Last summer, before a second wave of the COVID-19 pandemic surged across the globe, NPQ’s senior editor Steve Dubb raised concerns about its uneven economic impact and what the recovery might look like. He called out how economists were describing the path as “K-shaped,” because the crisis had improved the fortunes of the richest while showing a downward trend for nearly everyone else. Six months later, these views are proving to be quite on target on a global scale, demonstrating how much work remains to be done if we wish to emerge with a more equitable outcome.
On Monday, the International Labour Organization (ILO) released its updated report, COVID-19 and the world of work. Overall, according to the ILO, last year the global economy lost the equivalent of 225 million full-time jobs, representing an almost nine percent drop from the hours worked a year earlier. This translates into $3.7 trillion in salaries not brought home, or a 4.4 percent decline in the global gross domestic product (GDP).
In a news briefing by the Washington Post, Guy Ryder, the director general of the ILO, put this in perspective by saying, “The effect of the pandemic had been greater than not only that of the financial crisis but also that of the Great Depression of the 1930s.” He adds that job losses will likely continue throughout 2021, unless vaccination efforts take full effect.
But the pandemic’s pain has not fallen upon all people equally. Rather, the ILO finds that it has most heavily affected young workers, women, the self-employed, and low-wage workers. Their data shows employment losses were higher for women (5.0 percent) and for young workers (8.7 percent). The hardest-hit sectors included accommodation and food services, arts and culture, retail, and construction. Meanwhile, some sectors, such as information and communication, finance, and insurance saw job gains.
“Inequality is likely to further increase as a result of the type of job losses generated by the crisis,” Ryder says. “In the United States and the United Kingdom, for instance, significant job losses occurred at the lower end of the labor income distribution, while high-paid jobs were left largely intact. By the same token, job recovery has been stronger at the upper end of the labor income distribution, while demand for low-paid jobs has continued to be weak.”
Looking ahead, Ryder sees “tentative signs of recovery,” particularly in wealthy countries that have done better in mitigating the impact of lost jobs and willingness to support a social safety net that provides ample financial support as a replacement for dwindling wages. But without a robust and equitable global response that addresses these inequities, the ILO foresees a recovery that will leave many people falling further behind.
On the same day that the ILO released its report, Oxfam International published The Inequality Virus, which documents its understanding of the pandemic’s economic toll. In a press release, Oxfam Executive Director Gabriela Bucher says the disparate impact has resulted in the “greatest rise in inequality since records began.” Women and marginalized racial and ethnic groups are bearing the brunt of the crisis. Globally, women hold most of the low-paid precarious jobs, also making up 70 percent of the global health and social care essential workforce.
Oxfam researchers found that fairer economies have shown quicker economic recoveries and insist that extreme inequality is a choice, rather than an inevitable outcome.
“A temporary tax on excess profits made by the 32 global corporations that have gained the most during the pandemic could have raised $104 billion in 2020. This is enough to provide unemployment benefits for all workers and financial support for all children and elderly people in low- and middle-income countries,” reads Oxfam’s report.
From the ILO’s perspective, the actual speed and quality of the recovery will depend on a wide range of political, economic, and health factors. Vaccines are an essential part of that effort, but they will need to be made available to all parts of the world and not hoarded by wealthy countries.
“Governments around the world must seize this opportunity to build more equal, more inclusive economies that end poverty and protect the planet. The fight against inequality must be at the heart of economic rescue and recovery efforts,” says Bucher, “These measures must not be band-aid solutions for desperate times but a ‘new normal’ in economies that work for the benefit of all people, not just the privileged few.”
The global outcome will rest on the willingness of wealthy nations to recognize that their future is tied to how well the rest of the world recovers. Rich countries must extend financial aid to countries that cannot afford the needed safety net programs. Failing to do this will invariably widen the gap between developed and developing countries.
Oxfam and the ILO have helped us see more clearly the human consequences of a “K-shaped” recovery. We can see what must be done. Now that we know, do we have a global society with the will to act accordingly?—Martin Levine