recession since the Great Depression in the 1930’s.
Partial recovery is expected for 2021 with a rebound of 5.8% growth however, this is all dependent on the state of the health crisis.
The IMF’s chief economist, Gita Gopinath, has stated that the cumulative loss in global GDP in 2020 following through to 2021 could be as much as 9 trillion dollars, “greater than the economies of Japan and Germany combined.”
The number of people around the world that are unemployed stands at around 188 million, with 165 million do not have enough paid work and 120 million have given up looking for work or don’t have the resources to access the labor market.
The United Nations has predicted that a further 2.5 million people will be affected by the end of 2020.
As country leaders do the best that they can to mitigate the hard felt effects of the pandemic on people’s livelihoods, many lucky individuals are going to have to do the best that they can to hold onto their current positions while others search for alternative sources of income.
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