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ILO: COVID-19 Will Put 195 Million Out of Work—Hitting Manufacturing, Retail Hardest

In a short time, the coronavirus pandemic has swept in and propelled joblessness to heights the International Labour Organization (ILO) says will ‘far exceed’ what the world saw during the Great Recession.

The United Nations agency projects the COVID-19 crisis could see 195 million job losses—and that’s a conservative estimate.

“Workers and businesses are facing catastrophe, in both developed and developing economies,” ILO director-general Guy Ryder said. “We have to move fast, decisively, and together. The right, urgent, measures could make the difference between survival and collapse.”

Already, more than four out of five people (81 percent) in the global workforce of 3.3 billion have been affected by layoffs or furloughs resulting from full or partial workplace closures. These “unprecedented shocks to economies and labor markets,” the ILO said, makes what the world is facing now “the worst global crisis since the Second World War.”

A sizable 6.6 million people filed for unemployment in the United States last week, according to U.S. Department of Labor data released Thursday. And while fewer than the previous week’s claims, last week’s number brings the total unemployment claims in the last three weeks to a staggering 16 million. The unemployment rate currently stands at 5.1 percent and is only expected to climb. Last week, the unemployment rate was 4.4 percent, and the latest update from the Bureau of Labor Statistics (BLS) called that hike the largest month-over-month increase since 1975.

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The sharp increases, BLS said, “reflect the effects of the coronavirus and efforts to contain it.”

As of Tuesday, global unemployment had already reached around 190 million.

Some sectors—retail and manufacturing included, according to the ILO—are going to be harder hit in the pandemic than others. Retail employment in the U.S. declined by 46,000 jobs in March, according to BLS data, 10,000 of which were in clothing and clothing accessories stores. Manufacturing jobs dropped by 18,000 in the same period.

Globally, 482 million workers in retail and wholesale have been affected by COVID-19, and Ryder counts the sector among four (manufacturing, business services and administration, and food and accommodation) that are at the “sharp end” of the pandemic’s impact.

“The manufacturing sector, which employs 463 million workers, has been hit hard in some segments, as workers are told to stay at home, factories close, and global supply chains grind to a halt,” the report noted. “Quarantine measures, closure of retail stores, cancelled orders and salary reductions are suppressing demand in key industries such as automobiles and textiles, clothing, leather and footwear.”

Many of these numbers fail to factor workers in the informal economy, of which there are many in the apparel and footwear sectors. Many factories in leading sourcing countries that produce clothing for international brands subcontract production to undocumented—and often unprotected—workers, or those working out of their homes for various reasons that wouldn’t allow them to travel to a factory for work.

According to the ILO, there are as many as 2 billion people in the informal workforce, and COVID-19 has already affected “tens of millions” of them.

“In India, Nigeria and Brazil, the number of workers in the informal economy affected by the lockdown and other containment measures is substantial,” the report noted. “In India, with a share of almost 90 percent of people working in the informal economy, about 400 million workers in the informal economy are at risk of falling deeper into poverty during the crisis. Current lockdown measures in India…have impacted these workers significantly, forcing many of them to return to rural areas.”

It’s a saga that could shake out similarly for both informal and recognized workers in factories across Bangladesh, Pakistan, Vietnam, Myanmar and Cambodia, too.

What happens from here for the global workforce will depend largely on next steps in developments and policy measures.

“There is a high risk that the end-of-year figure will be significantly higher than the initial ILO projection, of 25 million,” ILO cautioned. “The eventual increase in global unemployment over 2020 will depend substantially on how quickly the economy will recover in the second half of the year and how effectively policy measures will boost labor demand.”

Without the right efforts, though, they’ll hardly be a panacea, and production losses across many sectors will be “devastating and longlasting,” according to the ILO, particularly in developing countries, which it says lack the “fiscal space for economic stimulation.”

Some of those necessary efforts, the ILO noted, include a focus on health protection measures and economic support for both the supply and demand sides. They should also endeavor to stimulate the economy, support businesses and jobs, protect workers and look to social dialogue for solutions.

Regardless of those policy implementations and their resultant effects, the outlook is highly uncertain. And so are any estimates of the severity of the shock that has been brought on by the pandemic.

“This is the greatest test for international cooperation in more than 75 years,” Ryder said. “With the right measures we can limit its impact and the scars it leaves. We must aim to build back better so that our new systems are safer, fairer and more sustainable than those that allowed this crisis to happen.”