Multiple crises threaten labor market recovery in Q4-2022

As the consequences of the Covid-19 pandemic fade, the multiple crises that overlap geographically and economically pose a danger to the recovery of the labor market around the world. According to the International Labor Organization (ILO), these multiple crises threaten the recovery of the labor market.

The global job market will “deteriorate significantly” this quarter, the Geneva-based UN agency warned on Monday, pointing to the consequences of the war in Ukraine and the impact of policy tightening. money on consumption.

According to the ILO, the outlook for the labor market around the world has deteriorated in recent months and, if these trends continue, the number of job vacancies should decrease and employment growth at the level market is expected to deteriorate significantly in the last quarter of 2022.

Shortfall of 40 million full-time jobs

Under these conditions, unemployment and inequality are set to rise due to the multiple economic and political crises that threaten the recovery of the labor market around the world, indicates the latest edition of the ILO Observatory on the world of work.

There are already signs that the recovery in global hours worked seen in early 2022 has reversed in the second and third quarters, the UN body said. “Further coordinated efforts both nationally and internationally will be needed to tackle the deeply worrying global employment situation and prevent a significant general slowdown in the labor market,” said Gilbert Houngbo, Director General of the ILO.

Overall, there were 40 million fewer full-time jobs between July and September compared to the fourth quarter of 2019, which is used as a baseline before the Covid-19 pandemic.

Informal growth will exceed formal growth in 2022

The level of hours worked was 1.5% below levels reached before the pandemic.

Concentrated in developing countries, the growth of informal jobs in 2021 fully offset the losses suffered in 2020, which is not the case for formal jobs.

By 2022, informal jobs are expected to grow at a similar pace to formal jobs, jeopardizing the slow but persistent trend towards formalization observed over the past fifteen years.

The ILO attributed the deterioration in the level of hours worked in mid-2022 to the reintroduction of public health restriction measures and the resulting disruptions to China’s economy and labor market.

The Americas are the best performers

The UN agency also points to the war in Ukraine as well as shocks to energy and food prices, which have increased inflationary pressures while weakening the recovery of the labor market around the world.

Regional data shows that the Americas is the best performing region so far in 2022, with hours worked exceeding the pre-crisis level since Q2 2022. On the other hand, the number of hours worked in all other regions of the world remains well below the pre-crisis level.

Even though Africa and the Arab States showed an upward trend in 2022, these two regions still register a 2% gap in hours worked compared to the pre-crisis level. Asia and the Pacific recorded a decline of 1.2 percentage points in the 2nd quarter of this year and, thereafter, this region saw a slight improvement of 0.6 percentage points, as activity in China resumed after the partial lifting of containment measures.

Very uncertain outlook

Europe and Central Asia recorded two consecutive quarters of decline, resulting in a cumulative loss of 1 percentage point. According to the ILO, this downward trend was caused by a deterioration in hours worked in Eastern Europe, fueled by the war.

More generally, the outlook for the labor market is very uncertain, with growing risks of a slowdown, in particular due to the consequences of high inflation, the tightening of monetary policies, the increase in the debt burden and the decline household confidence.

For the ILO, a comprehensive, integrated and balanced approach must be used to fight inflation while protecting jobs and incomes. “Wise policy choices must be made to navigate these multiple crises that have profound consequences for the world of work.”

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